Lord Burns, chairman of Marks & Spencer, will embark on a charm offensive this week to persuade angry investors that promoting chief executive Sir Stuart Rose to executive chairman is the best thing for the high-street retailer.
Investors such as Legal & General, which owns 4.9 per cent of M&S, have complained to the board that Sir Stuart's new position breaks the Combined Code on Corporate Governance. Mark Burgess, head of equities at Legal & General, has criticised the decision, arguing the group is best served by two separate roles. Other shareholders to have expressed dismay include Axa Management and the ABI, the trade body representing investors.
However, Lord Burns said: "[The code] says if changes are made, then a board must explain. That is what we will be doing. The reason we are doing this is to provide certainty about Sir Stuart staying on with the group. This is particularly important as we go through more difficulties in the economy."
Lord Burns said he had briefed most of M&S's shareholders last weekend, ahead of its statement last Monday, but had not been able to contact Mr Burgess. He said the board had waited until the last moment because it did not want market-sensitive information to leak. "It was unfortunate but I hope that when I meet him we will be able to explain why we believe Sir Stuart's new role is in the best interests of the company."
Sir Stuart said his new role would give him and the board time to properly select his successor. As part of the reshuffle Sir Stuart, who had indicated he might go in 2009, will now stay on until 2011 to help groom a new chief executive. This will also allow board members to adjust to their new positions.
As part of the changes, Ian Dyson, finance director, takes charge of operations. Kate Bostock assumes responsibility for clothing; she will join the main board, as will food guru Steven Esom. The company will also be considering external candidates for the chief executive's role.
One City retail analyst, Tony Shiret at Credit Suisse, recently suggested that M&S could solve its succession problem in one stroke by taking over the struggling Next group and giving its chief executive, Simon Wolfson, the top job.Reuse content