Rose survives revolting shareholders

The M&S boss faced down a revolt to win the backing of investors at the company's AGM...

by
Last Updated: 06 Nov 2012

About 95% of investors voted to re-elect Sir Stuart to the board at Marks and Spencer’s AGM yesterday in London’s Royal Festival Hall, despite grumbles about its flagging performance and the controversial decision to make Rose executive chairman. Most shareholders still seem to believe that he’s the right man to lead M&S back to greatness, suggesting that his efforts in resurrecting the retailer’s fortunes in recent years have earned him enough credit to get through this latest sticky patch. Or else that the truckloads of free tea and sandwiches saved his bacon…

But although it sounds like Rose tried to be his usual ebullient self at yesterday’s bash, he didn’t exactly get an easy ride. Top of the list of complaints was his elevation from CEO to chief executive, which has seriously irked the corporate governance lobby – and at a time when the retailer’s clearly struggling, you can see the argument for not concentrating too much power in the hands of one individual. Naturally the board defended the move, arguing that it was the best way to deal with succession planning – but it’s clear that not everyone was convinced. 

And that wasn’t all that Rose and the board had to contend with. They also came under fire for the share buyback programme, in which M&S borrowed lots of money to buy back a load of shares well above the current market price – thus potentially costing the company a fortune. Other (retail) investors were irate about the deteriorating quality of its women’s clothing, while its new policy to charge customers for plastic bags (as part of ‘Plan A’) also appears to be pretty unpopular –apparently it attracted some of the loudest boos of the day. And one Indian gentleman even criticised him for not having enough Indians on the board, which we imagine was one question Rose wasn’t expecting…

And although Sir Stuart won the crucial vote, the final picture didn’t look quite so good – once abstentions were factored in, it transpired that 22% of shareholders had either abstained or voted against his re-election to the board. That’s a huge rebellion by City standards, where a 3% protest vote is considered a bit of a kick in the teeth. It won’t be enough to force a U-turn on the executive chairman move, but it probably means that M&S will need to bring in a real heavyweight for the vacant non-exec post (for what that’s worth).

Still, at least Rose did win the vote – and on yesterday’s evidence, he seems to retain the confidence of most of his shareholders. When it comes down to it, there aren’t many plausible leadership alternatives, either inside or outside M&S – so it’s not really in anyone’s interests to force him out. But with another three years until he unveils a successor, and no signs of an M&S recovery, he’s got his work cut out to get the rebels back onside...

In today's bulletin:
Bank refuses to buckle
EADS hammered as US closes ranks 
Rose survives revolting shareholders 
Ryanair and co get their wings trimmed
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