M&S poised to act after Rose criticism

Marks & Spencer is today expected to offer a series of concessions to investors over its controversial plans to promote chief executive Stuart Rose.

The retail giant is said to have drafted a letter to shareholders spelling out measures to win backing for Rose's move to the post of executive chairman.

It is understood that M&S will propose that Rose stands for re-election every year, which will allow shareholders to vote on his appointment at this year’s annual general meeting in July.

The group will also reportedly pledge not to give Rose a pay rise and look to appoint a senior independent director to ensure his influence is kept in check.

It is thought that M&S had been in talks with the Association of British Insurers (ABI) over the details of the final letter, which could be made public as early as today.

The move comes after a three-week spat with investors angered by plans to effectively combine the post of chief executive and chairman, which goes against best practice guidelines.

The London market's 2003 Combined Code on corporate governance recommends that a company should avoid promoting a chief executive to chairman.

M&S announced the decision to appoint Rose as chairman as part of succession plans, with the group’s boss pledging to stay on until July 2011.

The company said it was not planning to replace Rose as chief executive, but would hand over some of his executive day-to-day management duties to finance head Ian Dyson.

However a raft of its major investors have opposed the decision, with Legal & General Investment Management, which has a 5% stake in the company, last week saying there was no need for “a dilution in corporate governance standards, particularly in leading UK companies”.

The ABI, which represents shareholders that control about a fifth of UK stock market, was also critical of Rose’s appointment as chairman.

One analyst, who did not want to be named, today criticised the retailer for its handling of the affair.

“It’s unfortunate that it has come to this – there are certain situations where investors take a benign view of a combined chairman and chief executive role, but normally that’s when a firm is in a severe state of affairs, which M&S is not.

“The obvious question is why they didn’t just keep Sir Stuart on as chief executive.”