Sports Direct, the retailer controlled by the controversial entrepreneur Mike Ashley, has met with fierce criticism from a leading corporate governance group in the run-up to its first annual meeting as a public company.

Pirc, which advises pension funds on corporate governance issues, has urged its members to vote against Sports Direct’s remuneration report at the September 11 meeting and withhold approval of the annual report and accounts. It also advised investors to abstain from the vote on reelecting Mr Ashley - who owns 57 per cent of the company - and two other directors. Pirc said it would have recommended opposing reelection of the directors but had mitigated its advice because this would mean voting against more than a third of the board.

Pirc objects to the automatic compensation that all three would receive if they left the company and to a bonus scheme that Pirc said was not “sufficiently challenging”. The body also said it had “severe concerns” over discretionary bonuses paid to David Forsey, the chief executive, and Bob Mellors, the finance director. Before the IPO, it was agreed that each would receive £5 million.

Pirc said that investors should withhold approval of the accounts because Sports Direct had failed to disclose either an environmental or employment policy. Even the reappointment of Grant Thornton as auditor should be opposed, according to Pirc, because the accountant’s fees for tax services and other work exceeded its audit fee from Sports Direct.

Any action by shareholders prompted by Pirc is unlikely to force Sports Direct into changes since Mr Ashley holds a majority stake. However, they reflect increasing hostility towards the company from the City since it floated in February because of poor corporate governance and lack of communication with investors.

The shares have slumped 53 per cent below the 300p float price and closed yesterday at just 139¾p.

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