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.
Sports Direct says the “360-degree” review will now be carried out by an independent party, it confirmed in a statement released this morning.
Shareholders had worried that RPC, the law firm that was assigned to carry out the review, was not independent having carried out extensive legal work for Sports Direct and its billionaire majority owner Mike Ashley.
Sports Direct also confirms a new workers’ representative on the company’s board will be elected via “democratic staff elections”.
“It is anticipated that all staff directly engaged or employed by Sports Direct may vote, further details of which will be announced at a later date,” the statement read.
The company made specific reference to the Investor Forum several times in the statement, stating the group had facilitated discussions and raised concerns on behalf of a number of shareholders.
The Investor Forum, which represents £14.5trn of assets, took the unusual step of going public with its concerns about Sports Direct in August, due to concerns that they were seeing no action on key corporate governance issues in their meetings with the company.
The Sports Direct statement says: “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.”
“RPC will continue to be a valued legal advisor to Sports Direct, and the board would like to thank RPC for its work on the existing Working Practices Report, which was compiled to the highest standards.”
Despite the conceding to demands on the independent review, Sports Direct defied shareholders earlier this month when chairman Keith Hellawell refused to step down despite 53 per cent of votes counting against him at the AGM.
The firm has also been carrying out a series of share buybacks, which was announced in July and confirmed at its AGM.
The company will purchase up to 5 per cent of outstanding shares totalling £89.5m in the period up to 21 October.