Mike Ashley, the founder and majority owner of Sports Direct, has stepped in as a permanent replacement for former Chief Executive Dave Forsey.
At the beginning of last week Sports Direct (who had been criticised for its working practices and zero-hours contracts) announced that it would now organise an independent review into working practices after receiving "shareholder feedback" and "subsequent consultation with a number of the company's long-standing shareholders".
Previously, Sports Direct had been scrutinised by the Business, Innovation and Skills Committee ("BIS Committee"), with a damning report being released in July of this year. It was alleged that the firm were not paying staff the national minimum wage, and were penalising staff for matters such as taking a short break to drink water and for taking time off work when ill. The BIS Committee were highly critical of the management of Sports Direct and that Mike Ashley, who regularly visits the firm, would have no idea of the working conditions and practices there, especially as they had been highlighted by the media since December 2015.
Following the BIS Committee report, Mike Ashley instructed a review of the working practices of the firm, which was carried out by the firm's lawyers, but refused to extend the review to the corporate governance of the firm. The report criticised the use of zero-hours contracts and the working conditions, as well as Dave Forsey for failing to inform the firm's board about some of these issues.
Mike Ashley, former Executive Deputy Chairman of the firm, has given up his role as Deputy Chairman to take over as Chief Executive from Dave Forsey. In addition two other changes were made to the board, with Karen Byers being appointed to the role of Global Head of Operations and Sean Nevitt to the role of Global Head of Commercial. However, Paul Blomfield, a member of the BIS Committee, is not convinced that the changes to the executive board of the firm would address the systemic labour problems at the firm, or whether Mike Ashley is the person to do the job.
It appears the implementation of the majority shareholder as the new Chief Executive has not allayed the shareholders' fears either, with Mike Fox from shareholder Royal London Asset Management, stating that the way the company was run had long been a problem and that Sports Direct still needed a new chairman before it could rebuild trust with investors. However, market reaction suggests not all shareholders and investors were concerned with Mike Ashley's appointment, as the share price for Sports Direct International increased by approximately 5% on 23 September 2016.
We will have to wait for the next play in Sports Direct's season. Will Mike Ashley listen to the firm's shareholders and investors and appoint a new chairperson, will the next report be truly independent and will it reveal more secrets? It is certainly by no means the relegation of the firm, but whether they come out of this as champions is still to be seen.