- Mike Ashley bows to shareholder pressure in latest concession
- Retailer seeking to assuage worries over corporate governance
Peace may finally be on the horizon at Sports Direct International Plc.
After years of tension between majority owner Mike Ashley and his minority shareholders, the U.K. retailer said Tuesday that it will hire an independent party to conduct a review of its working practices and corporate governance, taking the task away from its own adviser, law firm RPC.
The step earned approval from investors such as Aberdeen Asset Management, which is among those that have been vocal in their criticism. “There is much more work to be done, but hopefully today is the first step on the long journey to rebuild investor trust,” Paul Lee, head of corporate governance at Aberdeen, said by e-mail.
Shareholder Royal London Asset Management also welcomed the move, while still expressing reservations over the retailer’s commitment to change.
“Ultimately we believe no independent review can replace the need for a fundamental change in leadership and culture at the group and we still lack any confidence this will occur,” Mike Fox, head of sustainable investments, said in a statement.
Ashley is taking shareholder concerns more seriously after allegations of shortcomings in labor practices and inadequate corporate governance led to a vote against the reappointment of Chairman Keith Hellawell at this month’s annual general meeting. The Investor Forum, whose members represent about 27 percent of Sports Direct’s minority shareholders, said last month that RPC’s appointment meant a review wouldn’t be independent.
The company’s shares rose 2 percent to 287.7 pence at 12:45 p.m. in London. The stock has lost about half its value this year amid slumping profit.
Sports Direct said the decision to replace RPC, which this year completed an initial review, followed “careful consideration to concerns raised by independent shareholders.” RPC will continue to work as legal adviser to Sports Direct, the company said.
Separately, the retailer said there will be a democratic vote among its staff to appoint a workers’ representative to the board.