Poor governance at Sports Direct triggers December GM


Ashley Hamilton Claxton, Head of Responsible Investment

24 November 2017

If appropriate governance measures were in place at Sports Direct in the first place, there would have been a clear and transparent process for paying John Ashley what he was due and there would be no need to review his compensation after the fact. We will not be supporting this vote because we feel it is a consequence of poor governance. The company has provided no evidence or detail explaining why the £11 million is owed. Investors need to see a plausible reason as to why John Ashley is owed money, not how much he is owed. 
We will also be voting against the second resolution at the upcoming general meeting (GM), which will guarantee a minimum share price for executives. Even if the share price falls below this minimum, the executives will be rewarded through their compensation scheme. Although this change is in line with what is available to other employees, we do not think that it is appropriate for executives to be guaranteed a minimum share price, as this is against the core principle of pay for performance.

If appropriate governance measures were in place at Sports Direct in the first place, there would have been a clear and transparent process for paying John Ashley what he was due and there would be no need to review his compensation after the fact. We will not be supporting this vote because we feel it is a consequence of poor governance. The company has provided no evidence or detail explaining why the £11 million is owed. Investors need to see a plausible reason as to why John Ashley is owed money, not how much he is owed. 

We will also be voting against the second resolution at the upcoming general meeting (GM), which will guarantee a minimum share price for executives. Even if the share price falls below this minimum, the executives will be rewarded through their compensation scheme. Although this change is in line with what is available to other employees, we do not think that it is appropriate for executives to be guaranteed a minimum share price, as this is against the core principle of pay for performance.

Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.