Sports Direct is to undertake an external evaluation of its board of directors, following criticism of the retailer’s corporate governance.
The company also revealed in a stock market statement on Thursday that it will publish a report into how it treats its workers before the retailer’s annual shareholder meeting next month.
Mike Ashley’s retail group, which is facing a shareholder revolt over the re-appointment of its chairman, Keith Hellawell, at the meeting on 7 September, said it was also planning an external evaluation of its board of directors by April next year.
Almost 24% of independent shareholders’ votes went against Hellawell at last year’s annual meeting but new rules mean he must now win their support, rather than relying on the vote of Mike Ashley, the majority shareholder.
The promise of more boardroom scrutiny comes after several large shareholders told the Guardian they planned to vote against Hellawell’s reappointment.
Sports Direct has come under increasing pressure to reform its working practices and corporate governance as its sales performance and share price have suffered following damning revelations about its treatment of store and warehouse workers.
In a statement released to the stock market on Thursday, Sports Direct said it would be publishing an “independent report on working practices” put together by its lawyers, RPC. It said the report would “review and report on” an internal investigation announced by the company last December after the Guardian’s revelations about treatment of staff at the company’s warehouse in Shirebrook, Derbyshire.
Earlier this week Sports Direct’s warehouse workers were awarded £1m in back pay after the retailer admitted it had broken the law in not paying the legal minimum wage.
The sportswear chain and its employment agencies are also facing fines of up to £2m imposed by the Department for Business, Energy and Industrial Strategy after they were found to have been underpaying some of the UK’s lowest-paid workers for four years.
The payment was agreed between the union Unite, the retailer and HM Revenue & Customs, and includes about 200 workers directly employed by Sports Direct and about 3,000 staff hired through temporary employment agencies.
In June, Ashley admitted his company had broken the law by failing to pay staff the national minimum wage.
The admission, made when he appeared before MPs investigating his company’s treatment of its workers, confirmed the findings of the Guardian’s investigation, which revealed that Shirebrook warehouse staff were required to go through searches at the end of each shift, during which their time was unpaid. They also suffered deductions from their wage packets for clocking in for a shift a minute late.
HMRC is also investigating whether Sports Direct has been paying the minimum wage to the 13,000 workers at its stores.
Ashley claimed he was struggling to cope with the scale of Sports Direct when he appeared before MPs, and his board had been criticised for lacking independent directors. The company is also lacking a permanent finance director having appointed Matt Pearson as acting finance officer last summer.
Pressure for change has increased after the Financial Conduct Authority, the financial watchdog, required minority investors to approve non-executive directors at companies where a single shareholder owns 30% or more.
The rules came into force in May 2014 but did not affect Sports Direct’s last annual shareholder meeting because companies were given six months to comply.
