Sport Direct’s Mike Ashley clashes with investors over delay in employing FD

Ashley is on a collision course with the City once more over its governance.

Standard Life has reportedly said: “Concern over governance arrangements has been a persistent theme of the relationship between Sports Direct and its minority investors.

“These issues have included board appointments, inappropriate remuneration arrangements, share lock-up agreements and Sports Direct’s practice of buying minority stakes in other companies.

“In July 2014, minority investors voted, by a modest margin, to approve a new incentive scheme for executives after two years of discussion and at the fourth time of asking. In the wake of this vote, we engaged collectively with other minority investors to impress our concerns upon the chairman and to discuss the need for a higher standard of governance assurance.

“Many of the issues that informed the collective engagement remain unresolved. Recent changes to the listing rules that relate to the dual vote on independent directors at majority controlled companies could provide a catalyst for change in the absence of improvement.”

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But it was Odey Asset Management, holding a 5.2 per cent stake in Sports Direct, that recently criticised the firm’s 14-month delay in appointing a finance director.

Shareholder Crispin Oden, who backed Ashley in recent years, and reported calling him a “genius”, has been “concerned” about the “ongoing delay”.

Bob Mellors, Sports Direct’s previous FD, left the company in 2013 die to health reasons. And now, Odey Asset Management, holding a 5.2 per cent stake in Sports Direct, has been “concerned” about the “ongoing delay”.

Since his resignation, Ashley has gone on a somewhat shocking spree of share trades, buying stakes in retailers such as Tesco, MySale and Debenhams. He also brought a collection of LA Fitness gyms.

These concerns were spurred when it was revealed that strategic development director Jeff Blue would also be taking his leave. Standard Life suggested that Sports Direct was an “escalation candidate”, and that the situation would only become potentially worse.

Oden said: “This puts too much power into one person’s hands. They have got to move quickly on this.”

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