LONDON, Sept 6 (Reuters) - Sports Direct’s embattled chairman Keith Hellawell could be forced to honour a pledge to step down on Wednesday if independent shareholders don’t back him at the British retailer’s annual meeting.
Investors have blamed Hellawell, a 75-year-old former police chief constable and government drugs czar, for a string of management and governance failures at the sports retailer, as well as for his perceived inability to control Mike Ashley, its billionaire founder and chief executive.
Hellawell only kept his job a year ago thanks to Ashley, who used his majority shareholding to win a vote on his chairman’s re-election.
Ashley, however, will not be there to support Hellawell at this year’s annual general meeting at the company’s offices in Shirebrook, Derbyshire, in central England. The CEO, who owns 61 percent of the company, will be absent due to “conflicting demands for his time in other areas of the business,” the company said last month.
Technically Hellawell needs over 50 percent of total shareholder votes to be re-elected, but he has pledged to step down if he fails to win the backing of a majority of independent shareholders.
Independent investors would welcome a new chairman to speed up reforms of working practices, restructure the board and significantly improve corporate governance. However, given its history Sports Direct may struggle to find a high calibre replacement for Hellawell. It took three years to recruit a permanent finance director.
Hermes Investment Management, Royal London Asset Management and Aberdeen Standard Investments are among independent investors who have said they will vote against Hellawell’s re-election on Wednesday.
“Sports Direct has made some improvements over the last year but there remain significant, entrenched governance problems,” said Paul Lee, Aberdeen Standard Investments head of corporate governance.
“We still don’t have confidence that management is being properly and effectively overseen.”
Sports Direct was heavily criticised last year by lawmakers for its treatment of workers, including paying some less than the minimum wage for shifts at its main warehouse.
Shareholders have also had to endure a slump in profits, in part caused by the weaker pound following last year’s Brexit vote.
Last September 54 percent of the independent votes cast at the AGM opposed Hellawell’s re-election.
That prompted another ballot at a special meeting in January, at which the same proportion of independent votes were lodged against Hellawell. However, his re-election was a foregone conclusion because he had the support of Ashley. (Reporting by James Davey and Paul Sandle; Editing by Susan Fenton)