Pressure is mounting on under-fire Sports Direct chairman Keith Hellawell after an influential shareholder group recommended investors oppose his re-election.
Institutional Shareholder Services (ISS) said Mr Hellawell, a former West Yorkshire Police chief constable who lives in Huddersfield, has overseen “catalogue of governance and operational failures”.
The group said ahead of an investor vote tomorrow (Thursday): “As chairman, Keith Hellawell has overseen a period of serious operational, governance, and risk oversight concerns which have materially affected the company’s outlook and damaged shareholder value. As such, and in light of all of the above factors, his re-election does not warrant support at this time.
“In line with the recommendation issued ahead of the AGM, a vote against the re-election of the chairman remains warranted.”
Former Drugs Tsar Mr Hellawell has presided over a long list of scandals and controversies at Sports Direct.
Last year billionaire tycoon Mike Ashley, Sports Direct’s chief executive and majority owner, 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 - only to be replaced by Mr Ashley.
The Newcastle United FC owner also 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 also collapsed 57% in the first half of the year, although it did not stop Mr Ashley splashing out on a new corporate jet.
Independent shareholders vented their anger at Mr Hellawell’s stewardship at September’s tumultuous annual general meeting (AGM), with 53% voting against his reappointment.
But he received the backing of more than 81% of all shareholders, who include Mr Ashley.
Tomorrow’s vote is expected to go a similar way, although Mr Hellawell has gone on record stating that he will stand down from the role should he be voted down again by minority shareholders at the 2017 AGM.
ISS also raised concerns over Mr Ashley’s familial dealings.
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, Mr Ashley announced in December that the company has entered into an agreement with Double Take Limited, in which his daughter Matilda is a director.
ISS said: “Although the company has shown some willingness to make positive steps since the AGM, there remains a cloud of uncertainty at Sports Direct.
“It is also notable that, since the AGM, the company has disclosed a further related party relationship with a member of Mike Ashley’s family - this remains an area of ongoing concern, and again raises doubts around the effectiveness of the non-executive board.”