Pressure on Sports Direct chairman Keith Hellawell has intensified after shareholders voiced their opposition to his re-election ahead of a vote next week.
Hellawell has promised to step down if he does not receive the support of a majority of independent shareholders at the annual general meeting on Wednesday, despite having presided over various controversies sportswear chain.
Royal London Asset Management and Standard Life Aberdeen have indicated they would oppose his reappointment to the chairman role at the Mike Ashley-controlled retail company.
“Sports Direct continues to show a serious disregard for shareholders’ views about the governance and management of the company,” Royal London’s Ashley Hamilton Claxton said.
“We have no confidence in the ability of the firm’s chairman and non-executive directors to provide effective oversight and protect the interests of minority investors.
“For this reason, we will be voting against the firm’s CEO, chairman of the board and the lead independent director.”
Claxton’s comments came after trio of shareholder advisory firms – Institutional Shareholder Services, PIRC and Glass Lewis – recommended that investors vote against Hellawell’s reappointment.
Meanwhile, Phoenix Asset Management Partners and Aurora Investment Trust intend to vote for his reappointment.
Among the chief concerns of shareholders is Hellawell’s inability to rein in Ashley, who has seemingly been at the forefront of Sports Direct’s controversies.
Last year Ashley was grilled by MPs over “Victorian” working conditions at the retailer’s Shirebrook warehouse, before the company hosted a controversial “open day” at its headquarters.
Its chief executive Dave Forsey also quit – only to be replaced by Ashley himself, who has majority ownership in the company.
Ashley has since admitted to paying some staff below the minimum wage and was taken to task over the company’s use of zero-hour contracts.
Late last year, the Financial Reporting Council began investigating Sports Direct over its relationship with a business owned by Ashley’s brother.
Ashley also announced in December that Sports Direct had entered into an agreement with Double Take Limited, of which his daughter Matilda is a director.
In the meantime, profits at Sports Direct have tumbled and shareholders have become restless.
In January, Hellawell saw 54 per cent of independent shareholders vote against his reappointment and was only saved by Ashley, who owns 55 per cent of the company and whose backing meant he was re-elected.