Sports Direct chairman Keith Hellawell faces investors revolt at company's AGM

Keith Hellawell, Sports Direct's embattled chairman, faces a revolt from independent shareholders at the company's annual general meeting on Wednesday (6 September).

Royal London Asset Management, Aberdeen Asset Management, Fidelity and Legal & General Investment Management, Sports Direct's fourth largest independent shareholder, have all pledged to vote against Hellawell's re-election.

"Legal & General has voted against the Sports Direct chairman re-election since 2014 due to concerns regarding the governance of the company," said Sacha Sadan, director of corporate governance at Legal & General Investment Management.

"We escalated our concerns in 2016 by opposing the re-election of all of the non-executive directors. Although we are encouraged by some of the positive steps made over the past year, such as refreshing the board and labour relations, we believe progress is not sufficient to warrant supporting the chairman's re-election this year."

Hellawell, who only held on to his job at the shareholders meeting a year ago thanks to the backing he received from company founder Mike Ashley, has attracted criticism over his role in the recent mismanagement failures that have hit the retailer over the last 18 months.

In January, some 54% of shareholders voted against Hellawell, the same percentage who expressed a similar opinion back in September 2016 – but the weight of Ashley's backing proved crucial, as the Newcastle United owner controls 55% of the Derbyshire-based company.

Hellawell, a former chief constable of West Yorkshire, has offered to step aside should he fail to win the backing of independent shareholders.

Paul Lee, head of corporate governance at Aberdeen Standard, told the BBC Hellawell's re-election had become "a symbol of wider corporate governance concerns", while his election was "a lightning rod" for shareholders' concerns over the company.

The news comes a day after the Unite union said Sports Direct had failed to implement a pledge to offer guaranteed hours to its shops' staff as well as to offer permanent contracts to its warehouse workers.

The company had committed to adopt changes in working practices in the wake of the scandal that arose in 2016, when it was heavily criticised for the treatment of its staff and for the working conditions it offered.

A report into the company's operations released in July concluded Ashley had built his success on a business model that treats workers "without dignity or respect."

It said working conditions for his staff were similar to those of a Victorian workhouse, and heard numerous accounts of worker mistreatment, including staff being penalised for taking breaks and promises of permanent contracts in exchange for sexual favours.

However, according to Unite, the company continues to advertise positions with "no guaranteed hours of work" and there is no evidence that agency staff employed at its warehouse were given permanent contracts.

"This revelation shows it is 'business as usual' at Sports Direct and casts doubt on just how sincere it is about cleaning up its act," said Unite assistant general secretary, Steve Turner.

"One year on Sports Direct has been caught redhanded breaking its promise to offer workers the security of knowing what hours they will work and how much they will earn from week to next. It blows a hole in Sports Direct's commitment to treat workers with dignity and respect."