Stan Life leads vote against Sports Direct board

Euan Stirling

More than half of the independent shareholders of controversial retailer Sports Direct voted against re-electing Keith Hellawell as chairman at a stormy annual general meeting.

Edinburgh-based fund manager Standard Life Investments (SLI), which controls a 5.8% stake in Sports Direct, said it voted against the reappointment of all of the retailer’s non-executive directors and against the company’s remuneration report.

Sports Direct’s founder Mike Ashley faced down a torrent of criticism from shareholders at the meeting.

Ashley ignored shareholder demands for Hellawell to step down.

But almost 53% of of independent shareholders voted against keeping Hellawell as chairman.

“The company is disappointed to note that the resolution to re-elect the chairman was not approved by a majority of the company’s independent shareholders, and confirms that in accordance with the UKLA Listing Rules this resolution will be put to shareholders of the company at a general meeting to be held within 90 and 120 days of today’s date,” said the company.

“Dr Keith Hellawell will remain in his role until the date of that general meeting.”

Hellawell said: “I take this clear message from our independent shareholders seriously, and I will do my best to address their concerns and earn their confidence over the next year. 

“I have confirmed today that should I not receive the support of a majority of our independent shareholders at next year’s AGM, I will step down at that time with immediate effect.”

Sports Direct has been under scrutiny for months over its employment practices. Its share price has fallen more than 50% in the past year.

Euan Stirling, Standard Life Investments’ head of stewardship and environmental, social and governance investment at said: “In order to arrive at the correct structural conclusions, we believe that a full and independent review of governance at the company is required, along with a commitment to publish and act on the review’s conclusions and recommendations in the next twelve months.

“We would like to ask the board to commit to this course of action in order to achieve the associated objectives of structural change and long-term value creation.”

Stirling said SLI were longstanding shareholders in the company and had engaged with senior executives and non-executives over many years — “sadly to little effect.”

He said the responses to SLI’s enquiries had been either unconvincing or non-existent.

Stirling said SLI appreciated the scale and the market position of Sports Direct and its long-term value creation potential. “That is why we remain fully-engaged shareholders.”

But in order to achieve that potential, Stirling said SLI increasingly believed that a structural change in the way that the company was governed was now required.

Stirling said SLI would like to see Ashley “with a role, title and responsibilities that reflect his influence” as majority shareholder and founder of the business.

“And we would like to see that pivotal role supported, as well as challenged, by a group of talented and experienced executives.

“It is our opinion that even then, substantial strengthening of the non-executive members of the board will be required, particularly in the crucial role of chairman.”