Marks & Spencer executive chairman Sir Stuart Rose can expect a rough ride at today’s AGM, as shareholders vote on a resolution that would force him to give up his chairman role a year earlier than planned. As many as half are expected to support the motion – that won’t be enough to make it binding on the board, but it’s a big enough revolt to cause serious embarrassment for M&S. But while the retailer has undoubtedly made mistakes to end up in this pickle, it’s a bit hard to see what would be gained by forcing Rose out now…
The motion, which has been tabled by the Local Authority Pension Fund Forum (accounting for about 5% of M&S shares), would force M&S to split the chairman and chief exec role by July 2010, i.e. within the next 12 months. M&S says that it couldn’t agree more, in principle – but it’s set a deadline of July 2011 instead, giving them two years to find a new CEO. So the two sides are not exactly arguing for different things – more about how long the process should take.
There’s no doubt that the move to elevate Sir Stuart to the exec chairman role has rather backfired for M&S. At the time he’d just led the retailer from its previously parlous state to a £1bn+ profit, and seemingly couldn’t put a foot wrong. But even then the move was controversial – the corporate governance lobby was up in arms, and more than a fifth of shareholders failed to back it at last year’s AGM. Now the recession-driven fall in sales has taken away some of Rose’s stardust, his position has become even more precarious.
M&S’s problems are largely self-inflicted. It failed miserably to groom a successor to Rose during the good times, which is why it now has headhunters trawling UK plc. It’s also hard to see why the board was so keen to promote Rose to exec chairman in the first place when it was clearly going to cause ruptions – the idea that it was to give his underlings a chance to scrap for his old job was bizarre, to say the least. So if it gets a kicking today – and shareholders are also likely to oppose the remuneration report and the re-election of committee chairman Lady Patten – it only has itself to blame.
On the other hand, it’s not obvious what this vote would achieve, even if it passed. 12 months is not much time to source and recruit a CEO, apparently from scratch. And if Rose was forced out of the chairman role, he might well quit altogether, which will leave M&S entirely rudderless at a time when they really can’t afford to be. So shareholders are probably better off registering their disaffection forcefully, and encouraging Rose to get on with this search.
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