Marks and Spencer 2015 Annual Report Download - page 34

32
MARKS AND SPENCER GROUP PLC
DIRECTORS’ REPORT
GOVERNANCE
CHAIRMAN’S
GOVERNANCE OVERVIEW
OVERVIEW
As I mentioned earlier in this report, this
has been another year of mixed progress
for the Company. Our Food business
delivered another very strong year in a
di cult market. In Food we continue to
pursue a clear strategy with a distinct and
di erentiated position, remaining true to
our values and with a well articulated plan
for future growth.
We are encouraged by the improved
performance across the business in the
fi nal quarter 2014/15, particularly in GM
and M&S.com. However, our full year
performance was constrained by a number
of issues associated with the necessary
and signifi cant transformation of our
infrastructure, implemented in the last
few years, and macroeconomic and
performance issues impacting delivery in
a number of key international markets.
The launch of our new website and our
distribution centre at Castle Donington
represented the completion of two
signifi cant investments, essential for the
long-term growth of our business. This has
been a key area of focus for the Board over
the last two years. Yet, and despite rigorous
planning and mitigation of potential risks,
both experienced initial execution issues
beyond those that we expected. We believe
these issues are now resolved, or that plans
are in place to resolve them, and both
projects continue to be areas of focus
for the Board.
This year we have sought to provide insight
into the scope of the Board’s activities,
discussions and resulting actions. These are
provided on pages 38 and 39 of this report.
As a Board we have taken away a number
of learnings, particularly about our
management of and approach to risk.
The Board, supported by the Audit
Committee, spent time discussing risk
appetite across the business as well as
our investment criteria. Whilst defi ning our
approach to risk appetite remains a work
in progress, we believe this will improve
the quality of our investment process,
the mitigation of associated risks and will
deliver improved project implementation
going forward. A greater understanding
of risk appetite and its management will
also support our ambition to become a
more agile, innovative and entrepreneurial
organisation, as embodied by ‘Fit for
the Future’ and our updated values, which
were discussed earlier in this report.
CULTURE AND VALUES
The scale of investment and transformation
of the business over the last few years has
necessitated this shift in our culture and
behaviours. It will enable us to respond
to the changing consumer landscape, the
constant evolution in technologies, and
our aim to be a leading international, multi-
channel business. But while we adapt and
move forward, we are clear that staying
true to the M&S tenet of integrity is
non-negotiable.
Integrity underpins all of our Board
discussions, from debate on the
management of our teams, to the safety
and integrity of our food supply chain. It
a ects the way we implement the changes
required in our GM supply base to deliver
our ambitious gross margin targets,
while staying true to our high sourcing
standards. It shapes how we operate
in our international markets, and the
management of our property assets.
Integrity has protected the M&S brand and
supported its reputation for over 130 years
and the Board is focused on ensuring it
continues to do so for the long term.
Having Integrity as a value also means
being honest in how we judge our own
performance as a Board and where we can
do things better. We are disappointed not
to have made more progress against our
Board Action Plan this year. We discuss this
performance and our Board evaluation
and Action Plan on page 41 of this report.
We are clear about how we can be more
e ective, and what information we need to
monitor and challenge our progress and
ensure proper debate.
I have highlighted before the importance of
the Board as being critical friends. We have
a strong team and we have had a number of
robust discussions throughout the year on
our execution issues at Castle Donington,
the performance of the website and our
International business, the results of
unsatisfactory audits, our fi nancial
performance and progress against our
targets. We have refl ected, and will continue
to debate openly the results of our Board
evaluation and how we ensure we have
the highest quality of debate, coupled
with the right planning, information and
environment to support this. We must do
this to drive our e ectiveness as a Board
and to be fi t for the future.
FIT FOR THE FUTURE
The introduction of ‘Fit for the Future’
brings greater focus on high performance,
our teams, development and succession
planning, all of which remain a key part
of our Board and Committee agendas.
Associated detail on the activities of
the Nomination and Remuneration
Committees are provided on pages 42-43
and 52-76 respectively. Our Action Plan
for the 2015/16 year is stretching and sets
out specifi c objectives to improve our
performance. The plan aims to support
and enable greater debate and refl ection,
We have built a team with the skills and experience to support
our strategy. In this section we look at their roles and their
performance, and outline their independence, their e ectiveness,
ongoing professional development and succession.
ROBERT SWANNELL CHAIRMAN