LAPFF issues deadline for M&S governance
UK - The Local Authority Pension Fund Forum (LAPFF) has confirmed it plans to file a resolution calling for an independent chair of Marks & Spencer (M&S) if the retailer fails to split the roles of chairman and chief executive by 2009.
The appointment of Sir Stuart Rose as executive chairman of M&S - a role that combines the duties of chair and chief executive - was opposed by 22% of shareholders earlier this month, including the LAPFF.
Although one in five refused to back his appointment over concerns about the new government structure, Rose will take on the combined role for a further year and will face re-election in 2009.
So the LAPFF agreed at a recent business meeting to file a resolution at the next M&S annual general meeting (AGM) in 2009 calling for the roles to be split if the retailer "continues to breach corporate governance best practice".
Ian Greenwood, chair of the LAPFF, said the organisation believed "the risk of the company continuing downhill from its current shaky position has been increased as a result of the combined roles".
"We believe that concerned shareholders have no alternative but to continue to push for the combined roles to be separated. To this end the LAPFF will be submitting a shareholder proposal at the 2009 AGM," he added.
M&S announced in March Rose, previously scheduled to be chief executive until 2009, would combine his role with chair from June 1 2008 until 2011, following the departure of previous chair Lord Burns.
However, both the LAPFF, which represents 48 local government funds and £95bn in assets, and other institutional investors including Legal & General Investment Management (LGIM), which holds a 4.9% stake in the retailer, raised concerns that combining the roles is a breach of the Combined Code for business.
Although LGIM declined to comment on recent developments it said it stood by its view at the time of Rose's appointment in March, when officials said they believed strongly in the separation of roles as it provides a "much needed balance in the boardroom and prevents a potentially damaging concentration of power".
Following the LAPFF's latest announcement, a spokesman for M&S said: "The LAPFF are entitled to their view but it is important to remember the combined code is a series of guidelines not rules."
He pointed out if a company decided not to follow the guidelines they have to explain why, which the board of M&S has already done, and said "furthermore the appointment of Rose was backed by shareholders at the AGM earlier this month".
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