The Trade Union Share Owners (TUSO) group has today called on shareholders at Sports Direct to vote against the re-election of company Chair Keith Hellawell – citing long-standing concerns over the company’s governance and treatment of its workforce.
TUSO, a coalition of trade union funds (comprising the TUC, Unite, Unison and the International Transport Workers Federation) with over £1.5bn assets on the capital markets, has shareholdings in Sports Direct.
TUSO has written to Sports Direct’s other shareholders urging them vote out Mr Hellawell at the company’s AGM on Wednesday 9 September.
The call comes after MPs on the Scottish Affairs Select Committee accused Mr Hellawell and his board of running Sports Direct like a “backstreet outfit”.
Mr Hellawell and Sports Direct have faced widespread criticism following the collapse of Sports Direct’s subsidiary company USC in January, which left 88 staff redundant and £15.3m of debts to suppliers and landlords.
The Institute of Directors has described Sports Direct’s board’s handling of the USC crisis, which also left taxpayers with a £700,000 bill, as “dysfunctional” and “not acceptable” for a FTSE 100 company.
TUSO has outlined the following arguments against Mr Hellawell’s remaining as Chair of Sports Direct:
• His lack of knowledge and oversight during the collapse of USC
• His failure to tackle bad employment practices at Sports Direct, such as the extensive use of zero-hours contracts which account for the vast majority of the company’s workforce
• The continued practice of holding board meetings at which key members are not in attendance
• His failure as Chair of the board’s nomination committee to meet the Davies Review target for 25 per cent of board members to be women
• His failure to tackle bad employment practices at Sports Direct, such as the extensive use of zero-hours contracts which account for the vast majority of the company’s workforce
• The continued practice of holding board meetings at which key members are not in attendance
• His failure as Chair of the board’s nomination committee to meet the Davies Review target for 25 per cent of board members to be women
TUSO fears that the performance of the Sports Direct Board is affecting the company’s performance and value. Morgan Stanley earlier this year put a 20 per cent discount on Sports Direct shares because of poor governance.
TUSO also notes evidence of growing unease among shareholders. One in five independent shareholders at last year’s AGM voted against Mr Hellawell and TUSO is urging more to follow suit.
TUC General Secretary Frances O’Grady said: “Shareholders and workers both have an interest in reform at Sports Direct. We all want to see a successful business, but this success needs to be built on strong governance and good employment practices, not zero-hours contracts.
“Mr Hellawell is ultimately responsible for the performance of his board and must be held accountable for its actions. Without root and branch changes Sports Direct’s reputation will continue to be dragged through the mud.”
Unite General Secretary Len McCluskey said: “There are serious questions about the corporate governance and employment practices of Sports Direct. An estimated 3,000 agency workers are on zero-hours contracts at its Shirebrook depot, earning just above the minimum wage and being subjected to working conditions that are more akin to a workhouse than a FTSE 100 company.
“Separately, by Mr Hellawell’s own admission, a further 75 per cent of staff across its UK stores are also on zero-hours contracts, with Sports Direct accounting for a fifth of all such contracts in the retail sector. These employment practices combined with weak corporate governance mean a change of chair is needed to lead reform of Sports Direct and avoid lasting reputational damage.”
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