Monday, August 31, 2015

Vote against Keith Hellawell as director of Sports Direct

"VOTE AGAINST resolution 4 to re-elect Keith Hellawell as a Director of Sports Direct International PLC at the AGM 9/9/15

We believe that voting against the chair Keith Hellawell is appropriate in order to send a message about our concerns about management and employment practices, and weak corporate governance at Sports Direct, which the chair must take responsibility for.

Trade Union Share Owners (TUSO) is a group of investors representing the financial assets of the labour movement and committed to long-term responsible investment. We collectively have over £1bn in assets under management and our membership includes affiliated unions that represent workers at Sports Direct.

We urge you to VOTE AGAINST resolution 4 to re-elect Keith Hellawell as a Director of Sports Direct at the Annual General Meeting on the 9thSeptember for the following reasons:

The company’s questionable corporate governance and employment practices are long-standing issues that pose potential risks to investors. Yet the current chair has not addressed them despite concerns being raised repeatedly by various stakeholders, further he has been criticized by MPs for his lack of knowledge of important events at subsidiary USC.

Voting against Keith Hellawell would communicate that shareholders concerns can no longer be ignored and that Sports Direct has to change the way they do business if the long term reputation and success of the company are going to be sustained.

MPs have said that the chairman Keith Hellawell of Sports Direct is presiding over a FTSE 100 company run like a “backstreet outfit” where executives made deals behind the board’s back, withheld payments to force suppliers and landlords to the negotiating table and failed to consult with staff over the pre-pack administration of its fashion chain USC.

For many investors and the wider public, Sports Direct is synonymous with the use of zero hours contracts and other controversial management practices. Sports Direct was even the subject of an investigation by Dispatches on Channel Four in April this year.

The risks posed by the use of zero hours contracts and other management practices revealed by Dispatches need to be disclosed to shareholders, and it is clear that investor expectations are growing. A report issued by the National Association of Pension Funds in June recommended that PLCs disclose the breakdown of full-time, part-time and “contingent” workers. The NAPF specifically highlighted the use of zero hours contracts as a potential risk that investors need to assess.

Shareholders are aware that much of Sports Directs workforce is employed on zero hours contracts, yet continue to be left in the dark about the extent of such practices. The chair has acknowledged that this is an issue by referring to casual employment in his statement in the annual report. However the 48 words that chair spends on the topic provides no further information. In the Corporate Social Responsibility section of the annual report there is neither any commentary on zero hours contracts or a breakdown of numbers in each type of employment.

We believe that the workers of any company are their greatest asset and they should be treated accordingly, something that we must ensure Sports Direct follows.

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