Sports Direct has bowed to pressure from shareholders and agreed to bring in an outside firm to oversee a wide ranging review into the retailer's controversial business practices.
The company, controlled by founder Mike Ashley, had initially said it would use law firm RPC to conduct the inquiry. However, some shareholders had called into question RPC's independence, because the firm had worked for Ashley for several years.
In a statement, Sports Direct said: "Having given careful consideration to concerns raised by independent shareholders, facilitated by the Investor Forum [a group of major shareholders in UK firms], Sports Direct today announces that the forthcoming '360-degree' review of working practices and corporate governance which was announced on 6 September 2016 and which was to be led by RPC will now be led by an independent party other than RPC."
Calls for an independent investigation, following accusations by MPs that Sports Direct was operating like a "Victorian workhouse", were led by the Unite union, with members forcing a resolution on to the ballot for shareholders to vote on at a fiery annual general meeting earlier this month.
Initially, Sports Direct advised shareholders to vote against the resolution – saying it was unnecessary because it had already asked RPC to start work on a review.
When put to the vote, 21% of shareholders voted to hold the inquiry with independent lawyers, but Ashley – who has a 55% stake – voted against the plans.
It is not yet known who will take over and perform the inquiry.
Sports Direct also gave more details about its plans for having a worker representative on the board of the company, revealing the staff member will be voted into the position by all employees.
During a heated AGM, Ashley clashed with union representatives arguing for an independent review, blaming some for the problems that have been identified at Sports Direct.
Later on, he took journalists, shareholders and City analysts on a tour of his warehouse, where staff were previously earning less than the minimum wage.
Ashley showed off the new security procedures, but was heavily mocked after emptying his pockets to reveal a large wad of £50 notes.
In recent years, the company has faced severe criticism for its use of zero hours contracts for the vast majority of staff; a six-strikes-and-your-out system in its warehouse where workers are penalised for "excessive" toilet breaks and taking time off sick.
Both policies are changing after another review into the issues by RPC, found that more must be done to protect workers.
Despite the criticism Sports Direct's chairman, Keith Hellawell, who lost a vote of independent shareholders for his re-election, remains in position. He promised to stand down if he lost next year's vote, and can stay on this year, thanks to votes from Ashley.
Simon Neville is business editor at BuzzFeed UK and is based in London.
Contact Simon Neville at firstname.lastname@example.org.
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