Investor thumbs down for Rose M&S role

Marks & Spencer’s attempts to win over critics of its controversial move to promote chief executive Stuart Rose were dealt a blow today.

Legal & General Investment Management, which has a 5% stake in the company, said a meeting with leading members of the M&S board failed to allay its concerns about Mr Rose’s planned new position as executive chairman, announced by the retailer two weeks ago.

The appointment goes against best practice guidelines as the City’s 2003 Combined Code on corporate governance recommends that a company should avoid promoting a chief executive to chairman. The company is not planning to replace Sir Stuart as chief executive, but will hand over some of his executive day-to-day management duties to finance head Ian Dyson.

The company has defended the switch as “in the best interests of M&S”, as it looks for a long-term successor to Rose when he leaves the group in 2011.

But non-executive chairman Lord Burns – who will make way for Rose in June – and senior independent director David Michels, were told by L&G that it was not the right structure to allow for the appointment of a successor.

Mark Burgess, head of equities at L&G Investment Management, said: “We do not support a dilution in corporate governance standards, particularly in leading UK companies.”

Lobby groups have also been critical, with corporate governance body PIRC among those to raise concerns.

It said recently: “As a matter of principle, PIRC does not support the re-election of a chairman with executive responsibilities, in particular where the chairman also appears to fulfil the role of chief executive – a double no-no.”

The company’s annual meeting in July will not provide shareholders with an opportunity to protest as Rose stood for re-election last year.

He had originally said on joining in 2004 that he would leave after five years at the helm. Rose, who is 58, now aims to retire after his three-year stint as executive chairman.