Shares in Mike Ashley's controversial sporting goods company Sports Direct (SPD) fell 10 per cent on the day of the company's annual meeting, which was held this week alongside an 'open day' for investors at the group's Shirebrook warehousing facility.
Just a day earlier, a report from law firm RPC revealed "significant shortcomings" in Sports Direct's corporate governance policies and employment practices. The board immediately promised to rectify these, although it said a more thorough investigation must also be conducted - findings from which won't be available until 2017 at the earliest. For now, the board - which includes majority shareholder Mr Ashley - has voted for chairman Keith Hellawell to stay in his role despite his offer to resign.
Despite Sports Direct's best efforts to brush the concerns aside, institutional investors are becoming increasingly irritated by the group's lack of reform. Standard Life Investments, the second-largest shareholder with a 5.8 per cent stake, voted against the company's remuneration report and against the reappointment of all of the non-executive directors. L&G Investments is also understood to have done the same at the meeting. Euan Stirling, head of stewardship and environmental, social and governance investment at Standard Life, wrote an open letter to the Sports Direct board claiming attempts to engage with it had "little effect" and responses to enquiries had been "either unconvincing or non-existent".
While Mr Stirling said he still believes in the long-term potential for the company, he insisted a "structural change in the way the company is governed is now required". This includes giving Mr Ashley a role, title and responsibilities "that reflect his influence" as majority shareholder and founder of the business but that a "group of talented and experienced executives" are also needed to challenge him when needed.
Calls still stand more generally for Sports Direct to conduct a thorough - but most importantly independent - inquiry into its governance structure given the criticisms over its existing working relationship with RPC.
