Marks and Spencer 2008 Annual Report Download - page 38

The Board is responsible for the management of the business
of the Company and may exercise all the powers of the
Company subject to the provisions of relevant statutes and
the Company’s Memorandum and Articles of Association.
For example, the Articles contain specific provisions and
restrictions regarding the Company’s power to borrow money;
provisions relating to the appointment of directors, subject to
subsequent shareholder approval; delegation of powers to a
director or secretary or committees of one or more persons;
and subject to certain exceptions, a director shall not vote
on or be counted in a quorum in relation to any resolution
of the Board in respect of any contract in which he/she has
an interest which he/she knows is material. There are no
known arrangements under which financial rights are held
by a person other than the holder of the shares. Shares to
be acquired through the Company’s share plans rank equally
with the shares in issue and have no special rights. As far as
the Company is aware, there are no persons with significant
direct or indirect holdings of voting rights in the Company
other than as set out in the paragraph entitled ‘Interests in
voting rights’ on page 35.
Significant agreements – change of control
There are a number of agreements to which the Company
is party that take effect, alter or terminate upon a change
of control of the Company following a takeover bid. Details
of the significant agreements of this kind are as follows:
• the £400m Medium Term Notes (MTNs) issued by the
Company to various institutions on 28 March 2007 under the
Group’s £3bn Euro Medium Term Note (EMTN) programme
contain an option such that, upon a change of control
event, combined with a credit ratings downgrade to below
sub-investment level, any holder of an MTN may require
the Company to prepay the principal amount of that MTN;
• the £250m puttable callable reset notes issued by the
Company to various institutions on 11 December 2007 under
the Group’s £3bn EMTN programme contain an option such
that, upon a change of control event, combined with a credit
ratings downgrade to below sub-investment level, any holder
of an MTN may require the Company to prepay the principal
amount of that MTN;
• the $500m US Notes issued by the Company to various
institutions on 6 December 2007 under section 144a of
the US Securities Act contain an option such that, upon
a change of control event, combined with a credit ratings
downgrade to below sub-investment level, any holder of
such a US Note may require the Company to prepay the
principal amount of that US Note;
• the $300m US Notes issued by the Company to various
institutions on 6 December 2007 under section 144a of
the US Securities Act contain an option such that, upon
a change of control event, combined with a credit ratings
downgrade to below sub-investment level, any holder of
such a US Note may require the Company to prepay the
principal amount of that US Note;
• the £1.2bn Credit Agreement between the Company and
various banks dated 13 August 2004 contains a provision
such that, upon a change of control event, unless new terms
are agreed within 60 days, the facilities under that agreement
will be cancelled with all outstanding amounts becoming
immediately payable with interest; and
• the agreement between HSBC and the Company relating
to M&S Money dated 9 November 2004 (as amended and
restated on 1 March 2005) contains a clause such that, upon
a change of control of the
Company, any new owner would
be obliged to give undertakings to HSBC in respect of the
continuation of the agreement, negotiate revised terms
or terminate the agreement.
The Company does not have agreements with any director or
employee that would provide compensation for loss of office or
employment resulting from a takeover except that provisions of
the Company’s share schemes and plans may cause options
and awards granted to employees under such schemes and
plans to vest on a takeover.
(ii) Issue of new ordinary shares
During the period, 12,447,224 ordinary shares in the Company
were issued as follows:
• 114,556 shares under the terms of the 1997 Executive
Share Option Scheme at prices between 358p and 557p;
• 66,030 shares under the terms of the 2000 Executive
Share Option Scheme at prices between 215p and 350p;
• 2,054,623 shares under the terms of the 2002 Executive
Share Option Scheme at prices between 270p and 353p; and
• 10,212,015 shares under the terms of the United Kingdom
Employees’ Save As You Earn Share Option Scheme at
prices between 156p and 559p.
(iii) Purchase of ordinary shares
The Company was authorised by shareholders, at the
July 2007 AGM, to purchase in the market up to 170 million
shares, representing 10% of the Company’s issued share
capital, as permitted under the Company’s Articles. The
Company engages in share buy backs to create value for
the shareholders, when cash flow permits and there is not
an immediate alternative investment use for the funds. The
Company announced on 6 November 2007 that it would
begin a share buy back programme to purchase up to 10%
of the Company’s issued share capital. Since then and up
to 19 May 2008, the date of this report, 127,017,902 of the
Company’s ordinary shares, with a nominal value of 25p each,
were bought back and cancelled, representing 7.5% of the
Company’s issued share capital at 10 July 2007, the date of
the 2007 AGM. An up-to-date summary of all transactions is
available on our website. This standard authority is renewable
annually and approval will be sought from shareholders at
the 2008 AGM to renew for another year. It is the Company’s
present intention to cancel any shares it buys back, rather
than hold them in treasury.
Board of directors
The membership of the Board and biographical details of
the directors are given on page 32 and are incorporated
into this report by reference.
Martha Lane Fox was appointed to the Board as a
non-executive director on 1 June 2007. Jack Keenan
retired from the Board on 10 July 2007.
On 10 March 2008 the Company announced a number of
Board and senior management changes. Lord Burns will retire
as Chairman with effect from 1 June 2008. Sir Stuart Rose will
be appointed Executive Chairman from 1 June 2008.
36 MARKS AND SPENCER GROUP PLC
Group Directors’ report
continued