Pressure growing for independent review into practices at Sports Direct
Pressure is mounting on retail tycoon Mike Ashley after a shareholder group added its name to the growing list of investors calling for an independent review into working practices and a shake up of corporate governance at Sports Direct.
The Local Authority Pension Fund Forum (LAPFF) said it would support a resolution by Unite the union at the retailer’s annual general meeting (AGM) demanding an independent review of Sports Direct’s human capital strategy.
The LAPFF said it had also sent a briefing to its member funds raising concerns about a workplace review backed by Mr Ashley and overseen by Sport Direct’s lawyers RPC.
Kieran Quinn, chairman of LAPFF, said: “LAPFF’s view is that responsible business practices by companies lead to sustainable returns for investors over the long-term. We are worried that this view is not shared by Sports Direct.
“LAPFF’s hope is that an independent human capital strategy review will rectify any workplace practices deemed inappropriate and will help Sports Direct to move forward from the reputational and financial damage it has suffered.”
The intervention comes ahead of the retailer’s AGM on September 7 and amid fresh concerns over its corporate governance at Sports Direct after it was revealed that its accounts fail to disclose that international deliveries are run by Mr Ashley’s brother, John.
Sports Direct pays Barlin Delivery – run by the founder’s older brother – a share of the revenues generated by orders that are dispatched overseas.
Royal London Asset Management, which owns a 0.18% stake in Sports Direct, said on Monday that it had ”lost confidence” in the retailer’s non-executive directors and their ability to protect the interest of minority shareholders.
It followed calls from shareholder lobby group Pensions Investment and Research Consultants (Pirc), urging investors to oppose Mr Ashley’s re-appointment as executive deputy chairman following demands from MPs that he be ”held accountable” for the ”appalling” practices at its shops and warehouses.
Sports Direct announced last week that thousands of its warehouse workers will collectively be handed £1 million in back pay after the retailer came clean over not paying the national minimum wage.
Mr Ashley told MPs from the Business Select Committee in June that staff were not paid during security searches at the end of their shift, meaning they took home less than the minimum amount required by law.
The under-fire retailer said in a statement last week that the findings of a separate independent review carried out by RPC would be published in the week beginning September 5 and it would conduct a review of its board of directors by next April.