In the run up to the Sports Direct AGM this week (6th September) there were calls for shareholders to vote against the re-election of its chairman, Keith Hellawell, amid concerns that he has not been strong enough in dealing with the governance concerns that have surrounded the retailer for the past two years.

Having said he would resign at this AGM if he did not receive majority backing Hellawell received 53% support from independent shareholders.  Last year 57% opposed his re-election which led the company to hold a second vote in January. At that meeting, he continued to be opposed by independent shareholders with  54% voting against. However, he continued to have the backing of Mike Ashley, the majority shareholder, founder and chief executive of Sports Direct which meant overall there was an 80% backing for the chairman.

The Trade Union Share Owners Group - a group of investors representing the financial assets of the labour movement, including the TUC staff pension fund, the Unite staff pension fund, the UNISON staff pension fund, and the International Transport Workers’ Federation - had urged shareholders not to support Hellawell's re-election. This was supported by some major investors such as Royal London Asset Management (RLAM).

Ashley Hamilton Claxton, corporate governance manager at RLAM stated before the AGM that it would be voting against Ashley, Hellawell and the company's lead independent director, Simon Bentley. He said Sports Direct continued to show a serious disregard for shareholders’ views about the governance and management of the company and added that RLAM had "no confidence in the ability of the firm’s Chairman and non-executive directors to provide effective oversight and protect the interests of minority investors."

Guardian financial commentator Nils Pratley despaired at the timidity of the City which had let Hellawell remain as chair. He wrote "The complaints against Hellawell are well known and extend far beyond the failure to honour a promise to commission an independent review of working practices. He tolerated a lack of a permanent finance director for three years, ran into rows over bonuses, sanctioned trading arrangements with members of Ashley’s family and is seemingly happy with Sports Direct’s baffling habit of buying stakes in other retailers."

Sports Direct finally appointed a finance director Jon Kempster, in July and he will join the board on 11th September and Ashley and Hellawell have been undertaking stakeholder meetings to improve relations with shareholders. However, the company has backtracked on a number of commitments it made last year. Employees elected a worker representative in April, Alex Alex Balacki, who will attend board meetings for 12 months but will not be a full board member as was originally proposed. The company said appointing the representative as a full director could potentially constrain their role. An election for a new representative will take place each year.

Following support for a resolution by the TUSO group last year for an independent review into corporate governance, the company decided instead in January to go ahead with a review carried out by its legal advisers, RPC. The law firm had previously carried out a review into working practices which reported in September last year but investors indicated that they wanted an independent firm to carry out the latest review.

Meanwhile trades unions, such as Unite which organised protests outside Sports Direct stores and at company's headquarters at Shirebrook on the day of the AGM continue to argue that there are poor working practices at the company. It was an investigation by the Guardian newspaper in December 2015 into working practices that led to unprecedented scrutiny of the company including by MPs. In response to this last year's AGM also included an open day where Ashley took the media and investors around the Shirebrook warehouse.

This year Ashley had already indicated that he would be unable to attend the AGM due to other business commitments. Manifest in its analysis produced prior to the AGM stated: "Independent shareholders may feel disappointed that they will not have the opportunity to engage with Mike Ashley, especially in light of the accounting and corporate governance issues identified during the year."

The analysis also noted that the company's auditor Grant Thornton is under review by the Financial Reporting Council. This investigation relates to the signing off of an arrangement between the Company and Barlin delivery, a delivery Company owned by John Ashley, the brother of Mike Ashley. The outcome could result in a fine.