UK - The Local Authority Pension Fund Forum (LAPFF) has received backing from proxy voting advisory services for its shareholder resolution, calling for the apointment of an independent chair to the board of retailer Marks & Spencer (M&S) by July next year.
Sir Stuart Rose was appointed to the roles of both executive chairman and chief executive of the company in 2008 - a breach of the UK combined code on corporate governance - on the basis, it argued, that it would allow the firm to find a suitable successor for Rose, with a commitment to separate the roles again by 2011.
The decision was opposed at the time by 22% of shareholders, including the LAPFF, who warned they would table a resolution for an independent chair if the roles were not split by the next AGM. (See earlier IPE article: LAPFF issues deadline for M&S governance)
The LAPFF, whose members own more than 1% of M&S, confirmed in March that it had tabled the resolution as it believed the board of the company "exhibits a high degree of governance risk". (See earlier IPE article: LAPFF adds pressure for independent M&S chair)
Now less than two weeks before the AGM on 8 July 2009, the LAPFF has confirmed proxy voting advisory services - which advise shareholders how to vote at AGMs - have backed the resolution.
It claimed RiskMetrics has advised its clients to vote in favour of the resolution, together with PIRC - which helped file the motion - and Glass Lewis, a US proxy firm, while the organisation said the Association of British Insurers (ABI) had 'amber-topped' its report on the company because the resolution required considered judgement by shareholders.
Councillor Ian Greenwood, chairman of the LAPFF, said: "The support we have received from proxy voting advisers is very welcome, and demonstrates that our analysis of the company's governance structure, and how it might be improved, is widely shared."
"It is clear that the market sees the need to separate the chair and chief executive roles, and for M&S to re-enter the governance mainstream as soon as possible," he added.
However, within the notice of the AGM, the company claimed the resolution was not in the best interests of shareholders as the shortened timescale for the separation of the roles "introduces an unnecessary and significant risk", by either delaying the appointment of a CEO or Rose deciding his early departure as chairman would be the signal to leave the Board completely.
It concluded: "The resolution as proposed to shareholders does not enhance the prospect of an orderly succession and, indeed, carries inherent risk that could compromise careful planning. Nor, as it claims, does it avoid the issue becoming a personal referendum as this is exactly how the requisitioned resolution has been, and will be, portrayed.
"The Board believes that the resolution is not in the best interests of the Company, nor its shareholders generally. The directors consequently recommend you vote AGAINST resolution 16 as they intend to do so in respect of their own beneficial holdings."
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