Sports Direct’s annual general meeting (AGM) has seen investors vote through the reappointment of Grant Thornton despite shareholder group Institutional Shareholder Services (ISS) calling on investors to abstain
Abstaining on the vote to reappoint Grant Thornton as auditors was warranted, the ISS said, as ‘the FRC is currently conducting an investigation into the advice given to the group by Grant Thornton regarding the disclosure around related party transactions in connection with the 2016 financial statements.’
Despite that, 95.37% of shareholder votes were cast in favour of Grant Thornton’s reappointment.
ISS had recommended votes against the reappointments of chairman Keith Hellawell and chief executive Mike Ashley. Votes against the pair recognise ‘ongoing operational, governance and risk oversight concerns, and the company's apparent unwillingness to fully address the votes lodged by independent shareholders at the 2016 AGM and the EGM held earlier this year’, ISS said in a report explaining its position.
Hellawell was re-elected with 87.61% of the vote, while Ashley was re-elected with 94.4%.
Alongside that, ISS calls for shareholders to vote against granting the board authority to set the remuneration of the auditor.
‘The company has paid significant fees to its auditor for non-audit related work in each of the past three financial years,’ it said. In that time, Grant Thornton has received £1.4m in 2016, approximately £1m in 2015 and £457,000 in 2014 in non-audit fees, according Accountancy’s FTSE surveys for 2017 and 2016.
Grant Thornton has held Sports Direct’s audit since 2004.
Despite its recommendation, the motion was voted through with 92.51% of the vote.
ISS also called for a vote against senior independent director Simon Bentley.
‘Having accrued 10 years of service on the board (served concurrently with Mike Ashley), he is no longer considered independent’ ISS said. ‘A vote against his re-election is appropriate given his seats on the Audit and Remuneration Committees.’
In the event, Bentley’s reappointment was confirmed with 87.77% of the vote.
The outcome of Sports Direct’s AGM can be read here.
Report by Calum Fuller