LONDON (Reuters) – Mike Ashley, the billionaire founder and majority owner of Sports Direct (SPD.L), faces a potential shareholder revolt at the company’s annual meeting on Wednesday, though he will not be present to hear any protests.
Sports Direct last month said that its board had agreed that CEO Ashley, who owns 61 percent of the sportswear retailer, would not be required to attend the meeting in central London because of “overriding demands for his time”.
Ashley, who also owns English Premier League soccer club Newcastle United, did not attend last year’s meeting either.
Three shareholder advisory groups – Pensions & Investment Research Consultants (Pirc), Institutional Shareholder Services and Glass Lewis & Co – have urged investors to vote against the re-election of Ashley and the company’s chairman, Keith Hellawell, over Sports Direct’s alleged poor corporate governance and continuing concerns about employment practices.
“(Ashley’s) position on the board and level of shareholding raises significant concerns about his influence on the board and whether the other directors can objectively challenge and influence the board’s decision-making process,” Pirc said.
It also still has serious concerns about employment conditions at the retailer, which came under fire in a report by British lawmakers in 2016. The report highlighted “appalling working practices at both the Sports Direct shops and warehouses”.
Pirc considered Sports Direct’s response to the report as “insufficient”.
Concerns over the role of Michael Murray, the partner of Ashley’s daughter, who provides property consultancy services to Sports Direct and holds the title “head of elevation”, were also raised.
Hellawell, a former police chief constable and government drugs czar who has been Sports Direct chairman for nine years, is criticised by the investor advisory groups for his lack of leadership.
The annual meeting comes a month after Sports Direct bought department store chain House of Fraser out of administration in a deal that drew criticism from some analysts.
The rationale behind that deal remains unclear and was surprising to some analysts, given that Sports Direct’s financial performance had already been thrown into the spotlight by a 73 percent slump in annual profit after it booked an 85 million pound charge for a disastrous investment in department store group Debenhams (DEBL).
On Tuesday shares in Sports Direct fell by as much as 9.6 percent after a high court ruled that it must share documents related to an investigation by the accounting regulator into its auditor’s conduct.