Marks and Spencer 2007 Annual Report Download - page 41

www.marksandspencer.com/annualreport2007 MARKS AND SPENCER GROUP PLC 39
The success of this year's approach has been due to a number
of key factors:
• evolving and building on the process used in 2005/06 and
using this as a starting point for the design of the 2006/07
review. This ensured that we built on the lessons learnt,
were not starting afresh, and focused on any areas that had
been identified previously;
• the approach was vigorous but simple and for the first time
the questionnaire was conducted electronically;
• ensuring that the Chairman gained buy-in from all Board
members as to how the process should be conducted and
the need to ensure that this is an integral part of how they
work during 2007/08.
Committees Performance Evaluation
The process for reviewing the Committees in 2006/07 has been
to combine on-going reviews with a simple questionnaire led by
each of the respective chairmen.
The Audit and Remuneration Committees undertook a review
looking at their method of operation and processes and
combined this with the use of a questionnaire which was
conducted in March 2007. This proved particularly valuable
given the change of Chairmanship of both of these committees
(Audit – Jeremy Darroch and Remuneration – Louise Patten)
during the year. An executive summary was produced for the
Chairmen of both Committees which they discussed with their
respective Committee members.
The Nomination Committee reviewed its membership during the
year appointing Stuart Rose as a member, prior to its dedicated
session in January 2007 on succession planning.
Succession Planning and Senior Leadership Development
The Board Performance Evaluation in 2005/06 identified that
this was an area the Board wished to give a greater focus to in
the future. Significant progress has been made in this area
during the year including:
• twice-yearly reviews of individuals of the two levels beneath
the Board (full Board – June 2006 and Nomination
Committee – January 2007);
• regular risk assessment of Succession Planning with
mitigating action identified;
• a development programme established for high potential
individuals.
On 25 April 2007 we announced a number of senior
management changes to position the Company for the next
phase of its growth. We recruited two new people for positions
just below Board level as Director of Food and Director of
International Business. We also made further changes to our top
30 senior management, including three new director roles within
the Food Division, building on the appointments made in
October 2006.
Accountability and audit
The Group’s overriding corporate objective is to maximise long-
term shareholder value whilst exceeding the expectations 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 to provide assurance on
compliance with these policies. Independent assurance is
provided by internal audit, 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
Every six months the Board reviews the Group Risk Profile – the
tool that drives risk assessment and action planning. This is
supported by an on-going process for identifying, evaluating and
managing the significant risks faced by the Group. As an integral
part of planning and review, managers from each business area
and major projects:
• identify the risks to their plans;
• evaluate the risks using likelihood and impact; and
• document the actions being taken to manage those risks.
This process has been in place for the year under review and up
to the date of approval of the Annual report and accounts. It
has been regularly reviewed by the Board and accords with the
Internal Control Guidance for directors on the Code produced
by the Financial Reporting Council.
Executive Team Your Board Financial
Review Governance Financials
Shareholder Information