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Sports Direct investors to vote on 11 million pound payment to founder's brother

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Sports Direct investors to vote on 11 million pound payment to founder's brother

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LONDON (Reuters) – Investors in British retailer Sports Direct <SPD.L> will vote on whether to pay 11 million pounds to the brother of billionaire founder Mike Ashley, a move that could reignite tensions between shareholders and the board. Sports Direct said on Friday it would hold a general meeting on Dec. 13 after an independent report by law firm RPC found John Ashley, who was employed as an IT expert, was entitled to the money for his work in the years since the firm floated in 2007. It said John Ashley had not received what he was owed “because of concerns at the time about public relations”. The review was launched after pressure from shareholder groups expressing concerns over his history at the firm. Independent shareholders would vote on the resolution to give John Ashley the 11 million pounds, with Mike Ashley and other board members abstaining from the vote, the company said in a statement. “I fully expect that independent shareholders will vote against this proposal due to the passage of time involved, although in my opinion, technically the money is owed and therefore should be paid,” Mike Ashley, who is also chief executive and 61 percent shareholder, said in a statement. “It’s important for me to say that if John had owed one pound to Sports Direct, I would have ensured any sum was repaid in full.” The fresh showdown comes after years of clashes between investors and the board. Chairman Keith Hellawell, accused by investors of a string of management and governance failures, narrowly survived a vote to oust him in September. He had said he would resign if a majority of independent shareholders voted against him for a third time. Paul Lee, head of corporate governance at Aberdeen Standard Investments, said that while a decision on how to vote had not been taken, the resolution to pay Ashley’s brother would be hard to support. “It’s really difficult to see how it’s in our clients’ interest to support the proposal. This is a backpayment from 10 years ago, for which our clients get no new benefit,” Lee said. Aberdeen Standard Investments is a top-30 shareholder in the stock, Reuters data showed.

(Reporting by Alistair Smout; Editing by Jason Neely and Edmund Blair)
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