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Marks & Spencer was facing a full-scale investor revolt last night after Schroders, one of its top ten shareholders, made a devastating attack on the retailer's plans to give the chief executive, Sir Stuart Rose, the additional role of chairman.
Richard Buxton, the head of UK equities at Schroders, said that M&S was setting an “appalling example” and cast doubt on its claims that it had widespread investor support for the boardroom shake-up.
“We don't believe there's been any consultation and we've not been able to find any shareholder who's genuinely supportive of it,” he told The Times.
Mr Buxton, one of the most respected equity fund managers in the City, said that Lord Burns, the chairman of M&S, had given him the “brush-off” when asked for an explanation. He also said that he doubted M&S's argument that Sir David Michels, the deputy chairman, would provide a counter-balance to Sir Stuart.
The intervention by Schroders, which owns a 2 per cent M&S stake worth £130 million, leaves in tatters the retailer's claim that Legal & General, which owns 5 per cent of M&S and has already criticised the boardroom changes, was a solitary voice in opposition. The Association of British Insurers too has expressed reservations and demanded an explanation of the boardroom changes.
Mr Buxton said that the planned promotion of Sir Stuart to executive chairman went against ten years of corporate governance best practice.
“For such a household name, it sets an appalling example,” he said. “We're dead against. First and foremost, it's an undue concentration of power. It means there isn't going to be any realistic questioning of the strategy set by Sir Stuart at a time when the trading over Christmas demonstrated there might be some serious questions to be asked.”
Mr Buxton hinted that M&S ought to rethink even if it meant losing Sir Stuart completely. “The company is bigger than any individual,” he said.
Sir Stuart had made plain to Lord Burns he would not stay at M&S unless he was given the additional powers.
Mr Buxton, who runs the £1.5 billion Schroder Alpha Plus fund, also criticised M&S for its handling of Schroders' concerns. “We wrote to Lord Burns stating our objections. We received a brush-off reply from the company secretary saying they would be writing to all shareholders shortly.”
M&S has already come under fire for its lack of consultation over the controversial move. L&G was given an hour's notice before M&S went public on March 10. M&S only gave advance notice at all to four or five shareholders.
Although Sir Stuart is deemed to have done a good job at M&S over the past three years, doubts have crept in over his strategy because of the recent shrinking of underlying sales. The shares have plunged from a high of 750p a year ago to about 400p.
M&S last night declined to comment. It has argued that the elevation of Sir David and the appointment of an additional non-executive director would provide a counterweight to Sir Stuart.
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Maybe Mr Stanley Stephens, Gamlingay South Cambs., England judges the way Stuart Rose manages by his own manner. One can lead and steer a company and still listen to others. Not much chance of that I fear with Mr Stephens. His "mark my words" and "give me two reasons and I'll give you half a dozen" point to someone utterly convinced they are right. And why pick on the Israeli correspondant?
Victoria, Tavistock,
The heads of retail empires are relics of the 1970s ethos.Where one person ran the business in a unchallenged autocratic way.Rose wants to do what he does in an unchallenged,autocratic way.He has no time for listening to alternatives from other people.These are different times and a less dominate style is needed..The Rose way is great in boom times,but that approach rarely succeeds in a downwards trend.Shops are not the personal fifedom of one person,but as accountable as any other PLC.
david glowacki, london, uk
From a corporate governance perspective,it is not best practice. This could have quite easily been avoided if there had been a proper succession plan put place earlier.
M&S is bigger than one person, so if Stuart Rose is unable to accept one position-then let him go and get somebody in who will take M&S to the next level...including corporate governance and succession planning!
Cris, Alton,
As a small shareholder and customer I think Stuart Rose has and is doing a good job for M&S - do the overpaid people in Schroders or L&G ever shop in M&S? - I doubt it - he is a strong manager and they don't like it.
Poly, London, England
As a small shareholder in M&S. I think it sets a bad example that one man should take on both rolls for a major company.
I was not asked to vote on this appointment and feel that it is just wrong.
Stuart Rose should take on one or other of the apointments but not both.
Paul, Droitwich Spa, UK
Boffin 29.3.08 6.47
I am glad to see the amount of people that share my view with regards to the upgrading of Stuart Rose, he most certainly did not bring M& S out of the doldrums, it was purely more luck than judgement that they started to climb the ladder, through past experience, never have I seen any value for money since he has received his pat on the back, but you will see in the near future M& S shares were caused by a flash in the pan as I wrote in my comments a week ago in the express, mark my words, his promotion will do nothing for M&S.
Stanley Stephens, Gamlingay South Cambs., England
Boffin 29.3.08 7.06pm
I have been reading the other comments on behalf of Stuart Rose,and dont mean to be rude in any way, but I would like to ask I Kemp,Nahiriya, Israel.) just why she thinks so highly of this gentleman, give me two reasons why he is the man for the job, and I will give you half dozen reasons why he is not..
Stanley Stephens, Gamlingay South Cambs., England.
What is the point in paying an additional inflated salary to an external worthy, who perhaps knows nothing about the business, to chair meetings? Stuart Rose has shown he has the measure of the business, is popular among staff and small investors, and is clearly capable of running board meetings as well as the business. There are enough other voices on the board to query any policies or actions by the Chief Executive, - if they are so inclined! This small shareholder is perfectly content for Stuart Rose to become executive chairman.
Alan, Reading, UK
I worked in investor relations and was also appalled that when asking for forecasts some fund managers asked for and then followed others opinion.
I work for M&S now and yes it is a mammoth of a company in a volatile, fickle sector. What a change for the company when Rose came on board. Before I was sick of hearing customers comments about how badly we were doing. Fed by the media witch hunt at the time, customer confidence plummeted and staff morale was almost non existent.
The Autumn/Winter 2005 changed this and the way we present the product. I know nothing of the logistics of stock etc and yes it is infuriating when a popular product sells out. But I'd love to see some of the critics actually take this beast on and do better.
I love working for M&S, totally believe in the product, our innovation, committment to excellence and respect we have for our customers.
I am a simple shop assistant, earning £6.80 an hour
Victoria, Tavistock,
Schroders and Co are making a huge mistake. If M & S is "bigger than any individual" one has only Stuart Rose to thank for it being were it is and turned around. It seems that Mr Buxton being given the "brush off" by Burns has made it a matter of "getting even". If M & S lose Stuart Rose it will be to the detriment of the retailer and ALL investors
I.Kemp, Nahariya, Israel
Don't you just love these "investors" who have never run a business in their lives telling the few successful people in the UK how or how not to run their companies....get a grip lads.
I was involved in "the City" and went, as FD of an up an coming listed company, to an investment briefing lunch and asked the young guy next to me how much he had to invest each week and how he decided what to do....he said he had £1 million a week to invest for his company and that he only followed whatever the guy (an older investment manager) at the other end of the table (stuffed on red wine) in whatever he did as he could not then be blamed.
These guys get rich for doing nothing and, do not get me wrong, I would welcome the opportunity of doing the same and working as hard (or as little) as they do yet not have any real responsibility
Tony, London,