British billionaire Mike Ashley came under fire from protesters, employees, and shareholders for the management of the company at Sport Direct’s annual general meeting.
Hargreaves Lansdown, the big pension fund manager that owns stock in Sports Direct, even said Ashley’s company was “atrocious.”
It was so bad that, excluding Ashley, 50.3% of shareholders voted against Sports Direct’s remuneration plan while 23.7% voted against Ashley’s long-standing trusted business partner and company chairman Keith Hellawell.
However, because Ashley owns 55% of Sports Direct his shareholder vote meant that the independent shareholders votes were quashed and all resolutions were passed.
Nothing has changed. In other words, although there was an overwhelming majority of shareholders (who weren’t him) that were against the pay scheme, the management, and many other issues — he holds so much stock in the company that the vote went in his favour anyway.
Meanwhile, outside the building, members of the Unite workers union dressed up in Dickensian style clothing to make a point that Sports Direct’s heavy use of zero-hour contracts was like working in Victorian times. A zero-hour contract is a term of employment that does not guarantee work or provide sick, holiday and maternity pay. Sports Direct is a prolific user of zero-hours contracts with around 90% of its staff under this term of employment
Earlier this year, Unite said on Channel 4’s “Dispatches” that the company’s practices are “a throwback to the Victorian era.”
The whole AGM at the headquarters of Sports Direct in Shirebrook, Derbyshire was a mess, according to the Guardian:
Ashley and the Sports Direct board faced heavy questioning from shareholders at the meeting. Representatives from ShareAction, the pressure group, claimed the company’s workers are “risking their health” for fear of being dismissed.
A representative of Hargreaves Lansdown said Sports Direct’s reputation as an employer was “atrocious” and asked Hellawell why he had not resigned.
Ashley, who is Britain’s 22nd richest person with a £3.5 billion ($US5.4 billion) fortune, has come under fire from politicians and lobby groups over the treatment of his workers. In March, the Institute of Directors, an influential organisation made up of 34,500 British businesses, slammed Ashley’s Sports Direct for being “dysfunctional.”
That same month, politicians branded Sports Direct as a “backstreet outfit” for doing business and treating employees that “might be legal but it is certainly not moral.”
This week Royal London Asset Management, one of the most influential institutional investors in Britain’s capital, made the unprecedented move of hitting out at Ashley publicly through the press.
While Ashley may have quashed any protests today, he will not be able to keep politicians or the financial regulator Financial Conduct Authority at bay, if they decide to look into corporate governance.
“We have lost confidence in the board and are very concerned about the long list of corporate governance failings that have not been addressed,” said Ashley Hamilton Claxton, corporate governance manager at Royal London, in a public statement.
“We question how a board can effectively function when the executive deputy chairman fails to attend four board meetings, even if they are unscheduled. The board’s decision to lower the earnings targets for the executive directors’ bonus scheme is unacceptable by UK standards and serves as yet another example of poor governance, so we’re voting against the remuneration report and the share scheme amendment as well.”