LONDON, April 4 Sports Direct's
appointment of a law firm with close links to the retailer for a
governance review is an issue for shareholder Legal & General
Investment Management, LGIM said in its annual report on
corporate governance on Tuesday.
LGIM, the fund arm of insurer Legal & General and
one of the largest investors in British companies, said it had
pushed for the review into Sports Direct's labour practices
after British members of parliament condemned the retailer's
"Victorian" working conditions, LGIM said in the report.
Law firm Reynolds Porter Chamberlain published the review
into Sports Direct's governance in September 2016.
"Concerns remain about the appointment of the company’s
long-term law firm to carry out the review given its close links
with the company," LGIM said in the governance report. It also
said it would continue to watch the company.
LGIM also said it had voted against the re-election of
Sports Direct chairman Keith Hellawell in January 2017.
Hellawell was re-elected after company founder Mike Ashley
"We will continue to engage with the company and monitor the
ongoing issues," LGIM said.
LGFM is one of several investors arguing for higher
corporate governance standards at British companies. It said in
the annual report it had voted against at least one resolution
at shareholder meetings of 23 percent of British companies in
2016, up from 18 percent in 2015.
LGIM also said it was "currently engaged" with the board of
GlaxoSmithKline about its new pay policy, after opposing
the drug company's pay report in 2016 due to concerns over the
size of executive bonuses.
GSK is one of a large number of British companies seeking
shareholder approval for new pay policies at their respective
annual shareholder meetings over the coming months.
Shareholders have already given the green light to some new
company pay plans, but some have been forced to think again,
including Imperial Brands, which withdrew its proposal
after shareholder opposition.
LGIM has previously called for companies to publish the pay
ratio between the median employee and the chief executive.
"The increasing pay gap is having an impact on society and
that is why we are taking a stronger line on bonus awards and
the need for companies to publish their pay ratio," LGIM
director of corporate governance Sacha Sadan said.
(Reporting by Carolyn Cohn and Simon Jessop. Editing by Jane