Sports Direct pledges 'independent' governnance review

Sports Direct has bowed to pressure and ditched the plan for its own lawyers to lead a review of the company's working practices and governance.

The retailer said it was responding to the demands of shareholders by announcing that its lawyers, RPC (NYSE: RES - news) , would no longer be leading the "360-degree" review - promised after a backlash at the company's AGM earlier this month.

The company - majority-owned by Newcastle United supremo Mike Ashley - said the study would now be carried out by an "independent party".

"The board has made this decision after listening to shareholder feedback at the recent AGM/Open Day and during subsequent consultation with a number of the company's long-standing shareholders via the Investor Forum," Sports Direct said.

The shift was announced after investors inflicted a bloody nose on the firm at the meeting by voting against the re-relection of its chairman.

Keith Hellawell - a former chief constable and government drugs tsar - was only saved thanks to Mr Ashley's voting rights.

The vote came after months of pressure from City institutions concerned about a slump in Sports Direct's share price and the extent of Mr Ashley's control.

The meeting at Sports Direct's headquarters in Derbyshire saw frayed tempers as Mr Ashley fought off criticism of changes to working practices announced by the company a day earlier.

The new rules were a response to allegations of Victorian workhouse conditions at the warehouse, including the bullying of staff and aggressive rules, with some workers reportedly taking home less than the minimum wage.

There was further embarrassment, for Mr Ashley personally, when he was forced to empty his pockets by security during a warehouse tour following the AGM - revealing a wad of £50 notes .

Investor (LSE: 0NC5.L - news) groups warmly welcomed the commitment to now hold an independent review.

Unite union assistant general secretary Steve Turner said: "At last Mike Ashley and his board have grasped that they need to take some very serious steps to restore shareholder, consumer and worker confidence in their employment practices.

"We have always urged, as we did at this year's AGM with the backing of investors, that an independent review is a vital component of this company truly getting to grips with its many and serious employment problems, so we are pleased that the company has now seen sense.

"We offer every assistance in the next steps in Sports Direct's journey towards fair employment, including with this review, and call on Mr Ashley to recognise the benefits of working with the union during this process as an essential way to build faith with the workforce."