Marks and Spencer 2005 Annual Report Download - page 14

12 MARKS AND SPENCER GROUP PLC
Corporate governance continued
Under the Company’s Articles of Association, all directors seek
election at their first Annual General Meeting following appointment
and all directors are required to offer themselves for re-election at
least every three years. In addition, any director who is aged 70 or
more is required to retire and seek re-election annually.
Committees of the Board
The audit committee comprises Kevin Lomax (chairman),
Anthony Habgood, Steven Holliday and Jack Keenan, all of whom
are independent, non-executive directors. Paul Myners was a
member until he was appointed Company Chairman on 31 May
2004. Brian Baldock and Dame Stella Rimington were members
until they retired on 14 July 2004. Anthony Habgood and Steven
Holliday joined the committee on their appointment on 15 July
2004. Its primary function is to maintain the integrity of the financial
statements and other information to shareholders, to review the
systems of internal control and risk management; to maintain an
appropriate relationship with the Company’s external and internal
auditors and to review the effectiveness and objectivity of the audit
process. Additional items reviewed during the year include:
international accounting standards, clothing stock and
commitment controls, store assurance, business change,
information security and cash controls. Private meetings have
also been held separately with the external auditors and the
Chief Internal Auditor. From 1 May 2005 Stuart Rose and Charles
Wilson, supported by the Finance Group, will assume the
responsibilities normally performed by a Finance Director until the
appointment of Ian Dyson on 27 June 2005.
The audit committee keeps under review the independence and
objectivity of the external auditors, PricewaterhouseCoopers LLP
(‘PwC’), including the review of audit fee proposals and non-audit
fees. An engagement and fee approvals process is in place which
requires prior committee approval for some engagements and
excludes others. In some cases, the nature of the non-audit advice
may make it more timely and cost-effective to select PwC, who
already have a good understanding of the Group. PwC may also
be appointed for consultancy work, but only after rigorous checks,
including competitive tender, to confirm they are the best provider.
PwC is also subject to professional standards which safeguard the
integrity of the auditing role performed on behalf of shareholders.
Details of this year’s fees are given in note 3 to the financial
statements.
The Board is confident that the collective experience of the audit
committee members enables them, as a group, to act as an
effective audit committee. The committee also has access to the
financial expertise of the Group and its auditors and can seek
further professional advice at the Company’s expense if required.
Our search for a new non-executive director with recent and
relevant financial experience to refresh the skills and experience of
the committee as a whole continues, having been interrupted by
the significant Board restructures in May and November 2004.
The remuneration committee comprises Jack Keenan
(chairman), Anthony Habgood, Steven Holliday and Kevin Lomax,
all of whom are independent, non-executive directors. Dame Stella
Rimington was chairman until her retirement on 14 July 2004.
Barbara Cassani and Brian Baldock were members until their
retirement on 30 April and 14 July 2004 respectively. Kevin Lomax
became a member on 15 July 2004. Its primary role is to
recommend to the Board the remuneration strategy and framework,
giving due regard to the financial and commercial health of the
company and to ensure the executive directors and senior
management are fairly rewarded for their individual contributions
to the Company’s overall performance. The remuneration of the
non-executive directors is determined by the Chairman and the
executive directors.
The Remuneration Report is set out on pages 16 to 25 as required
by the Directors’ Remuneration Report Regulations 2002.
The nomination committee comprises Paul Myners (chairman),
Anthony Habgood, Steven Holliday, Jack Keenan and Kevin
Lomax, all of whom are independent non-executive directors, with
the exception of the Chairman. Brian Baldock and Dame Stella
Rimington were members until their retirement on 14 July 2004.
Its role is to ensure that appropriate procedures are in place for the
nomination, selection, training and evaluation of directors and for
successional plans. It reviews Board structure, size, composition
and successional needs, thereby keeping under review the balance
of membership and the required blend of skills, knowledge and
experience of the Board.
Paul Myners was appointed as Chairman in May 2004 on an
interim basis until a permanent appointment is made, having been
appointed to the Board in April 2002 as an independent non-
executive director. He subsequently made more time available so
that he could continue in the role while the search for a permanent
Chairman continued. He is chairman of Aspen Insurance Holdings
Ltd and of Guardian Media Group plc. He is a non-executive
director of the Bank of New York and will join the Court of
Directors of the Bank of England on 1 June 2005. In 2004 he
retired as a non-executive director of mm02and as a trustee of
the Charities Aid Foundation.
Also in May 2004, Stuart Rose was appointed as Chief Executive
and Charles Wilson as executive director, both with considerable
experience in retail and turnaround situations. During the year
further candidate searches resulted in two non-executives being
appointed to the Board in July 2004 and a Finance Director to
be appointed in June 2005, all recruited externally. In all cases
appointments were made on merit and against objective criteria
to ensure that the Board maintains an appropriate balance of skills
and experience.
Kevin Lomax, an independent non-executive director, has led the
search for a new Chairman on behalf of the nomination committee.
The committee has also commissioned searches for new non-
executive directors to address successional arrangements and
broaden the skills, experience and diversity of the Board.
In May 2005 we announced that Lord Burns will be joining the
Board as Deputy Chairman with effect from 1 October 2005 and
will become Chairman from the Annual General Meeting in July
2006. Paul Myners will then step aside from the Board as, under
the Combined Code principles, the Board will not be able to
consider him as an independent director.
The corporate social responsibility (“CSR”) committee
comprises Paul Myners (chairman), Jack Keenan, Graham Oakley
and seven members of management. Mark McKeon and Alison
Reed were members until their retirement on 9 November 2004
and 30 April 2005 respectively. It provides the Board with an
overview of the social, environmental and ethical impacts of the
Group’s activities. Key CSR risks and opportunities are identified in