Marks and Spencer 2002 Annual Report Download - page 14

Corporate governance
The remuneration of non-executive directors is determined by the Chairman together with the other executive
directors. The Board considers each year whether shareholders should be invited to consider separately the
Remuneration Report at the AGM, and is proposing a separate resolution to shareholders at the 2002 AGM.
Nomination Committee: keeps under review the Board structure, size and composition; selects and proposes to
the Board suitable candidates for appointment as directors of the Group, and considers Board successional plans.
It comprises all the non-executive directors, is chaired by Brian Baldock, and meets as required.
Corporate Social Responsibility (‘CSR’) Committee: provides the Board with an overview of the social,
environmental and ethical impacts of the Group’s activities. It is chaired by Luc Vandevelde, is comprised of main
Board members and senior management and meets at least three times annually. The Committee reviews the Group’s
CSR strategy, policies and performance on behalf of the Board. The Group’s risk assessment process is applied to
identify the key risks in the areas of employment policy, ethical trading, environmental management, animal welfare,
health and safety and community involvement. Our first full CSR Report will accompany our next annual report in
June 2003 following consultation with our principal stakeholders and will be externally audited and verified.
Relations with shareholders
The Group is committed to ongoing communication across its entire shareholder base, whether institutional investors,
private or employee shareholders. This is achieved principally through annual and interim reports, quarterly trading
statements and the AGM. The Group’s website at www.marksandspencer.com contains corporate and customer
information updated on a regular basis.
Regular dialogue and presentations take place throughout the year with institutional investors. The AGM held in July
in London is well attended by shareholders who receive a business presentation and have the opportunity to ask
questions of the full Board including the chairs of the Audit, Remuneration and Nomination Committees. The results
of the proxy voting are declared at the Meeting and are published on the Group’s website together with a resumé of
the Meeting.
Accountability and audit
Responsibility for risk and internal control
The Group’s overriding corporate objective is to maximise long-term shareholder value whilst exceeding the needs
of our customers, employees and partners. In doing so, the directors recognise that creating value is the reward for
taking and accepting risk.
The Board has overall responsibility for the Group’s approach to assessing risk and systems of internal control, and for
monitoring their effectiveness in providing shareholders with a return that is consistent with a responsible assessment
and mitigation of risks. This includes reviewing financial, operational and compliance controls and risk management
procedures. The role of executive management is to implement the Board’s policies on risk and control, and present
assurance on compliance with these policies. Further independent assurance is presented by an internal audit
function, which operates across the Group, and the external auditors. All employees are accountable for operating
within these policies.
Because of the limitations that are inherent in any system of internal control, this system is designed to manage,
rather than eliminate, the risk of failure to achieve corporate objectives. Accordingly, it can only provide reasonable
but not absolute assurance against material misstatement or loss.
Risk assessment
The Board has established an ongoing process for identifying, evaluating and managing the significant risks faced
by the Group. As an integral part of planning and review, management from each business area and major project
identify their risks, the probability of those risks occurring, the impact if they do occur and the actions being taken
to manage those risks to the desired level. This information is communicated upwards on a filter basis, culminating
in a comparison with the executive directors’ assessment of the Group’s risks and discussion by the Board of the
Group Risk Profile.
12 Marks and Spencer Group plc