Marks and Spencer 2015 Annual Report Download - page 7

OUR BUSINESS
OUR PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
05
ANNUAL REPORT AND FINANCIAL STATEMENTS 2015
new core values built on the principles that
have guided M&S since it was founded in
1884. The values – Inspiration, Innovation,
Integrity and In Touch – aim to equip us all
to deliver our strategic plans.
But while the words are new, we have not
changed what matters to us. Acting with
integrity is at the heart of the way we do
business. So our customers can be sure
that the GM margin gains we achieve will
not come at the expense of the standards
we expect in our factories; they can be
safe in the knowledge that we will not
compromise on the provenance of our
food; and they can rely on us to be a force
for good in the communities in which we
operate.
Our commitment to Plan A, the
programme we launched eight years ago to
become the world’s most sustainable major
retailer, remains as deeply held today as it
ever was. As people become increasingly
aware of how their behaviour impacts the
world around them, we believe businesses
need to connect with the communities in
which they operate. From healthy living
to ethical sourcing, we are committed to
leading the way and striving to o er our
customers the most sustainable options
possible. As M&S becomes more
international, our ability to lead with others
on a global scale grows, whether by using
our scale to drive improvements in our own
supply chain, or by lending our expertise to
global industry initiatives.
STAKEHOLDER ENGAGEMENT
Engaging with stakeholders and employees
is particularly important during times of
change. We communicate regularly with our
shareholders to ensure they understand
our progress and plans. Outside our results,
this year, we held investor briefi ngs on
M&S.com and our International business,
and Marc Bolland and his executive team
had many meetings with investors. All
information shared at these events
is available to shareholders at
marksandspencer.com/investors. We
again held a governance event for our
largest shareholders, which I led with our
Senior Independent Director.
We have recently implemented a new
loyalty scheme for our private investors.
The scheme allows over 190,000 of our
UK-registered private investors to use
money from their dividend payment to buy
an M&S Shareholder Card at a discount. It
operates much like a gift card. The initiative
refl ects the fact our private investors are
also some of our most loyal customers and
we value them greatly.
Our ‘Fit for the Future’ programme was one
of our biggest ever engagement exercises,
where employees discussed the shape of
the new values. We also launched a scheme
for the 3,500 section managers who
between them manage 92% of our sales
fl oor colleagues. The programme inspired
and motivated these managers, who are
the beating heart of M&S.
LOOKING AHEAD AND DIVIDEND
M&S is a more capable and better
equipped business than it was a year ago.
In the coming year we will continue to
focus on growth in Food, improving
GMperformance, further improving
margins and cash generation.
Our dividend policy remains a progressive
one, with dividends broadly covered twice
by earnings. We intend to pay a fi nal
dividend of 11.6p this year, taking the total
dividend to 18.0p, up 5.9% on last year. In the
context of our increased free cash fl ow, we
are also pleased to announce an ongoing
programme of returns of capital to
shareholders, starting this year, with a
share buyback programme of £150m.
Finally, I would like to thank all our
employees for their hard work and
commitment at a time of signifi cant
change. M&S employees are dedicated and
upbeat – I am always struck by their positive
attitude and energy. Their pride in M&S and
commitment to the business are what
makes us special. I want to thank every
one of them in stores and in our o ces
for their contribution this year.
ROBERT SWANNELL CHAIRMAN
Independence Half of our Board is made up
of independent non-executive directors, in
line with the UK Corporate Governance Code.
Senior Independent Director Our Senior
Independent Director is Vindi Banga.
Accountability and election We have clear
separation of duties between Chairman and
CEO roles, and require all the directors to
stand for re-election annually.
Evaluation An externally facilitated
performance evaluation of the Board and its
committees was undertaken during the year,
as it is every three years.
Attendance The Directors have all attended
an acceptable level of Board and Committee
meetings.
Compliance The composition of all Board
committees complies with the application
recommendations of the Code.
Experience Throughout 2014/15, two members
of the Audit Committee had recent and
relevant fi nancial experience.
Tenure The tenure of our previous external
auditor was over ten years. In 2014/15 we
appointed a new statutory auditor, Deloitte,
following a thorough tender process.
Non-audit policy We have a policy for the
award of non-audit work performed by our
auditor, which is disclosed on our website, and
we have disclosed the limited non-audit work
undertaken.
Auditor appointment We disclose our
external auditor appointment policy.
Internal Audit Details on the internal audit
function are provided within this report.
Performance-related pay A signifi cant part
of our performance-related pay is delivered
through shares.
Reward Our reward framework is simple and
transparent and is designed to support and
drive our business strategy.
See Governance Section p32-82
GOVERNANCE PROFILE OUR GOVERNANCE PRINCIPLES
LEADERSHIP See p34
The Board rigorously challenge each other
on strategy, performance, responsibility and
accountability to ensure that the decisions we
make are of the highest quality.
EFFECTIVENESS See p41
The Board’s performance is scrutinised in an annual
e ectiveness review. This examines the progress
we are making against our plan, our collective and
individual e ectiveness, and the independence of our
non-executive directors.
ACCOUNTABILITY See p44
All of our decisions are discussed within the context
of the risks involved. E ective risk m anagement is
central to us achieving our strategic objectives.
ENGAGEMENT See p51
Maintaining strong relationships with our
shareholders, both private and institutional, is
crucial to achieving our aims. We hold numerous
events throughout the year to maintain an open
dialogue with investors.