The Trade Union Share Owners (TUSO – UK) has written a letter regarding a vote to take place at the upcoming Sports Direct International PLC AGM on December 13 2017. Sports Direct PLC is listed on FTSE 250 equity index.
CWC participants are encouraged to VOTE AGAINST Resolution 1 to approve the extension of the guaranteed minimum value for eligible employees participating in the Company’s share schemes to Karen Byers and Sean Nevitt and VOTE AGAINST Resolution 2 to approve a proposed payment to John Ashley.
WHY INVESTORS SHOULD VOTE AGAINST THE RESOLUTIONS
Rewarding executives while other shareholders are penalized when share prices fall below the minimum contradicts the rationale for equity as an incentive and contravenes widely accepted corporate governance good practice. Furthermore, the company has made inadequate progress addressing low pay and back-payments owed to its workforce due to the non-payment of the National Minimum Wage are outstanding. As such, the measure proposed in this resolution exposes the company to further reputational risk.
Neither Sports Direct nor the legal firm RPC, which has represented John and Mike Ashley in the past, provide sufficient evidence or detail explaining why Sports Direct owes £11 million to John Ashley (founder and majority share owner Mike Ashley’s brother). A review by an independent individual or organization would be required in order to secure shareholders’ confidence in making such a substantial payment for past work. This resolution is indicative of a need for a clear and transparent corporate governance practice at the company.
These resolutions, viewed in relation to the company’s approach to workforce pay, will further damage workforce morale and present additional risks to the company’s reputation
KEY WORKFORCE PAY ISSUES
Sports Direct workers are paid significantly below the Real Living Wage of £8.75 per hour. The company refuses to meet with Unite the Union to discuss a pay claim that proposes the real living wage for its workforce.
Thousands of warehouse workers received a total of approximately £1m in back pay after a Guardian investigation revealed the company was paying below the National Minimum Wage. However, many agency workers at Sport Directs warehouse in Shirebrook have still not received the back pay they are owed.
In summary, resolutions guaranteeing a minimum value for the share scheme for two individuals and a payment of £11m for another provides no reassurance to shareholders that Sports Direct is addressing its well-documented weak employment practices and corporate governance failures.
The CWC recommends its participants VOTE AGAINST resolutions 1 and 2 in order to address concerns related to management and employment practices and corporate governance at Sports Direct.
Please click here to read the full letter to shareholders from TUSO.