Wednesday 15 March 2017 4:23 pm

Shareholder group Pirc hits back at Sports Direct’s “fake news” allegations

A shareholder advisory group has hit back at Sports Direct after the retailer accused it of pushing out “fake news” figures on high pay ratios.

Pensions and Investment Research Consultants (Pirc) also claimed Sports Direct had sight of the contested figures in 2015 and made “no response on the detail”.

After City PM reported on the figures earlier this week, Sports Direct this morning issued a statement condemning the Pirc analysis as “fake news that appears to have been either deliberately or recklessly circulated by an irresponsible organisation that is making headlines at the expense of Sports Direct”.

The company said the data was “presumably based on an unvested bonus entitlement that was previously accrued by Dave Forsey”, the firm’s former chief executive.

This entitlement was accrued over several years (which was not immediately apparent from the published Pirc list, neither would it have amounted to the sum in question), but in any event, Mr Forsey chose to forego the bonus, which was never paid. The bonus award in question was granted in 2011 and subject to the satisfaction of four underlying Ebitda targets for FY12 to FY15, and was due to vest in 2017, but, as stated, was never paid to Mr Forsey.

This is explained more fully in the Directors' Remuneration Report on pages 60 and 61 of the company's 2016 annual report and accounts. The true ratio over the period in question would therefore have been closer to 9:1, according to PIRC's own calculations.

But, after receiving backing from fellow corporate governance research company Manifest, Pirc hit back at Sports Direct on Wednesday afternoon.

Pirc said:

It had set out the data in its 2015 UK proxy report on Sports Direct’s 2015 AGM, and sent it to the company on 25 August 2015.

The company made no response on the detail in the draft report (PIRC sends draft proxy reports to all UK companies ahead of their AGM, for company comments, prior to publication to clients.)

The 2016 UK Annual Corporate Governance Review used this data, along with figures from other FTSE 350 companies, collected between August 2015 and July 2016.

All the data used and analysed has been collected by Pirc throughout the year up to 31st July from publicly available disclosure such as companies’ annual reports or prospectuses. Pirc comments are based on its view of corporate governance best practice and in line with its Shareholder Voting Guidelines 2016.

Pirc said that at the time of collation, its analysis of the ratio was correct. Further changes to the Sports Direct’s remuneration scheme in subsequent periods will, it said, be updated in its 2017 annual review.

Pirc added: “Far from being ‘fake news’, Pirc’s analysis was correct and the company had an opportunity to question our analysis at that time. The remuneration policies that led to Pirc’s analysis were only subsequently amended.”

Sports Direct declined to comment.