Morrisons buys time with board appointment

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The Independent Online

The supermarket chain Wm Morrison will attempt to appease investors this week by announcing it is close to strengthening its board with the appointment of a third non-executive director.

The supermarket chain Wm Morrison will attempt to appease investors this week by announcing it is close to strengthening its board with the appointment of a third non-executive director.

A second profit warning in nine months has piled the pressure on the owner of Safeway to shake up its corporate governance, and has cast doubt on the position of its finance director Martin Ackroyd.

Sir Ken Morrison, the 73-year-old chairman, could use Wednesday's preliminary results announcement to break his self-imposed silence on the company's succession plans. He has long refused to be rushed on the issue, despite maintaining that the group has already decided internally.

Sir Ken is known to be keen for his son William, 29, to take over one day. The obvious internal candidates are the joint managing directors, Bob Stott and Marie Melnyk, although it is not clear that either appointment would please the City. Investors want the group, which finally appointed its first independent directors last May, to create a nominations committee.

There were no clues yesterday about the identity of the third non-executive director, although it would surprise no one were Sir Ken to opt for another fellow Yorkshireman.

David Jones, the Next chairman and the president of Yorkshire County Cricket Club, and Duncan Davidson, the founder and chairman of the York-based housebuilder Persimmon, joined the board last May. Although Mr Jones would be a popular choice to replace Sir Ken, chairing Morrisons as well as Next would break City rules calling for executives to chair only one FTSE 100 company.

Tomorrow, the non-executive duo, who are outnumbered by seven executive directors, will face their toughest test yet at Morrisons at a board meeting that could determine the fate of Mr Ackroyd. Analysts have called for him to go after last week's admission that Morrisons' profits would be £40m lower than expected. The hole, which was blamed on changing suppliers' terms, fuelled fears that the group had taken on too much when it bought Safeway for £3bn. The warning followed the revelation last July that differences between Morrisons' and Safeway's accounting procedures would wipe £180m from its bottom line this year.

The challenge of integrating a group twice its size has wiped out Morrisons' once dependable sales growth, savaging its share price and profit margins. The company said last week it was finding the supermarket sector "increasingly competitive", which some analysts read as an admission of failure.

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