Marks and Spencer 2012 Annual Report Download - page 46

Governance Marks and Spencer Group plc Annual report and financial statements 2012 44
How do we make sure our Board is effective?
In 2010/11 we commissioned our first ever independently-
facilitated Board review, conducted by Ffion Hague of
Independent Board Evaluation. Our aim was to capture open
and constructive feedback from Board members that would:
–provide insight into our effectiveness;
–point to actions for improving our performance; and
–establish a benchmark for measuring future progress.
While it is considered best practice for boards to conduct
an external review every three years, based on the positive
feedback from the Board and the fact that we had a number
of new joiners during the year, we decided to adopt a ‘Year 2
Booster’ approach for our 2012 review.
The aim of this approach was to:
–check progress against the issues identified in last
year’s report;
–check feedback from new members of the Board and bring
them up to speed with the process the Board has undergone;
–identify any new issues that have arisen during the past year.
Once again, and in order to ensure consistency, Ffion Hague
assisted with this review. The review was conducted according
to the guidance in the UK Corporate Governance Code 2010.
What was the focus of the Board review?
Our approach involved a Board observation; one-to-one
interviews with the Chairman and new joiners and structured
telephone interviews with those directors who participated in
last year’s evaluation. Each participant was asked to evaluate
the Board, its Committees, the Chairman and individual
Board members. The process took place between January
and March 2012.
Subjects covered included a general overview as to the
‘state’ of the Board, its operation and how this had changed
over the year. Directors were asked for their views on our
shareholder engagement and relationships and how these
relationships might be improved.
Views were sought on the Board’s input into strategy
discussions, governance and compliance, risk management
and succession planning.
Views were also sought on the Board culture and the
relationships with senior management as well as how new
members are selected and inducted.
What did we learn?
From the review, and subjects covered, it is clear that the
Board has made progress on most of the points on last year’s
action plan, as evidenced by:
–the dedicated session on succession and talent and the
introduction of non-executive lunches to improve
engagement with senior management;
–the appointment of Vindi Banga and Miranda Curtis
following the retirement of Sir David Michels and Louise
Patten; the subsequent appointment of Jan du Plessis as
Senior Independent Director; the review and changes to the
Remuneration and Audit Committees;
–the opportunity for a more focused review of strategy with two
meetings specifically dedicated to this, one in the Stratford
store in October and the other more recently in February 2012;
–further progress on developing the Group Risk Profile and
aligning the risks and actions to the strategy outlined in
November, which was a key focus for the Audit Committee.
However, there is opportunity for us to broaden the debate
and explore our understanding of risk, tolerance and
appetite in 2012/13; and
–we held our first governance event in June 2011 which was
well attended by major shareholders and representative bodies.
They clearly welcomed the opportunity to discuss succession
and the Board, remuneration and Plan A. We agreed to make
this an annual event and the next one is scheduled for June
2012. We have also been actively engaged in the debate on
diversity, remuneration and integrated reporting.
When we look at the more detailed table of responsibilities by
area, which we put together last year, along with the
feedback from the 2011/12 Board assessment, it is clear that
there are opportunities for us to:
–improve papers and presentations, including context,
content and timeliness;
–create a better framework to facilitate constructive debate,
especially in relation to strategy;
–ensure a more strategic review of the forward agenda;
–continue our engagement with senior management below
Board level; and
–following intensive induction on joining, review ongoing
knowledge and training for all directors.
Action Plan 2012/13
The insights gathered from the Board review has resulted in
a clear action plan for the year ahead. The actions address
the key areas of succession, development and people,
nature and scope of the Board debate, risk management,
and shareholder engagement.
During the year, the Board plans to:
–continue to drive the agenda on succession planning
and development of key managers;
–continue to improve engagement with shareholders and
representative bodies, and transparency and disclosure;
–continue to review ongoing knowledge and training for
all directors;
–continue to drive better understanding of risk,
risk tolerance and appetite; and
–continue to review long-term forward agenda and papers
and framework for Board discussion.
Director induction
On joining, M&S directors receive a comprehensive, formal
and tailored induction programme. This includes time with the
Group Secretary, each of the executive directors, members of
the Management Committee and a wide range of senior
management from across the business.
During the year we supported induction programmes
for Laura Wade-Gery, Executive Director Multi-channel
E-commerce and Vindi Banga and Miranda Curtis: our two
new non-executive directors.
Effectiveness