Marks and Spencer 2010 Annual Report Download - page 53

Operating & Financial review p16 
Governance 
Financial statements p78 
To find out more, visit marksandspencer.com/annualreport2010 49
“ Last year we set an action plan
to address being an independent,
informed and responsible Board.
Our performance review focused
on these three key areas.”
Sir David Michels Deputy Chairman
Sir David Michels, Deputy Chairman, talks about the
2009/10 Board performance review
This year we reviewed how we ensure independent challenge
around strategy, succession, leadership, risk and reward. We felt
that we had responded to external concerns regarding the
Chairman/CEO role and increased the level of dialogue with our
investors. At least half the Board comprises independent directors
who bring experience from other retail and consumer-facing
sectors, finance, property, international and online businesses.
Accountability is strengthened by ensuring there is sufficient time
for debate in the boardroom. The committees carry out detailed
independent oversight on behalf of the Board to ensure we have the
right processes in place for succession, audit and remuneration. The
Board receives independent analysis on stakeholder feedback from
our Customer Insight Unit; Director of Plan A, CSR and Sustainable
Business; and an annual investor audit produced by Makinson
Cowell. This combination of experience, objective opinions, detailed
review and debate has enabled strong, independent challenge.
We checked how we are kept informed and believe that we
get enough detail and the right amount of non-financial information
including employee and customer feedback. The non-executives
get direct access to the management team and sit on Board
committees so they have been kept informed on management’s
response to the current economic climate. The Group Secretary
makes sure that timely information is given to all directors. She
also keeps them informed on governance, regulation, key legal
issues and legislative change through a written report at each
Board meeting. Our online Board portal provides easy access to
information for directors to carry out their duties and for ongoing
development.
We also asked ourselves about our commitment to being
responsible. We felt we gave significant time to discussions
around our brand, Plan A, code of ethics and heritage. The Board
has a clear view of its accountabilities to shareholders and wider
stakeholders. The Board’s challenge is to make sure this is put
into practice and is built into the way we work. We don’t get it
right 100% of the time and we rely on the Management Board to
make sure it happens on a day-to-day basis. This coming year we
want to look closely at how we can extend the impact of
governance on the wider business and keep under review what
guides our behaviours – see Box D.
“We also reviewed our performance on risk and our people.”
We asked questions around “making sure things go to plan”.
We covered risk management, the organisational response to risk
and control, information on risks and assurances on controls.
Overall we were satisfied that oversight on risk issues has
improved on last year, is robust and that we tackle risk effectively:
although we want to strengthen this further.
We also looked at “doing the right thing by our people”.
This year we gave considerable emphasis to leadership
development through the Lead to Succeed programme, which
was attended by our directors and the top management team.
The Management Board reviewed feedback from Lead to
Succeed participants; the annual employee ‘Your Say’ survey
which gives a good indicator to morale and management style
in the business; and working forums conducted as part of our
Project 2020 change programme. This included views on
responsiveness to stores and customers; engaging and motivating
teams; how business performance is managed; and how the
organisation communicates. As a result, the rollout of our Lead
to Succeed programme for our top 100 people has been
accelerated; performance management processes have been
strengthened further; and a leadership index introduced in our
employee survey to help line managers benchmark and improve
their performance. Furthermore, management performance is
now linked to individual bonus.
How do we make sure our Board is effective?
Board performance
Last year we said that to achieve good governance, we need
a Board that demonstrates independence, is well-informed and
acts responsibly. We put particular effort into this year’s Board
performance review, by tracking progress against these requirements,
‘drilling down’ into specific areas that we feel matter, and looking
at how we can drive better governance through to the business.
We are confident that putting effort into getting the self-assessment
right has resulted in a more rigorous review as we set out in Box C.
We took a more robust approach to our self-assessment by
engaging the governance specialists, Independent Audit. They
provided external facilitation by challenging us on the questions we
asked ourselves and helping us analyse the results.
Committee performance
The Nomination & Governance, Audit and Remuneration Committees
have each conducted reviews of their own performance as described
for the Board. More information is given on pages 51-52.
Individual performance
The Chairman reviewed the performance of the executive directors
individually against business and individual objectives. Remuneration
is directly linked to these reviews and is determined by the
Remuneration Committee.
Our Governance Framework gives particular emphasis to the
governance accountabilities of the Chairman, Deputy Chairman and
non-executive directors. The Deputy Chairman has reviewed the
performance of the Chairman against these accountabilities and
business objectives and confirms that he has continued to
demonstrate strong leadership of the Group during a time of
considerable economic uncertainty.
Following discussions the Chairman held with individual
directors, the Board confirms that each non-executive director is
independent in character and judgement; commits sufficient time
and energy to the role, and continues to make a valuable
contribution to the Board and its Committees.
Governance report
Effectiveness
BOX C: HOW WE REVIEWED OUR EFFECTIVENESS