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July 9, 2008

UK: Rose on defensive at M&S AGM

Marks & Spencer boss Sir Stuart Rose has told the company's shareholders that he takes corporate governance "extremely seriously" following his controversial promotion to executive chairman.

Marks & Spencer boss Sir Stuart Rose has told the company’s shareholders that he takes corporate governance “extremely seriously” following his controversial promotion to executive chairman.

Speaking at the retail chain’s AGM this afternoon (9 July), Rose reacted to criticism from institutional investors who say taking on the chairmanship while also CEO breaches corporate governance guidelines.

Rose said: “Your board, and I myself, do take corporate governance extremely seriously and I do very much regret the negative publicity that the changes we made a few months ago have attracted.

“I personally care very much about leadership continuity and succession, and have only agreed to these changes for one reason – that I believe it is the right thing to do. Be clear that when my job is done I will go.”

M&S shareholders will vote annually for Rose’s appointment to chairman, with recent reports suggesting that a third of investors, including four of the company’s biggest – pension funds ABP, Universities Superannuation Scheme and Railpen, plus the Co-operative Insurance Society – could vote against the proposal following today’s meeting.

Also speaking at the AGM, M&S’ non-executive deputy chairman Sir David Michels said: “The board entirely and unamonously supported this move for a number of good reasons. We believe that it is in the best interests of M&S to retain Stuart in a leadership role through to 2011.

“He’s been the leading architect of the company’s recovery to date and we believe unquestionably has the right set of skills to take both M&S forward and to complete the job he started. It is also worth mentioning that, in these somewhat uncertain economic times, continuity becomes more important.”

Rose is widely credited as the man who galvanised M&S from struggling times to reach the GBP1bn profit mark last year, before encountering challenges this year culminating in last week’s profit warning.

He had earlier told shareholders that the UK’s retail environment has “changed significantly”, and described the company’s recent profit warning as a “smoke detector” for high street trading.

M&S has turned its attention to international expansion in the face of an economic downturn domestically, and now operates 278 stores in 40 territories.

The company has recently set up joint ventures in Greece, the Balkans and Czech Republic, together with an agreement with Reliance Retail to set up operations in the emerging Indian market.

For the latest reaction to the M&S AGM this afternoon, go to the just-food blog.

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