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Sports Direct’s independent shareholders remain unconvinced

A majority of Sports Direct independent shareholders remain sceptical of governance improvements at the troubled retailer and last week voted against the re-election of its chairman, Keith Hellawell. Under UK listing rules, the retailer had been forced to hold a general meeting to vote again on his reappointment after most independent shareholders voted against him at the company’s AGM last September.

Sports Direct Logo

Sports Direct shareholders still fail to back Hellawell

The proxy voting results show that 54% of Sports Direct shareholders voted against Hellawell’s re-appointment. However, he continues to have the full support of Mike Ashley, the majority shareholder, founder and chief executive of Sports Direct which meant overall there was a 80% backing for the chairman.

Hellawell had come under criticism because of the corporate governance failings that emerged at the company over the last year. These were identified in a report by MPs and a separate report by the company’s law firm RPC. Hellawell has said that if he fails to receive the full support of the independent shareholders at the 2017 AGM he would resign with immediate effect.

Ashley  said: “Keith has my full backing and will be continuing in his role on the basis that he has the unanimous support of the board. I note that many of those who voted against Keith have acknowledged that we have made positive progress since the AGM.”

In its latest results in December the company announced a drop in profits and Hellawell hit out against what he described as an extreme political, union and media campaign waged against this company which he said had  damaged its reputation, staff morale and influenced its customers.

The company is due to announce the details of an independent review of its corporate governance which was demanded by investors last year. Sports Direct has been engaging with investors, through the Investors Forum, in order to get the review under way and said in December that it would announce the review chairman shortly.

Speaking to the Guardian newspaper, Sarah Wilson, chief executive of the shareholder proxy voting service Manifest, said Hellawell must stand aside at the September 2017 AGM and Sports Direct had to make big changes: “They have eight months until the next AGM to get new people in. They are losing goodwill and this is an existential threat to the business, and they have to respond to do something about it.”

What do you think?