Marks and Spencer 2009 Annual Report Download - page 56

52 Marks and Spencer Group plc Annual report and financial statements 2009 Directors’ report
Corporate governance
continued
Of course good governance is also a matter of the Board working
effectively as it goes about meeting its accountabilities. To this end
we have undertaken a thorough review of both the Board and its
governance committees and given particular weight to induction
and succession planning. This matters to us – a strong Board
makes a significant difference to a company’s ability to create value.
The annual performance review is an important element of the
Board’s activities to review and improve its performance continually.
What did the Board do during 2008/09?
During 2008/09 we acted decisively to meet the challenge of the
global economic downturn, taking steps to manage costs tightly
and respond quickly to the changing needs of our customers.
Our current priorities place a greater emphasis on managing our
business through the current downturn, underpinning our strong
financial position and continuing to invest for the long term, to be
well placed when the market improves. In November 2008 we
announced six priorities:
Our priorities
– retain our market leading position in general merchandise;
– improve our performance in food;
– drive our international business;
– optimise margins and tightly control costs;
– maintain a strong balance sheet; and
– uphold high ethical standards.
In May 2009 we announced that we have completed a major review
to drive M&S through its next phase of development and launched a
change programme under the banner ‘2020 – Doing the Right Thing’.
The Board met 10 times during the year (see attendance table
on page 60) and at every meeting received an update on current
trading, operational and financial performance from the Chairman
and the Finance and Operations Director. Directors received a
monthly Group Results booklet summarising financial results for the
Group against the current operating plan. It also contained
information on interest expense, cash flow and net debt, balance
sheet, inventories, capital expenditure, investor relations and
competitor news.
The Board received regular updates from the Chairmen of the
Audit; Remuneration; Nomination and Governance; and Capital
Approval Committees on activities during the year and an annual
update from the Chairmen of the How We Do Business Committee
and the Fire, Health & Safety Committee. At each Board meeting
the Group Secretary reported on governance.
Executive Committee members attended Board meetings to
give updates on progress in their respective areas during the year.
The Head of our Customer Insight Unit gave regular updates to the
Board on latest market share data and customer feedback on M&S
products and the service they received in stores.
The Board held an offsite meeting in February 2009 to consider
the mid to long-term retail landscape, presented by independent
advisers, and strategic opportunities presented by the Executive
Committee.
During the year separate meetings were held by the non-
executive directors to consider the process and timetable for
succession to Chief Executive. This would allow for the first
assessment of internal candidates after they had had experience
in their new roles for a reasonable period.
How did the Board review its performance?
In June 2008 we published our Governance Framework containing
individual profiles for Board members and terms of reference for the
Board and its Committees, against which performance could be
measured. In November 2008 the Board agreed that external review
of its performance would not be good use of funds at this time, given
our own internal resource, but that an external review of our internal
process would help us to make sure that our approach to the annual
assessment is thorough.
Sir David Michels, Deputy Chairman, led the 2008/09 Board
review, assisted by Alison Houston, our Head of Board Performance.
In December 2008 each director had a one to one discussion with
the Deputy Chairman, enabling him to highlight particular issues or
themes to be reviewed.
In February 2009 each director completed a questionnaire
electronically to rate performance across the highlighted areas.
An unattributed executive summary was then distributed to all
directors and discussed at the Board meeting in March 2009.
The 2008/09 review has confirmed that:
– whilst the Board had committed additional time to strategic
development and brought forward its deliberations to respond
to the changing economic climate, the balance of time spent on
strategic and operational issues still needed to be monitored;
– succession planning and leadership development required
sustained focus to identify and develop leaders of tomorrow.
The appointment of Jan du Plessis as a non-executive director
had enhanced the independence, skills and experience on the
Board; and
– information presented to the Board on wider stakeholders was
helpful. This included regular presentations on customer sentiment
and the competition which gave a valuable insight into the market
and behaviours using independent analysis.
External review During 2008/09 we worked with external
consultants who advise companies on how to get the best value
out of governance. We used their online tool with electronic
questionnaires for the Board and committee reviews and to produce
the executive summary of the results.
In April 2009 they analysed with us the results of our Board
assessment, gave us feedback on our process and reviewed the
action plans we have set ourselves as a result. We are also
discussing with them ways of benchmarking the progress we make
on those actions during 2009/10.
Board committee performance The Nomination and Governance,
Remuneration and Audit Committees have each conducted reviews
of their own performance as described for the Board. More
information is given in their respective reports on pages 58 to 60.
Board effectiveness continued