SPORTS Direct is a formidable retailing cash-generation machine, but founder and boss Mike Ashley is to corporate governance what Attila the Hun was to embroidery. He doesn’t “get” the concept. The ban on journalists attending the company’s AGM (three were eventually admitted) just underlines a point that has already been well made since Sports Direct went public (in a manner of speaking) eight years ago.
Ashley, who is also the owner of Newcastle FC, is a curious mixture of the reclusive, the enigmatic and the combative. Some football followers may think this is symbolically reflected in the erratic fortunes of the Geordie Nation’s team.
Sports Direct is the biggest UK employer to use controversial zero hour contracts, with their no guaranteed working hours, which MPs and campaigners have branded unfair and exploitative.
Ashley responded by telling MPs on the Scottish affairs committee earlier this year who wanted him to explain the retailer’s carpert-bombing use of those contracts, and the treatment of redundant staff at the company’s USC business in Scotland, that he was too busy to see them. One almost admires the chutzpah.
Sports Direct’s non-execs have as a result been almost routinely parodied as nodding dogs in thrall to an intimidating personality. The hardly firebrand Institute of Directors calls the board dysfunctional.
As ShareAction, the corporate governance action group, says, while it is legal for a company to exclude press or suggest it is inappropriate they turn up to a private shareholder AGM, it goes against the whole spirit of transparency.
Just as the media is the eyes and ears of the public at court cases, so the media also performs a similar service for shareholders who cannot attend an AGM themselves.
Only about 20 people were in the audience at the Sports Direct event – hardly the biggest demonstration of shareholder democracy you will ever see. Heavyweight institutional investor, Royal London Asset Management, voted for the second year running against the re-election of the non-executive directors at Sports Direct, and this year RLAM also cast its vote against the re-election of Ashley himself.
“We question how a board can effectively function when the executive deputy chairman [Ashley] fails to attend four board meetings, even if they are unscheduled,” the fund manager said yesterday.
Ashley obviously has a born retailer’s touch. Earnings are good; expansion is dynamic. To let this be overshadowed, even damaged, by almost gratuitously cackhanded corporate governance at one stage added to the gaiety of the nation. Now it has authentic curiousity value.
Morrisons goes back to basics
SOMETIMES you can be late to the corporate party. So it was with the belated, star-crossed flirtation of supermarkets group Morrisons with convenience stores.
For a long time such stores have been a big success story at the likes of Tesco and Sainsbury’s, but Morrisons, under former boss Dalton Philips, seemed to choose poor sites and lack the expertise to expand M-Local meaningfully.
New Morrisons boss David Potts, who succeeded the ill-fated Philips,has now sold the 140-strong estate to retail entrepreneur Mike Greene.
With M-Local, it was a case of too little, too late for the Bradford-based retailer.