Sports Direct chairman narrowly survives shareholder revolt – The Guardian

The Sports Direct chairman, Keith Hellawell, has survived a shareholder rebellion after just over 53% of independent investors backed his re-election.

Hellawell, who has been chairman of the company since 2009, had pledged to step down if he failed to win the backing of independent investors who last year voted against him.

Key shareholders backed the former West Yorkshire police chief constable even though he has been viewed as a weak chairman who is failing to counter the power of the company’s majority shareholder and founder, Mike Ashley. They also re-elected senior independent director Simon Bentley.

Ahead of the sparsely attended meeting at Sports Direct’s head office in Shirebrook, Derbyshire, investors such as Legal & General Investment Management, Royal London Asset Management and Aberdeen Asset Management had set the scene for a rebellion by pledging to vote against Hellawell.

Last year, more than half of independent shareholders voted against the chairman, forcing the company to hold a second vote in January after which he was kept in place only with the backing of Ashley, who now owns more than 60% of Sports Direct shares.

On Wednesday Hellawell defended Sports Direct’s use of zero-hours contracts and said there was no need for an independent review of its working practices.

Asked for an update on a pledge made last year to offer guaranteed hours deals to shopfloor staff, the vast majority of whom currently do not know if they will get any work each week, Hellawell said “a huge proportion of workers are happy to retain the flexibility” of the existing setup.

He added: “Zero hours is still a legal form of employment in this country. I appreciate that a number of unions are against that but while it is still a legal form of employment we will choose it if we wish to continue with that.”

The issue was raised by the Labour leader, Jeremy Corbyn, during Wednesday’s prime minister’s questions when he said Ashley should “honour his word” and end zero-hours contacts.

Alex Balacki, a store manager who was recently elected to the board by workers directly employed by the company – not including the majority of warehouse staff who are hired via agencies – said: “The vast majority of people are happy with the contracts and as long as that’s the case it’s working for people.” He said the setup allowed Sports Direct to employ “single mums and students” in a way that would not otherwise be possible.

Hellawell, 75, pledged to step down if more than half the group’s independent investors failed to back him at Wednesday’s AGM. It follows more than a year of criticism over corporate governance and treatment of workers at the group.

At the meeting a series of investors asked for an update on a report into the treatment of workers carried out by the company’s lawyers last year.

At the annual meeting in 2016, independent shareholders backed a resolution calling for an independent review of corporate governance and working practices. Sports Direct did promise to implement that but later said the review would be carried out by the law firm RPC, which has worked closely with the company for some time.

Asked if he would commit to a truly independent review, Hellawell said: “If there’s a problem we address that problem and work through that problem. We don’t see the need for an outside body to come in and look at this organisation at the moment.”

Last year, a parliamentary inquiry found that Ashley had been running Sports Direct like a Victorian workhouse, treating workers “without dignity or respect”.

The inquiry was launched after the Guardian exposed how temporary workers at its depots were effectively receiving hourly rates of pay below the minimum wage.

HMRC subsequently found that workers were owed backpay but some have yet to receive the money partly because a dispute betweenemployment agencies previously used by Sports Direct.

Hellawell said Sports Direct recognised “a concern to pay workers whatever they are owed” but this was “not as easy as it sounds” when dealing via the agencies. “There are discussions between agencies, former agencies and this company,” he said.

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