Shareholders ratchet up pressure on Sports Direct

Sportswear company’s chairman and directors face direct challenge led by Legal & General

LEGAL & General, the UK’s biggest pension fund manager, has come out swinging against Sports Direct by revealing it will vote against the retailer’s chairman and all its non-executive directors at the sportswear chain’s meeting next month.

It will be the third consecutive year the largest investor in UK companies has voted against Keith Hellawell and in that time Sports Direct’s shares have more than halved.

Sacha Sadan, director of corporate governance at Legal & General Investment Management, said the firm would be also voting against all of the non-executive directors “as we believe that Sports Direct needs a stronger body of independent non-executive directors to ensure the business is run in the interest of all shareholders.

“We are disappointed that there have been no new non-executive board appointments in the past five years.”

Mr Sadan also confirmed that he would be supporting a resolution, proposed by trade unions, to form an independent review of Sports Direct’s labour practices.

The retailer, which was relegated from the FTSE 100 earlier this year, had recommended investors vote against the resolution and said it would be a “distraction” to the work already being undertaken by law firm RPC.

Sports Direct is due to face investors on September 7 and has taken the unusual step of using online social network Eventbrite to invite shareholders, the press and members of the public to attend the meeting and visit its ware- house, which has been likened to a “Victorian workhouse” by MPs.

“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,” the company said in reaction to the most recent City criticism.

The company has been vilified after an investigation into workplace practices revealed a “six strikes and you’re out policy” and that staff were being paid below the minimum wage. Sports Direct has come to an agreement with HM Revenues and Custom to hand £1m to staff in back pay, after Mr Ashley’s admission that it had broken the law.

Investor Forum, an influential body that represents £14 trillion of assets and whose members own a combined 12pc stake in Sports Direct, has also taken the unprecedented step of publicly criticising its corporate governance.

“Sports Direct’s employment practices have been a lightning rod but these are all symptoms of failure of corporate governance,” the body said.

The forum said it wanted an independent review of the company’s entire corporate governance framework to be launched at the AGM. Andy Griffiths, its chief executive, said engagement from the Sports Direct board had been “underwhelming”.

Steve Turner, of Unite, said: “Sports Direct has achieved a rare feat in uniting the City, politicians and Unite in the need to address deep seated problems with its work practices and corporate governance.”