UPDATE: When a CEO of a public company suddenly resigns, investors usually panic, sending shares down. When Sports Direct boss Dave Forsey resigned out of the blue, the company's value increased by 7%.
Sports Direct founder Mike Ashley must have some conflicting emotions. On the one hand his personal paper wealth just increased by £50m or so overnight, but on the other he's lost his closest ally. 'I feel like I have lost my right arm, but I do hope to have the opportunity to work with Dave again in the future,' he said.
Ashley has now taken back the role of CEO of the company he founded over thirty years ago, having previously been 'executive deputy chairman'. That assumption of responsibility is no doubt why investors are so pleased - it's a step in the direction of good corporate governance.
Forsey himself was characteristically vague about his motivation. 'I have given my entire working life to the Company and in return the Company has given me amazing opportunities and experiences. I wish everyone at Sports Direct well in the future,' he said.
Below is an article from March 2016, when Forsey was charged over his alleged failure to inform the government about USC's administration. That case has been adjourned until November 2016, with Forsey pleading not guilty.
MT doesn’t often report on criminal court cases, but we will make the occasional exception. Over the next few days, Sports Direct chief executive Dave Forsey is due in court to face charges that he acted contrary to Section 194 of the Trade Union and Labour Relations (Consolidation) Act 1992.
In lay terms, that’s the rule that requires companies to inform the government about large scale redundancies ahead of time – in this case relating to the administration of Sports Direct subsidiary USC in early 2015. Forsey is denying the charges.
Despite being the chief executive of Sports Direct since 2007, little information is publicly available about Forsey. He’s reportedly been working for billionaire Mike Ashley since 1984, when he had a Saturday job in his first shop. Rising through the ranks via the operations department, he became MD of what was then called Sports Soccer (it was later renamed Sports World before getting its current branding in the mid noughties) in 2001.
Forsey has been nearly as low key as Ashley in that time. In his chief executive’s statements and the handful of interviews he’s given, he’s been thorough but distinctly unquotable. His trial will therefore bring an unusual level of public attention (most of which is usually on Ashley himself).
For the firm on the other hand, it will be an unwelcome distraction. Sports Direct has suffered a dramatic collapse in its share price (it’s currently trading at 392p – down 44% from December 4) following unfavourable media reports on conditions in its Shirebrook warehouse and a profit warning in January over unfavourable weather. That’s led Ashley himself into a spot of bother with a Commons select committee, which is trying to get a slot in the busy billionaire’s diary. All in all, not a pleasant time for team Sports Direct. The case continues (updates to follow).
Picture credit: Ewan Munro