Marks and Spencer 2013 Annual Report Download - page 46

Governance Marks and Spencer Group plc Annual report and financial statements 2013 44
Effectiveness
The annual Board effectiveness review provides a useful
opportunity for the Board to take a step back and reflect on
their collective and individual effectiveness, consider where
improvements can be made and chart progress. This year the
Board evaluation was facilitated internally between January and
March 2013, by our Group Secretary and Head of Corporate
Governance, who has significant insight into both the day-to-
day and strategic workings of the Board. This year’s internal
evaluation follows two years in which an independent externally
facilitated Board review has taken place.
Independence of directors
The Board reviews the independence of its non-executive
directors as part of the annual Board effectiveness review.
The non-executive directors bring a strong independent
oversight to the Board and following this year’s review the
Board considers that all of the non-executive directors
continue to demonstrate their independence. Biographical
details of each director can be found on pages 40 to 41.
The Chairman is committed to ensuring the Board is made
up of a majority of independent non-executive directors who
objectively challenge management, balanced against the
need to ensure continuity on the Board. In December 2012
we announced that Jeremy Darroch will step down in
June 2013 having served seven years on the Board.
Andy Halford was appointed to the Board on 1 January as a
non-executive director and Chairman designate of the Audit
Committee. The Board strongly believes that it is essential
to ensure continuity of corporate knowledge and experience
to complement and support the new skills and experience
brought to the Board by those directors appointed over the
last two years. The Board agreed that Steven Holliday, who
will have served on the Board for nine years in July 2013,
stands for re-election for an additional year at the 2013
AGM. Steve’s independence has been subject to particular
scrutiny; his detailed knowledge and association with the
Group assists him in effectively challenging management and
his length of service, when taken in the context of the Group
as a whole, enhances his effectiveness as a non-executive
director. As a result, the Board believes that Steve remains
independent in character and judgement.
How did we approach the Board and Committee Review?
In line with previous years, we took the view that a detailed and
focused one-to-one discussion, conducted in person with each
director was the most effective way to facilitate a constructive
and meaningful conversation. The directors were asked their
views on a range of subjects including:
–Board composition and the role of the Board
–Board leadership and culture
–Monitoring of Company performance
–Corporate governance
–The facilitation of the meetings particularly around scope of
agendas, quality of papers, degree of challenge and debate.
The Senior Independent Director meets with the non-executive
directors at least once a year to review the Chairman’s
performance. The Senior Independent Director then provides
feedback to the Chairman as appropriate.
How are we progressing?
It was clear from the Board review that good progress has
been made against the actions the Board set itself last year:
–Continued to strengthen succession at both Board and senior
management level. Ensured the Board is comprised of a
diverse range of skills and experience, well positioned to
challenge and develop the strategy. The appointment of
Andy Halford to the Board as a non-executive director and
the changes made to the executive team, including the
appointment of Steve Rowe to the Board, have been key
appointments;
–Engaged with senior management and high potential
individuals throughout the year, facilitated through a series
of lunches, strategy and investor days;
–Engaged institutional shareholders throughout the year.
Our annual governance event held in June 2012 was well
attended by both major shareholders and investor bodies.
An investor event, addressing our international strategy, was
held in Istanbul in February 2013 and was also well attended;
–Ensured director inductions continued to be full and thorough
and offer the opportunity to dive into key parts of the
business;
–Continued to drive an understanding of the Board’s risk
tolerance and appetite;
–Made significant progress on planning the long-term
framework for Board discussion, allowing more time for fuller,
more challenging and strategic debate.
Action Plan 2013/14
The insights gathered from the Board review have highlighted
some opportunities which have resulted in a clear action plan
for the year ahead. The actions address the key areas of
succession, Board oversight and reflection, risk management
and information management.
During the year the Board is committed to:
–Continue our work on succession planning with greater
focus on high potential individuals and their development in
the business, especially below director level;
–Review how we can continue to benefit from the extensive
and diverse experience of our non-executive directors;
–Allow for greater review and reflection on the quality of past
decisions;
–Given our changing risk profile as we become a leading,
international multi-channel retailer, ensure appropriate
challenge and debate around risk and approach to risk;
–Board papers: continue to review our information
management, content and balance of papers;
–Meetings: consider the balance and content of our agendas
to allow greater time for open debate.
Director induction
On joining the M&S Board a full, formal and tailored induction
programme is arranged for directors including access to all
parts of the business and an opportunity to meet major
shareholders.
During the year we appointed Steve Rowe and Andy Halford to
the Board. Steve was appointed Executive Director, Food having
worked across a significant part of the business over a 23 year
career at M&S. Steve’s induction was focused specifically on
the Board process, including his duties, responsibilities and
obligations as a director. Andy Halford’s appointment as a
non-executive director and Chairman designate of the Audit
Committee was tailored specifically around learning the
business, its operations, its key markets and risks.