Forum hits out at Sports Direct
A GROUP of major stock market investors has turned up the heat on Sports Direct with an unprecedented public attack on the retailer’s corporate governance and working practices.
The Investor Forum, whose 40 members manage £850billion invested in UK shares and which represents 27 per cent of Sports Direct’s independent shareholders through the likes of Legal & General, Aviva, Standard Life and Fidelity, says a “wide-ranging independent review of the entire governance practices” is needed to rebuild confidence.
It declared a report on working practices by Sports Direct’s legal advisers RPC would not be independent, while an external evaluation of its board of directors “fails to reflect the breadth and magnitude of reform that is required”.
Sports Direct, which is majority owned by founder Mike Ashley, pictured, is to open its doors to the public on the day of its annual meeting at its headquarters in Shirebrook, Derbyshire, on 7 September, to enable them to quiz the board.
However, the Forum said: “Governance failings are clearly resulting in declines in operating performance and long term shareholder value. A clear plan of action is urgently required.” It said an independent review should address issues such as board oversight and effectiveness, potential conflicts of interest, employment practices and supplier relationships.
Investor Forum chief executive Andy Griffiths said: “It is highly unusual for us to consider it necessary to make public concerns and recommendations in this way.
“While we welcome Sports Direct’s move to hold an open day, we have not received an appropriate level of commitment to respond to investor concerns and, as a result, the usual options have been exhausted. We remain committed to engaging with the board constructively but this requires the company to acknowledge the need for fundamental reform.”
A Sports Direct spokesman said: “Mike Ashley acknowledges the appreciation of his efforts in terms of hosting an open day. He looks forward to meeting everyone and answering all your questions.”