Marks and Spencer 2006 Annual Report Download - page 34

Marks and Spencer Group plc
Corporate governance
The Board is focused on achieving long term success for the
Company through the pursuit of sound business strategies
whilst maintaining high standards of corporate governance
and corporate responsibility. The following statement explains
our governance policies and practices and provides insight
into how the Board and management run the business for the
benefit of shareholders. A detailed account of how we comply
with the Combined Code on Corporate Governance (the
‘Code’) provisions can be found on the Company’s website,
together with the terms of reference of the Audit,
Remuneration and Nomination committees, at
www.marksandspencer.com/investorrelations.
The Board
On 1 April 2006 the Board comprised the Chairman, Deputy
Chairman, Chief Executive, two executive directors and six non-
executive directors, who are collectively responsible for the
success of the Company. A list of directors, with details of their
biographies and committee membership, is given on page 19.
Paul Myners is Chairman and he is responsible for the working
of the Board, for the balance of its membership subject to
Board and shareholder approval, and for ensuring that all
directors are able to play their full part in its activities to deliver
value to shareholders. He ensures effective communication
with shareholders and that Board members have a sound
understanding of the views of investors.
Paul retires as Chairman following the Annual General Meeting
on 11 July 2006 when Lord Burns succeeds him, having been
appointed Deputy Chairman in October 2005. Paul is also
stepping down from the Board as, under the Code principles,
having served as Chairman, he can no longer be considered
as an independent director.
Stuart Rose is Chief Executive and he is responsible for all
aspects of the management of the Group and its business,
which includes developing the appropriate business strategies
for Board approval and achieving timely and effective
implementation. He ensures that, within the strategies agreed
by the Board, appropriate objectives and policies are adopted
for each area of the business, that appropriate budgets are set
and that their performance is effectively monitored with
guidance or direction given as appropriate.
The Chairman ensures that the directors receive accurate, timely
and clear information. Directors are encouraged to update their
skills, knowledge and familiarity with the Group through their
initial induction, on-going participation at Board and committee
meetings, and through meeting our people at store locations
and elsewhere. Views of customers and shareholders are also
shared through Board presentations and individual meetings.
The Board is regularly updated on governance and regulatory
matters. There is an established procedure whereby any
director, wishing to do so in the furtherance of their duties, may
take independent professional advice through the Group
Secretary at the Company’s expense. This facility has been
extended to the Audit, Remuneration and Nomination
committees. The Company maintains liability insurance for its
directors and officers. The directors and secretary have also
been granted qualifying third party indemnities following
shareholder approval in July 2005.
Kevin Lomax is Senior Independent Director and he is charged
with establishing a communication channel between the
Chairman and the non-executive directors and ensuring that
the views of each non-executive director are given due
consideration. He is also an additional contact point for
shareholders if they have reason for concern which contact
through the normal channels of Chairman, Chief Executive or
Finance Director has failed to resolve or for which contact is
inappropriate.
Kevin Lomax is retiring from the Board on 31 August 2006,
when he will have completed two three-year terms as a non-
executive director. On 1 September 2006, David Michels will
succeed Kevin as Senior Independent Director and Jeremy
Darroch as Audit Committee Chairman.
The non-executive directors provide a wide range of skills and
experience to the Group. They bring an independent judgement
on issues of strategy, performance, risk and people through
their contribution at Board and committee meetings. The Board
considers that throughout the year each non-executive director
was independent in character and judgement and that they also
met the independence criteria set out in the Code. The non-
executive directors have ensured that they have sufficient time
to carry out their duties. Any term beyond six years (ie two
three-year terms) for a non-executive director is subject to
particularly rigorous review.
Following the completion of the non-executive director and
successional review, the Board has reviewed committee
membership to refresh the skills, knowledge and experience
of the Audit and Remuneration committees.
Graham Oakley, Group Secretary, acts as a sounding board
to the Chairman and individual directors. He supports the
Chairman in ensuring the effective functioning of the Board.
He is secretary of the Audit, Remuneration and Nomination
committees. He also heads the Corporate Governance Group,
which supports the Board and its committees and commercial
colleagues on a range of issues.
The Board has a formal schedule of matters reserved for its
decision. It determines the overall Group strategy; creation,
acquisition or disposal of material corporate entities or assets;
development and protection of the brand; matters of public
interest that could affect the Group’s reputation; public
announcements including statutory accounts; significant
changes in accounting policy; capital structure and dividend
policy; operating plans and key performance indicators;
prosecution, defence or settlement of material litigation; Group
remuneration policy and Board structure, composition and
succession.
The Board receives regular updates on performance against the
annual operating plan and investment decisions, together with
business reports and presentations from senior management.
32 www.marksandspencer.com/corporategovernance2006