Marks and Spencer 2009 Annual Report Download - page 54

Overview
50 Marks and Spencer Group plc Annual report and financial statements 2009 Directors’ report
Corporate governance
What is our approach to governance?
Leadership and governance go hand in hand in a successful company.
For both to work well you need a clear plan of what you want to
achieve. There are different ways to secure good governance:
– what you achieve in practice is as important as the formal structures;
– a strong relationship between management and the Board is
important, with trust, challenge, a common goal and good
information flows between them; and
– it’s not just about the Board – it’s about how governance is
understood and acted on throughout the business – ‘from the
boardroom to the shop floor’.
“We have one of the most trusted brands on the high street.
We need a clear plan, inspired leaders and motivated
employees, all focused on giving customers what they
want at M&S.” Sir Stuart Rose, Chairman
We recognise that our current Board structure is out of line with the
Combined Code in that Sir Stuart Rose combines the roles of
Chairman and Chief Executive. We understand the concerns of our
shareholders but believe that we still can – and do – maintain robust
governance while at the same time benefiting from having Stuart
at the helm.
“As Deputy Chairman I lead on governance; together
with Stuart and our Board colleagues, we are guardians
of the M&S brand.” Sir David Michels, Deputy Chairman
As long as we have robust governance and make sure that
appropriate challenge to the executive is in place, we believe
the right balance can be maintained.
This report sets out how we achieve this and how M&S
governance adds value to the business.
How does the Board demonstrate independence?
We are putting particular emphasis on making sure that our
independent review of the executive is effective.
We have strengthened the role of the Deputy Chairman to address
concerns over the combined role. He leads on all governance matters,
which includes engaging shareholders on their views, chairing the
Nomination and Governance Committee and conducting the review
of Board performance.
The Board has a clear majority of independent directors – with six
out of 10 being fully independent. All our non-executives have been
appointed since 2004 and have an average tenure of less than three
years each.
It’s also a question of mindset – our Board combines a broad
range of skills, experience and personalities which secures the
necessary level of challenge and insight to enhance executive
performance.
We are conscious of the need to give sufficient time for questions
and debate in the boardroom so discussion does not get curtailed.
The non-executives have the opportunity to influence the agenda.
An ongoing timetable of executive updates is kept under review and
strategic discussions were brought forward to respond to the current
economic climate and changing needs of our customers.
The governance committees carry out detailed independent
oversight on behalf of the Board to ensure we have the appropriate
processes in place for succession, remuneration and audit.
The non-executives get good, direct access to the management
team through presentations at Board and committee meetings,
the Board’s strategic session in February and ad hoc meetings
at their request.
Our Group Secretary supports both the Chairman and the
Deputy Chairman in carrying out their governance accountabilities.
He also makes sure the non-executives get the information and
access to people they need. He is supported by the corporate
governance group which makes sure that the role of governance is
understood throughout M&S. On 8 July 2009 the Group Secretary,
Graham Oakley, will retire and will be succeeded by Amanda Mellor,
current Head of Investor Relations.
“I am constantly aware of the need to be independent and
to ask the challenging question – it’s in the best interests
of M&S.” Steven Holliday, Non-Executive Director
“I have direct access to the Audit Committee Chairman.
The Committee supports me in making sure that
management responds to our findings and that internal
audit is effective.” Mark Fensome, Head of Internal Audit
“I am pleased that my colleagues and I can be forthright
in the boardroom. Our Board culture supports this.”
Jan du Plessis, Non-Executive Director
How does the Board keep fully informed?
We have a comprehensive but efficient committee structure to help
keep the Board fully informed.
Activity reports from the Nomination and Governance,
Remuneration and Audit Committees are given on pages 58 to 60.
The committee chairmen report to the full Board on the outcomes
of each meeting. With so much detailed work being delegated to the
committees, it is essential that time is given to keeping all directors
up to date and to give them opportunities to ask questions.
The following committees also support the Board in fulfilling its
governance accountabilities:
Executive Committee – to develop and implement Board strategy
and react to operating and financial performance
Customer Insight Unit – to analyse marketplace trends and
customer views to influence business decisions
How We Do Business Committee – to implement Plan A,
our 100 social, environmental and ethical commitments
Business Involvement Groups – to represent employee views
to management to influence business decisions
Capital Approval Committee – to approve capital expenditure
within Board limits and optimise investment
Board effectiveness