If he didn’t have enough to worry about with plunging sales and a tanking share price, Marks and Spencer boss Sir Stuart Rose may also have to face down an investor rebellion at the retailer’s AGM on Wednesday. Reports suggest that around 30% of his investors could refuse to back M&S’s controversial plan to promote him to executive chairman, which has gone down like a lead balloon in the City. That’s a huge revolt by public company standards – it’s generally considered a big kick in the teeth if 10% of shareholders refuse to back the board, so you can see just how irate some of these big investors are….
The original story in yesterday’s Sunday Times (just above the piece about MT’s ’35 Under 35’ 2008, you may have noticed) suggested that fund managers Schroders and Legal & General are behind this shareholder rebellion, with up to 15% expected to vote against Rose’s elevation outright, and another 15% likely to abstain. Some of M&S’s big backers are apparently going to protest by voting against the retailer’s accounts – the corporate equivalent of stamping your feet and sticking out your bottom lip. And with the company’s market value down by two-thirds since this time last year, you can see why they’re sulking.
The plan to promote Rose was already unpopular, given that these days the City considers it pretty bad form to combine the chairman and CEO roles. But last week’s rotten figures, which showed a 5.3% drop in sales for M&S last quarter, will have made his position even more difficult. Although the retailer blamed the fall on the weakening market, not everyone was convinced – certainly the sudden departure of Steven Esom suggests that all is not well in the food division, which appears to be losing customers to cheaper rivals. Even Gordon Brown is now telling us to be a bit smarter about our food shopping (on the grounds that we currently chuck away £8 of food a week), which is unlikely to help...
It’s certainly a fairly rapid turnaround in fortunes for Rose. It wasn’t long ago that he was being hailed as a retailing genius for resurrecting the fortunes of M&S; now that customer confidence has ‘deteriorated markedly’ (as he puts it), he’s right in the firing line. But these big investors need to be careful what they wish for – good leaders don’t turn into bad leaders overnight, and not many people know this business like Rose does. Forcing him out now, at a time when M&S really needs a firm hand on the tiller, could turn out to be a big mistake...
In today's bulletin:
MT celebrates young women in business
Family battle brewing at Anheuser-Busch
Rose facing thorny reception at M&S AGM
Editor's blog: Graceful collapse of a colossus
Tax: is simple better than stable?