Chairman of Sports Direct faces calls to quit

Three advisory groups want a shareholder vote against Keith Hellawell at this week’s annual meeting

SPORTS Direct’s chairman could be toppled next week after three shareholder advisory groups recommended investors vote against his re-election.

Keith Hellawell, a former policeman and drugs tsar, has committed to stepping down from the board if the majority of independent investors revolt again at Sports Direct’s annual meeting on Wednesday.

He was saved earlier this year, despite 54pc of independent shareholders rebelling against him, after Sports Direct founder Mike Ashley used his majority shareholding to support him in a separate vote.

Since last year’s annual meeting, Sports Direct’s boardroom has undergone huge upheaval with long-serving lieutenant Dave Forsey abruptly quitting, acting finance chief Matt Pearson stepping down, and sole female director Claire Jenkins departing.

The company has hired its first permanent finance boss in four years, John Kempster, and bolstered its board with independent directors David Daly, a former Nike stalwart, and ex-banker David Brayshaw.

However, investors including Legal & General Investment Management have not been soothed by the string of changes. “Although we are encouraged by some of the positive steps made over the past year, such as refreshing the board and labour relations, we believe progress is not sufficient to warrant supporting the chairman’s re-election this year,” said Sacha Sadan, director of corporate governance at LGIM, which owns a 0.8pc stake.

“We believe that all shareholders should continue to send a strong signal to Sports Direct calling for change.”

Mr Hellawell, who has chaired the company for eight years, has been accused of being an “ineffective counterweight to Mr Ashley’s considerable control of the company” by influential proxy advisory firm Glass Lewis.

Institutional Shareholder Services (ISS) and Pirc have also recommended investors vote against Mr Hellawell.

Pirc highlighted a string of eyebrowraising decisions by the company, such as buying a £40m corporate jet, entering into a make-up licensing agreement with Mr Ashley’s daughter, and employing Michael Murray – the partner of the tycoon’s other daughter – to lead Sports Direct’s property team, as reasons to push for a change.

“It is important for the shareholders to be confident about the board’s ability to represent their best interests and not those of the controlling shareholder. This is no longer the case with the existing chairman and an oppose vote is therefore recommended,” said Pirc’s report.

ISS has also criticised Mr Hellawell for reneging on a pledge to investors to commission an independent review of Sports Direct’s working practices and corporate governance.