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Under-fire Sports Direct chairman faces second shareholder vote
January 5, 2017 / 9:23 AM / 9 months ago

Under-fire Sports Direct chairman faces second shareholder vote

LONDON, Jan 5 (Reuters) - Sports Direct investors will vote on the re-election of chairman Keith Hellawell later on Thursday, four months after he was rejected by a majority of independent shareholders who said he had overseen a string of management and governance failures.

Hellawell is likely to win the ballot at a special meeting because he has the support of founder and chief executive Mike Ashley, who owns 55 percent of the sportswear retailer.

However, the 74-year-old former police chief constable and government drugs czar pledged in September he would step down at the next annual shareholder meeting later this year if he once again did not receive the backing of independent investors.

Aberdeen Investment Management plans to vote against Hellawell on Thursday, saying that although the company had made progress since the last meeting, it was still “deeply concerned” about governance.

Hellawell said in September he had offered to resign, but the board had persuaded him to stay to oversee improvements in working practices and independent scrutiny.

Sports Direct was condemned by lawmakers last year for its treatment of workers, including paying some less than the minimum wage for shifts at its warehouse in central England.

An independent report commissioned by the company found “serious shortcomings” in working practices, which it is taking steps to tackle.

Investors, already counting the cost of the damage to the company’s reputation, have also endured a slump in profits at the sportswear retailer, in part caused by Britain’s vote to leave the European Union, which has pushed up its costs. The stock has halved over the last six months.

Shareholder advisory group ISS is also opposed to Hellawell’s re-appointment in the second ballot, called under new rules that give independent shareholders more say.

“As chairman, Keith Hellawell has overseen a period of serious operational, governance, and risk oversight concerns which have materially affected the company’s outlook and damaged shareholder value,” it said. (Reporting by Paul Sandle; Editing by Mark Potter)

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