The Investor Forum, which has £14.5 trillion of investments, says the company should conduct a thorough independent review.
Investors are uncomfortable about the company’s illegal underpayment of staff and an unusual arrangement with founder Mike Ashley’s brother over deliveries, reports The BBC.
Concerns have been raised at the highest level.
The Investor Forum wants Sports Direct to address a comprehensive list of issues:
- Corporate governance and board oversight
- Related party transactions
- Employment practices
- Acquisition strategy and due diligence
- and oversight of key supplier relationships and store management
The organisation says this “highly unusual” public call for a review is necessary to rebuild the company’s reputation.
The public call comes as Sports Direct’s board faces mounting pressure.
In June, Mike Ashley faced intensive questioning by MPs over the way his company was run, following a Guardian investigation that revealed his staff were being kept at work for searches for such long periods of time that their pay dropped below the legal minimum wage.
MPs also heard workers’ stories alleging they were so worried about their jobs that they feared to call in sick, resulting in a number of ambulances being called to the warehouse in Shirebrook in Derbyshire.
This week, the revelation of the distribution arrangement with Mr Ashley’s brother has drawn the attention of City regulator the Financial Reporting Council, which is said to be looking into the agreement and why it was not disclosed in Sport Direct’s annual report.
Major shareholder Royal London Asset Management recently said it had “lost confidence” in the directors of the retailer to protect the interests of investors other than Mr Ashley, who owns more than 50 per cent of the business he founded in 1982.
Shareholders will be able to voice their feelings about the company at the annual shareholders meeting on 7 September, which it said on Wednesday would be open to all interested parties – an unusual move for any company, whose AGM is generally restricted to those who own a stake in the business.
They will have no active voice in proceedings.
A number of those that do are expected to rebel against the board, particularly against the reappointment of Keith Hellawell as chairman.
Mike Ashley is known for being publicity-shy, but outspoken in his views.
Independent retail analyst Nick Bubb commented: “It remains to be seen how ‘open’ Sports Direct will be at its ‘open day’ on 7 September, but management have clearly calculated that the company’s reputation is so low that it can only get better, despite the constant risk that Mike Ashley says something stupid.”
The company’s shares were down 2 per cent in early Thursday trading at 304p. They have fallen around 50 per cent since the start of this year.
