Mike Ashley, the founder of scandal-hit Sports Direct, has come under renewed pressure to review the company’s governance and employment practices after a group of some of the world’s highest profile investors called for an independent inquiry into how the business is run.
The Investor Forum, a group of fund managers which controls assets worth £14.5 trillion, requested the board to commit to an independent and comprehensive review to begin rebuilding the confidence of shareholders.
It is the first time the group, which represents 27 per cent of Sport’s Direct’s shareholders and asset management groups such as BlackRock and Allianz, voiced concerns about a company over corporate governance failings in public.
“It is highly unusual for the Investor Forum to consider it necessary to make public their concerns and recommendations in this way. In prior situations we have always managed to work privately with companies to create effective long term solutions,” Andy Griffiths, executive director of the Investor Forum.
“We do not take this step lightly and, whilst we welcome Sport Direct's move to hold an open day, we still have not received an appropriate level of commitment to respond to investor concerns and, as a result, the usual options have been exhausted,” he added.
The public call comes as frustration from Sports Direct shareholders is growing.
Large shareholders have warned they are considering voting against the reappointment of the company’s chairman Keith Hellawell and other senior board members at the retailer’s annual general meeting on 7 September.
Sports Direct's latest controversy, first reported by the Financial Times, concerns the brother of founder and majority shareholder Mike Ashley. A company owned by John Ashley – Mike’s elder brother – has been paid for a role handling overseas deliveries for the retailer. The arrangement was not disclosed in the company’s annual report and has drawn attention from the Financial Reporting Council.
Sports Direct, whose working practices were compared to a “Victorian workhouse” by a committee of MPs in July, also said it would publish an independent report into working conditions at the start of September.
In June, Ashley admitted at a parliamentary hearing that he had broken the law by failing to pay the national minimum wage to staff.
The company's shares were down 2 per cent in early Thursday trading at 304p before recovering slightly in mid-morning trading.
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