Sports Direct has given in to demands from asset management body the Investor Forum and ditched its legal advisor to carry out a review on the company’s corporate governance and working practices due to a conflict of interest.
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The company which has been accused of allowing Victorian workhouse conditions and or paying its workers below the minimum wage has already commissioned a preliminary by law firm Reynolds Porter Chamberlain (RPC).
The review, announced earlier this month, will no longer be headed by company adviser RPC, the United Kingdom retailer said in a statement Tuesday.
Sports Direct said its board had made the decision after listening to shareholder feedback at the recent AGM and during subsequent consultation with a number of the company’s long-standing shareholders via the Investor Forum.
The move comes after independent shareholders rebelled at the retailer’s annual meeting, with 53% opposing the re-election of chairman Keith Hellawell.
The company has faced sharp criticism over corporate governance and working practices at its warehouse in Shirebrook, Derbyshire, after it was revealed that some warehouse staff were paid below the national minimum wage. However, the reforms do not apply to hundreds of agency staff.
Separately, Sports Direct said there will be a democratic vote among staff directly employed by the retailer to appoint a workers’ representative to its board. The Business, Innovation and Skills committee said Sports Direct had treated staff like “commodities rather than human beings”.
And Mr Ashley said he was unaware of the problems at the warehouse.
The retail chain has come under huge scrutiny in the a year ago over workplace practices at its giant Shirebrook warehouse in Derbyshire, while a string of institutional investors have lined up to criticise the company’s corporate governance.
Last month the Investor Forum, which holds a 12 per cent stake in Sports Direct, issued a rare public statement outlining its concerns about the working practices at Sports Direct and the influence founder and 55 per cent shareholder Mike Ashley has on how the group operates.
“The board will continue constructive dialogue with the company’s independent shareholders in order to reach agreement regarding the specific nature and timing of the review”, it added.
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“This is only the beginning of a process which must see the end of exploitation at Britain’s biggest sports firm”.
