Sports Direct has succumbed to shareholder pressure by agreeing to an independent review of its working practices and corporate governance.
Mike Ashley, the company’s founder and owner, admitted in a BBC TV interview yesterday that he had taken his eye off the ball but claimed the problems at the company’s warehouse were caused by “the odd rotten apple”.
The company had said the law firm Reynolds Porter Chamberlain (RPC), which carried out a preliminary review published this month, would conduct a further investigation. However, after strong shareholder backing for an independent review at the Sports Direct Annual General Meeting this month, the company has now agreed.
Sports Direct’s share price, which has taken a battering over the past 12 months, rose about three percent after the announcement and the BBC Breakfast interview.
Ashley was forced to look into his company’s working practices after a Guardian investigation at its warehouse in Shirebrook, Derbyshire. MPs later compared it to a Victorian workhouse.
RPC’s report, published the day before Sports Direct’s AGM, criticised the company and prompted Ashley to apologise to staff for practices at its warehouse.
Ashley also announced plans to put an employee on the board to show his willingness to listen to staff after the Guardian’s revelations and a campaign by the Unite union battered his company’s reputation.
Ashley said he had not known about the poor treatment of employees but claimed there was little wrong at Sports Direct and that its reputation had been brought low by a few mistakes.
He told BBC Breakfast on Tuesday:
“It is odd, isolated instances. It’s the odd rotten apple in the barrel and then you say: ‘OK, I’ve got to go and find the rotten apple in the barrel’ … I’m now coming in to work very closely with HR, the warehouse and the [employment] agencies.”
Ashley said Sports Direct had paid out more than £200m in staff bonuses in the past five years and that one cleaner had received £80,000 in addition to her standard pay. He said his job was to fix the few things the company had done wrong to bring them up to the standard of what it had done right.
“I’ve taken my eye off the ball. I’ve said I’m going to fix it and I will.”
At the AGM, Ashley at one point said the retailer’s problems had been caused by Unite and hinted that he might walk away from the company he founded in 1982 if he was unable to improve the way it was run.
Ashley told the BBC it would take longer than a year for him to make the necessary changes but that he was listening to shareholders, who called for the independent review as a condition for Hellawell staying on.
“I had to support Keith Hellawell at the AGM to give him an opportunity for another year and he said if he doesn’t get the support of independent shareholders he will go. Dave Forsey [the chief executive] lost his bonus, which was £3m or £4m. We take this a lot more personally than anyone can possibly imagine.”
There was also a protest vote against Sports Direct’s three other non-executive directors. More than 30 percent of independent shareholders failed to back their reappointment amid widespread concern that they had not held Ashley to account.
Rebecca joined the HRreview editorial team in January 2016. After graduating from the University of Sheffield Hallam in 2013 with a BA in English Literature, Rebecca has spent five years working in print and online journalism in Manchester and London. In the past she has been part of the editorial teams at Sleeper and Dezeen and has founded her own arts collective.
