Sports Direct has confirmed that the future of its chairman, Keith Hellawell, will be voted on for the second time in four months in January.
The special meeting has been called by the struggling retailer after 57% of independent shareholders failed to support Hellawell at the annual shareholder meeting in September.
Under new financial regulatory rules which give independent shareholders more of a voice on the appointment of non-executive directors, the company has to hold a second vote 90 to 120 days after the first meeting if it wants to hold on to Hellawell.
At the second meeting, which will be held at Sports Direct’s headquarters in Shirebrook, Derbyshire, Hellawell’s reappointment can be pushed through with the backing of new CEO Mike Ashley’s 55% majority stake. In September, Ashley insisted his chairman was staying put for at least another year, and they would work together to improve the way the sports chain is managed.
In a notice to shareholders announcing the meeting, Sports Direct said it had been disappointed that a majority of independent shareholders had not backed the re-election of Hellawell as required under listing rules.
Earlier this week Hellawell criticised MPs, trades unions and the media for waging a campaign against the business. The company did promise to improve its treatment of workers and corporate governance in September. This week it announced the appointment of a new non-executive director, investment banker David Brayshaw. But it also revealed a deal with a cosmetics company linked to Ashley’s daughter and the purchase of a new jet despite a 57% dive in pretax profit to £71.6m.
The board said they recommended that shareholders back Hellawell: “The board believes that the re-election of Dr Hellawell, when combined with the appointment of David Brayshaw, will provide a balance of continuity and fresh, independent insight. The board is also mindful of the importance of maintaining the stability of the leadership of the company as it seeks to implement certain improvements in working practices.”
A notice to shareholders published late on Friday made clear that if Hellawell is re-elected in January, but subsequently does not receive the support of a majority of independent shareholders at the next annual general meeting in September 2017, he will “step down at that time with immediate effect.”
Hellawell, a former police chief who has been widely criticised by shareholders, said an “extreme political, union and media campaign waged against this company” had damaged its reputation, influenced customers and had a negative impact on the morale of Sports Direct’s staff.
