Sports Direct chairman defies calls to quit
Keith Hellawell has vowed to continue as chairman of Sports Direct in a snub to shareholders and campaigners calling for his head after the retailer’s relegation from the FTSE 100.
In an interview with the Guardian, the former chief constable suggested the retailer’s difficulties with the City were largely cosmetic, despite concerns over the group’s trading and its treatment of workers – as well as longstanding investor complaints including the influence of 55% shareholder Mike Ashley and the failure to hire a permanent finance director for two years.
Hellawell said: “Yes, I do [think I’m going to stay as chairman] … That is the plan, yes. I think there are a number of issues we are looking at in relation to the way in which we relate to the City – our investor relations certainly need to be improved. The issues in relation to corporate governance are very often overstated and they relate to the time we have been without a finance director, which we are resolving.”
Hellawell’s comments appeared to make light of City concerns about the company’s governance, which have resulted in investors pressing for the retailer to find a new chairman to challenge the dominance of Ashley.
On Wednesday, the Sports Direct shareholder Standard Life said in its annual report into corporate governance report: “In view of the continued failure of [Sports Direct’s] remuneration committee to address our concerns and in view of some wider concerns about the governance of the company, we voted against the re-election of the chairman, the senior independent director and the chairman of the remuneration committee [at the group’s last annual meeting in September] to emphasise the importance we attach to these matters.”
The protest votes came on top of comments at the time by another shareholder, Royal London Asset Management, which said it had lost confidence in the board. Before the meeting, the Investment Association issued a red-top alert on the company, its most severe warning to investors. Of Sports Direct’s independent shareholders who voted, almost a third refused to back the re-election of Hellawell as chairman.
Steve Turner, assistant general secretary of the Unite union, which has led a long-running campaign on the treatment of Sports Direct workers, said: “Keith Hellawell needs to consider his position. On his watch Sports Direct has become the poster boy for bad British business with a reputation for shady corporate governance and draconian working practices.
“The retailer needs to heed the message being delivered by the City with a fundamental rethink of its corporate structures and the way it treats its workforce. Otherwise investors will continue to turn their backs on a company that brings with it a stench of abuse and malpractice.”
Sports Direct’s relegation from the FTSE 100 was formally confirmed on Wednesday as part of the quarterly reshuffling of stock market indices based on Tuesday night’s closing prices. At that point, Sports Direct was ranked as the 142nd most valuable company on the main list of the London stock exchange, thereby demoting it to the FTSE 250 index of smaller companies.
The relegation came after a torrid three months in which £1.6bn was wiped from the retailer’s value after a slump in the group’s trading and an undercover Guardian investigation that revealed how thousands of temporary Sports Direct warehouse workers were receiving hourly rates in effect below the minimum wage.
The minimum wage disclosures prompted the Institute of Directors to brand the company a “scar on British business” and Labour’s former shadow business secretary Chuka Umunna to file an urgent parliamentary question, which resulted in the business minister, Nick Boles, being summoned to the Commons to answer questions on the scandal.
Sports Direct denied paying less than the minimum wage. It responded by announcing a pay rise for its staff, as well as a review of all agency staff terms and conditions, which was to be overseen by Ashley.
When asked for a progress report on the billionaire’s review, Hellawell said: “I think it’s still under review. He’s looking at a lot of things within the company particularly in relation to the way we reward our staff which, obviously, we regard quite highly. He reported to the last board on the work that was being done and he’ll report to the next board on further developments.
“We meet quite frequently. I think the next scheduled board – we’re probably going to meet within the next three or four weeks.”