M&S prepares to repel rebels
Retailer asks for clarification of governance code as shareholders seek new chairman at annual meeting
Marks & Spencer has asked for the corporate governance code to clarify its rules on a chief executive becoming chairman – the key issue on which it faces a shareholder revolt this week.
The retailer, where Sir Stuart Rose holds both positions, is also asking for the code to give better guidance on succession planning, amid criticism that he has failed to identify his successors.
Rebel shareholders have added a resolution to the agenda Wednesday's annual meeting calling on Sir Stuart to bring forward by 12 months to next July the date when an independent chairman will be appointed. The board is urging investors to oppose the resolution. The company secretary, Graham Oakley, says: "They urge this without consideration as to whether this would prompt his departure from the board entirely, also forcing early appointment of a new chief executive".
Mr Oakley has written to Sir Christopher Hogg, the chairman of the Financial Reporting Council which produces the code that says chief executives should not become chairman or hold both positions. Firms that deviate from the code are required to say why. However, Mr Oakley complains that " 'comply or explain' is sometimes interpreted as 'comply or else' by some shareholder representatives".
The resolution calling for Marks to find a new chairman was submitted by Bradford Council on behalf of other local-authority pension funds, backed by the lobby group Pirc.
Mr Oakley has called for Sir Christopher to change the code on the chairmanship issue and on identifying successors. "More guidance would be helpful on the role of the nomination committee, and, in particular, consistency around leadership development and succession planning," he says. "It would also be helpful to differentiate between the roles of chairman and chief executive being combined and the chief executive stepping up to be chairman. Governance concerns for the former relate to the effectiveness of the board and, for the latter, to the effectiveness of the new chief executive."
Sir David Michels, who was made deputy chairman last year to appease shareholders opposed to Sir Stuart taking on both roles, has indicated his wish to become chairman but has had no support from Sir Stuart, who merely said last week: "It's a free world if he wishes to put forward his candidature".
Marks has a long history of boardroom disputes. Lord Myners, now a Treasury minister, was removed as chairman in previous infighting.
The company will seek a new chief executive next year but retail analysts say there is no clear internal candidate and criticise the apparent lack of succession planning. Sir Stuart will have been chief executive for six years.
This week's resolution asking him to shed the chairman's role within a year requires a 75 per cent majority. The rebel shareholders hope to attract some of the 28 per cent of investors who did not support Sir Stuart's re-election to the board last year, and say a vote close to 50 per cent would send a clear message.
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