A major investor group, The Investor Forum, has called for a “wide-reaching” independent review of Sports Direct’s corporate governance.
The Investor Forum has 40 members and represents 27% of Sports Direct’s independent shareholders, including Legal & General, Aviva, Standard Life and Fidelity.
The statement said the Sports Direct board had shown “continued reluctance to act in line with the views of independent shareholders.” It added: “Governance failings are clearly resulting in declines in operating performance and long term shareholder value and, given the lack of progress and the broader impact on all stakeholders, the Forum now considers it important to make public its recommendations to the SDI Board.”
The Forum wants the review to cover corporate governance and board oversight and effectiveness; related party transactions and potential conflicts of interest; employment practices; acquisition strategy and associated due diligence; and oversight of key supplier relationships and the management of the store portfolio.
Andy Griffiths, executive director of the Investor Forum said: “It is highly unusual for the Investor Forum to consider it necessary to make public their concerns and recommendations in this way. We do not take this step lightly and while we welcome SDI’s move to hold an Open Day, we still have not received an appropriate level of commitment to respond to investor concerns and, as a result, the usual options have been exhausted.”
He added: “We remain committed to engaging with the Board constructively to enhance the value of Sports Direct’s franchise, but this requires the company to reconsider its proposed actions and acknowledge the need for fundamental reform. If they are unable to do so, then members of the Board will have to ask themselves whether they are able to effectively represent the interests of all shareholders.”