LONDON (Reuters) - Sports Direct’s (SPD.L) billionaire founder Mike Ashley expects shareholders to vote against paying his brother 11 million pounds in the latest investor stand-off.
The British retailer run by Ashley said on Friday it would hold a general meeting on Dec. 13 after a report by law firm RPC found his brother John was entitled to the money for his work as an IT expert since Sports Direct floated in 2007.
The review, which said John Ashley had not received what he was owed “because of concerns at the time about public relations”, was launched after pressure from shareholder groups.
Independent shareholders would vote on the resolution to pay the 11 million pounds, with Mike Ashley and other board members abstaining from the vote, Sports Direct said in a statement.
“I fully expect that independent shareholders will vote against this proposal due to the passage of time involved, although in my opinion, technically the money is owed and therefore should be paid,” Mike Ashley, who is Sports Direct’s chief executive and a 61 percent shareholder, said.
“It’s important for me to say that if John had owed one pound to Sports Direct, I would have ensured any sum was repaid in full,” he added.
Shareholder Royal London Asset Management said that investors hadn’t been given a “plausible reason” why John Ashley was owed money, and would vote against the resolution.
“We will not be supporting this vote because we feel it is a consequence of poor governance,” Ashley Hamilton Claxton, Head of Responsible Investment at Royal London Asset Management said.
“If appropriate governance measures were in place at Sports Direct in the first place, there would have been a clear and transparent process for paying John Ashley what he was due and there would be no need to review his compensation after the fact.”
The latest showdown comes after years of clashes between shareholders and the board. Chairman Keith Hellawell, blamed by investors for a string of management and governance failures, narrowly survived a vote to oust him in September.
Paul Lee, head of corporate governance at Aberdeen Standard Investments, said that while a decision had not yet been taken, it was “really difficult to see how it’s in our clients’ interest to support the proposal” to pay John Ashley the money.
Reporting by Alistair Smout; Editing by Jason Neely/Edmund Blair/Alexander Smith