Institutional Shareholder Services, one of Britain’s most powerful shareholder advisors, is trying to boot billionaire Mike Ashley’s out of Sports Direct, the company he founded.
The ISS sent a memo, which was seen by Business Insider, to the £1.8 billion ($2.3 billion) sport retailer’s investors saying that shareholders should oppose Ashley’s re-election as deputy chairman next month at the group’s annual general meeting.
The memo was first reported by Sky News.
The ISS exerts influence over 25% of Sports Direct’s independent shareholders. However, as pointed out by Sky News, this equates just over 10% of the retailer’s issued share capital because Ashley is the majority shareholder.
The group said that, under Ashley’s leadership, there are “serious operational, governance and risk oversight concerns which have come to the fore during the period in review.”
At the end of July, the UK parliament’s Business, Innovation, and Skills Committee on published a report into its investigation of Sports Direct, saying it uncovered “a disturbing picture of the working practices and business model at Sports Direct.”
The report found:
- Workers had effectively been paid below the national minimum wage;
- Some say they were promised permanent contracts in exchange for sexual favours;
- Evidence of staff mistreatment, including being penalised for matters such as taking a short break to drink water and for taking time off work when ill;
- Serious health and safety breaches, with repeated ambulance calls to the Shirebrook warehouse including in one case for a woman who gave birth in the toilet;
- Over reliance on temporary staffing agencies who “do not seem to have a basic understanding of employment law and practices.”
MPs began investigating Sports Direct after an undercover investigation by the Guardian found workers were effectively earning less than minimum wage because they were made to stay for compulsory searches when leaving the warehouse but weren’t paid for this time.
Since then, Sports Direct’s share price has collapsed by nearly 60% over the last year, due to the political pressure and struggling business performance:
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