Sports Direct risks fresh shareholder anger with review appointment

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Sports Direct could cause further controversy with shareholders after appointing a law firm that has previously worked for the retailer to conduct a review of its corporate governance.

The retailer – whose working practices were exposed by a Guardian investigation in 2015 – had pledged not use Reynolds Porter Chamberlain (RPC) for the review after protests from investors.

In September, Sports Direct said an independent party other than RPC would conduct the review, which was intended to look at its boardroom structure and other management issues.
Two candidates put forward by the Investor Forum to lead the review had pulled out. The Investor Forum coordinates behind the scenes negotiations between shareholders and companies. Up to 20 candidates are thought to have been considered.

But on Friday, in an announcement after the stock market had closed, the company, which was founded by Mike Ashley, said it would appoint RPC to lead the much anticipated review. RPC has worked extensively for Ashley and Sports Direct, which is one of the law firm’s biggest clients.

Sports Direct said: “This decision has been taken in the light of recent frustrations over delays in appointing an independent party other than RPC to lead the review. These delays were due to the fact that we have twice accepted candidates who were put forward to chair the review by the Investor Forum, only for those candidates to subsequently be withdrawn.

“We believe any further delays would place an unreasonable burden on the business at a time when the company should be fully focused on delivering its strategic priorities as we build towards our medium and long term aspiration to become the ‘Selfridges’ of sports retail.”

The Investor Forum responded: “We note the Sports Direct statement and will be discussing its implications with our members.”

Sports Direct’s statement, which included a pledge for an external evaluation of the board later this year, follows the move earlier this month by shareholders to again reject Keith Hellawell as chairman of the retailer.

At a specially convened meeting 54% of independent shareholders voted against the former police chief constable’s re-election to the board. He held on to the post after winning 81% of the vote, helped by the support of Ashley, who owns 55% of the shares.

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