What would follow if Sports Direct’s independent shareholders vote to dump Keith Hellawell as chairman at Wednesday’s annual meeting?
Such an event at a FTSE 250 company is so rare that precedents are few, and probably unreliable because Sports Direct, with founder and chief executive Mike Ashley owning 60%, runs to its own script. Here’s a speculative theory: Ashley might say good riddance to good governance and instal himself as executive chairman.
Hellawell’s downfall is far from assured, it should be said. On one hand, the main proxy voting agencies have recommended he should pay the price for the company’s many governance failings and slow pace of reform. On the other, some of the leading investor rebels of past years, such as Standard Life, have cut the size of their stakes.
The only certainty is that outsiders’ views matter this time. Last September’s 54% rebellion against Hellawell was rendered redundant in January when Ashley rolled out his shares in a binding vote to save his loyal ally. Ashley even said then that he’d asked the former police officer to reconsider his pledge to quit if independent shareholders deliver a third thumbs-down this week. That sweet talking has plainly failed. The notice of this year’s meeting states clearly that Hellawell will go “with immediate effect” if he can’t win a majority among independents.
So who would chair Sports Direct? The least likely outcome – surely – is that Ashley would bow to the demand for an experienced and independent outsider to be appointed. It would be tricky to find a credible volunteer anyway. More to the point, peace-making conciliation is not Ashley’s style. If outside shareholders deliver an “up yours” to his chairman, he may reply in kind. If doesn’t assume the role himself, he could always shuffle another boardroom loyalist, such as Simon Bentley, into the job.
That thought should not deter the rebels. If they agree with voting agency Glass Lewis that Hellawell is “beholden to Mr Ashley and as such, acts as an ineffective counterweight” their only reasonable course is to vote to get rid of him. But the alternative to the ineffectual and hapless Hellawell may be even tighter control of the boardroom for Ashley. The billionaire is not even bothering to attend Wednesday’s meeting, with rather suggests he doesn’t care what other shareholders think.