Sports Direct faces more criticism from shareholders but they need to use their votes if they want real change

The Investor Forum has called on the company to institute an independent review of its goverance and employment practices

Will shareholders vote against Sports Direct boss Mike Ashley?

Sports Direct has made great play of the review into working conditions at the company being conducted by its founder and driving force Mike Ashley.

Trouble is it’s not convincing anyone. And it isn't just journalists and unions expressing scepticism. They have been joined by investors too.

Will Sports Direct wake up? There hasn’t been much sign of that happening which explains the decision by the The Investor Forum, a group claiming to represent investors holding 12 per cent of Sports Direct’s shares and 27 per cent of its independent shareholders, to intervene publicly.

In a statement echoing some of the arguments put forward by the Unite Union, the IF has called for an independent review to be conducted into the company’s governance and employment practice. Of the review set in train by Mr Ashley it says: “The narrow benchmarking exercise of employment practices is being carried out by RPC solicitors, who SD has a pre-existing relationship with, and therefore will not be independent."

And there's more: “The recently announced external Board evaluation, (which is already a minimum requirement under the UK Corporate Governance Code), fails to reflect the breadth and magnitude of reform that is required."

All valid points. Moreover, the steady flow of bad publicity is soiling the business’s brand. Would you be comfortable being seen out with a Sports Direct carrier bag on your arm? Would you want your friends to see you going into a Sports Direct shop?

If the answer to those questions is no then you’re not alone. The group's recent sales performance proves that.

Sports Direct’s myopia isn’t complete. September 7, the day of its AGM, has been turned into “open day” at Shirebrook. There will be site tours, including the brand shops and the infamous warehouse with its multitude of hard-working Eastern European agency staff. Q&A sessions? They’re happening too. Mr Ashley’s PR advisers can only pray that he refrains from saying anything stupid. Anyone want to offer odds on that?

But how, exactly, will indulging in a belated bit of PR work like this change anything?

Institutional investors much prefer to air their grievances in private. It is only when they feel that they’re talking to a brick wall that they go public. As such, the intervention of the Forum, which includes blue chip investors such as Legal & General, matters.

But if it wants to achieve real change its members need to use their votes. Minority shareholders have been given to protect their interests when they invest in companies with powerful majority shareholders like Mr Ashley. They can vote to remove directors from the board, directors who, in this case, have done a pretty poor job when it comes to providing oversight of the company and its operations for shareholders.

That’s the only thing that stands the chance of making a real difference to the way this company is run. But, as I've written, independent shareholders had the chance to act last year and they didn’t. Has Sports Direct finally reached enough of a tipping point to rouse those investors who aren’t part of the forum out of their torpor? That remains to be seen.