Sports Direct braces for shareholder rebellion at AGM
today Aug 30, 2019
Mike Ashley’s reelection as chief executive officer of Sports Direct could face opposition from shareholders at the company’s annual general meeting on 11 September after three advisory firms recommended to oust him from the board.
Institutional Shareholder Services joined Pirc and Glass Lewis’ calls for investors to vote against Ashley’s reelection amid “significant operational and governance concerns” at the British group.
This is the latest blow to the company after a chain of controversies, including the resignation of auditor Grant Thornton after the group was slapped with an unexpected €674m (£605m) Belgian tax bill which delayed its latest annual results.
ISS said Sports Direct’s 2018 acquisition of the struggling House of Fraser chain had “led to concerns about the company’s viability as a whole,” reported The Guardian. In July Sports Direct admitted that the retailer’s problems were “terminal” and said it regrets rescuing the national chain.
The ISS report also raised concerns over further Sports Direct acquisitions and financial deals with Ashley’s brother and his daughter’s partner, Michael Murray.
The report said: “ISS’s policy for UK companies provides for withholding support from directors under extraordinary circumstances for material failures of governance, stewardship, or risk oversight. Recent events at Sports Direct appear to indicate that in this case, all three criteria apply. A vote against the re-election of Mike Ashley is therefore considered appropriate.”
Shareholders will come together at the firm’s annual general meeting on 11 September to vote on a series of resolutions, including Mike Ashley’s reelection. He founded the business in 1982 and owns 62% of the company.
ISS’ calls echo that of Glass Lewis, another shareholder advisory firm, which said on Tuesday that Mike Ashley is “inextricably linked with the myriad controversies, past and ongoing” which have caused “serious reputational damage” to Sports Direct.
Pirc also advised blocking the re-election of chairman David Daly and directors Richard Bottomley, Nicola Frampton and David Brayshaw.
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