A representative from the pressure group ShareAction claimed that workers are “jeopardizing their health” for fear of being dismissed. At the same time, another shareholder said the company’s reputation as an employer was “atrocious” and asked its chairman, Keith Hellawell, why he had not resigned. Unite union members protested outside Sports Direct’s headquarters in Derbyshire, where the meeting took place, by dressing up as Dickensian workers and holding a banner reading: “It’s a ‘workhouse,’ not a workplace.”
Investors also gave the company robust criticism over pay and the future of Hellawell. More than half of the company’s independent shareholders who voted were against its pay policy, while almost a third refused to back the re-election of Hellawell as chairman. In response to the criticism, Hellawell said he was “proud of how this organization operates.” Claire Jenkins, a non-executive director, said comments about working conditions were misguided, adding: “We are not operating Dickensian practices.”
The Info Blog. Leading up to the meeting, Sports Direct had faced heavy criticism from the City and trade unions over corporate governance failings and the treatment of its workers. City institutions, including Royal London Asset Management, are unhappy about lowering the performance targets in its bonus scheme, failing to hire a new finance director for 18 months, and buying stakes in rival retailers such as Tesco and Debenhams. The Investment Association issued a red-top alert, its most severe warning, ahead of the meeting.
Trade unions have accused Sports Direct of exploiting workers by using zero-hours contracts for most of its staff. Colin Hampton, a representative from ShareAction, claimed at the meeting that up to 4,000 casual staff employed at Sports Direct’s warehouse faced a “six strikes and you’re sacked” policy. He alleged this includes strikes for sickness, excessive talking, and toilet breaks, while also claiming staff has to wait between 25 and 45 minutes unpaid to be searched at the end of their shifts.
However, Jenkins denied the claims and said there was “no evidence of bullying.” She said: “The six strikes policy is actually not dreadful at all; in fact, compared to an awful lot of employers, six strikes is actually deemed to be quite generous. “Casual workers provide flexibility for us, but agencies give them guaranteed hours of work. We are satisfied we provide good conditions, and casual workers are getting what they know they are entitled to from their pack.
“We address issues by telling the truth and the facts. But if you choose not to listen to facts, I am not sure what we can do.” When asked by John Dunn, a shareholder, whether he would resign as chairman, Hellawell said: “If a majority of shareholders feel I am not doing a good job, I will not stay. I am proud of this organization, and I am proud of the way this organization operates. “I am not satisfied with statements made by people with their own agenda. What you are not accepting is that we are telling the truth.”
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Ashley, the founder of Sports Direct and the owner of Newcastle United, remained silent during the meeting, even when a shareholder asked whether the tycoon was concerned that the company might not be meeting health and safety regulations because of its treatment workers. “This is not Mr. Ashley’s company,” Hellawell replied. “He is a major shareholder, but it has a life of its own. I can assure you that we on the board unless Mike wants to disagree with me, are satisfied.”
However, Ashley approached the three shareholders who represented trade unions and ShareAction at the end of the meeting and pledged to look into the allegations about staff being forced to wait 45 minutes at the end of shifts. Excluding Ashley, 50.3% of shareholders voted against Sports Direct’s remuneration policy for directors, while 28.6% refused to back Hellawell as chairman. Legal & General, which owns 3% of Sports Direct and is a top-10 shareholder, voted against Hellawell.
There were also significant rebellions against the re-election of Sports Direct’s non-executive directors and the remuneration of Grant Thornton as auditors. However, the support of Ashley, who owns 55% of Sports Direct, meant both resolutions were passed at the meeting. A total of 88.3% of shareholders backed the re-election of Ashley as executive deputy chairman, while the lowering of the profit target for the staff bonus scheme was also approved.