INDEPENDENT shareholders have vented their anger at under-fire Sports Direct chairman Keith Hellawell, with 54 per cent voting against his reappointment.
But the former West Yorkshire Police chief constable and government drugs tsar will remain in place after receiving the backing of 80.92 per cent of all shareholders, which includes Sports Direct founder Mike Ashley, who owns 55 per cent of the company.
Hellawell has been accused by shareholders of overseeing a “catalogue of governance and operational failures” and his reappointment is likely to irk some of the group’s investors, with Aberdeen Asset Management and Royal London having publicly opposed him prior to the vote.
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But Ashley said: “Keith has my full backing and will be continuing in his role on the basis that he has the unanimous support of the board. I note that many of those who voted against Keith have acknowledged that we have made positive progress since the AGM.”
Thursday’s vote was triggered after more than half of the retailer’s independent shareholders voted against Hellawell’s reappointment at September’s tumultuous AGM. Hellawell has gone on record to say he will stand down from the role should he be voted down again by minority shareholders at the 2017 AGM. The 74-year-old has presided over a long list of scandals and controversies at Sports Direct.
Last year Ashley was hauled before MPs to be grilled over “Victorian” working conditions at the retailer’s warehouse, the company hosted a farcical “open day” at its headquarters, and its chief executive Dave Forsey quit – to be replaced by Ashley.
The Newcastle United FC owner admitted paying some staff below the minimum wage and was taken to task over the firm’s controversial use of zero-hour contracts.
Profits at the group collapsed 57 per cent in the first half of the year, although it did not stop Ashley splashing out on a new corporate jet.
Late last year, the Financial Reporting Council announced an investigation into Sports Direct over the retailer’s relationship with a firm owned by the tycoon’s brother. Undeterred, Ashley announced in December that the company had entered into an agreement with Double Take Limited, in which his daughter Matilda is a director. Paul Lee, head of corporate governance at Aberdeen Asset Management, said the result of the vote was “no surprise” given the backing Hellawell had from Ashley.
He added: “The real test will come at the AGM, when Hellawell has said he will step down if he does not receive the support of the majority of independent shareholders.
“This is not about personalities but the overall governance of the business. Much needs to be delivered by the AGM to win the support of independent shareholders.
“Progress needs to be made on a genuinely independent review of working practices and governance, the company needs to deliver on its undertakings to its workforce, including appointing an employee representative director, and it needs to enhance its reporting.
“Most importantly, we need to see progress towards appointing a new executive team with the necessary skill set and experience to manage a company of Sports Direct’s size and scale. Poor governance and oversight has dogged the company for far too long and more change is required. We welcome the board’s recognition of this but words must now be matched with deeds.”