Sports Direct is facing a shareholder backlash despite promising to change some of its more outdated working conditions the sportswear retailer has forced on staff.
But despite the promised changes, Standard Life Investments, which owns 5.8% of shares in the clothing retailer, voted against the company pay report and reappointment of all non-executive directors, because it believes that founder Mike Ashley needs more independent and experienced non-executives around him.
The shareholder, one of the biggest after Ashley, said Ashley should have “a role, title and responsibilities that reflect his influence as majority shareholder and founder of the business”.
Standard Life has taken this tough approach because despite trying to engage with executives over many years the board has paid little or no attention to their enquiries.
“We are longstanding shareholders in the company and have engaged with senior executives and non-executives over many years, sadly to little effect. The responses to our enquiries have been either unconvincing or non-existent,” Euan Stirling, head of stewardship and governance at Standard Life Investments, said in a statement to Sports Direct chairman.
Standard Life said structural change was necessary at Sports Direct if the company is to achieve the “long-term value creation potential”, the shareholder believes it has.
“Tight cost control can be an attractive feature of a business. However, taken too far, and with a focus on the short-term, it can and does result in the starvation of investment in talent, facilities and infrastructure which can leave a business vulnerable to its competitors and its own weaknesses,” Stirling said.
Sports Direct announced on Tuesday that it was to end its controversial zero-hours contracts at one of its warehouse, and put a workers’ representative on its board.
Ashley apologised to staff following the publication of an internal report which found a string of serious shortcomings in regards to working practices, and said he wanted to make the company “one of the best employers in Britain”.
In a letter to Sports Direct workers, Ashley said: “I have always believed that Sports Direct was built by the great people who work here. I therefore wish to apologise to you on behalf of myself and the board for the shortcomings that have occurred in our working practices, which have been identified in the report.”
Join Financial Director, Oracle and a host of ‘Fast Data’ experts to discover how financial professionals can help create a Fast Data business
Wolseley is to cut up to 800 UK jobs and close around 80 branches costing the company about £100 million, the plumbing and heating supplier said on Tuesday despite reporting rising sales and profits
What can you do to ensure your employees know the company policy and stick to it? Hear from other CFOs and experts in our free-to-view video
The quality of reporting by the UK’s top public companies has slowed despite greater economic uncertainty and increased investor demands for better disclosure, new research has found