Sir Stuart Rose, chief executive of British retailer Marks & Spencer, faces a new corporate governance kerfuffle, following the controversial plan to make him executive chairman. He has a tiny stake in Lucky Voice, a karaoke bar group backed by Martha Lane Fox, a dot-com entrepreneur who is an independent non-executive director of M&S.

Britain’s corporate governance code requires companies to offer an explanation to investors if an independent director has a significant business link to another director. To keep the mood light - this isn’t about any wrong-doing, after all  - I suggest that any such explanation should take the form of a karaoke evening in one of Lucky Voice’s private rooms.

Ms Lane Fox would begin by singing Independent Women Part One by Destiny’s Child to remind M&S shareholders that she is a wealthy person - “I buy my own diamonds, I buy my own rings” - who doesn’t need Sir Stuart’s backing to satisfy her material needs.

Shareholders would then seek to emphasise the point that companies must not just do the right thing but also be seen to do the right thing, through a rendition of It Ain’t What You Do (It’s The Way That You Do It) by Fun Boy Three and Bananarama.

Sir Stuart would at this point launch into Suspicious Minds by Elvis Presley, before upping the stakes with a burst of the Clash’s Should I Stay Or Should I Go? The latter ultimatum would provoke an instant response, with the investors assuring him that We Can Work It Out, and then deciding to Let It Be.

Feel free to suggest any other appropriate songs below.

Dear Shareholder,
You have asked me to explain my outburst of a few days ago, when I threw down my copy of the Financial Times and declared, to no one in particular: “Why don’t some of these shareholders just shut up?!” I am now writing to provide some detail of my deliberations prior to making that outburst.

We have been told in recent days that the proposed changes in the Marks and Spencer boardroom are “in breach” of the UK’s combined code on corporate governance.

Apparently the English word “or”, as in “comply or explain”, has lost its meaning. M&S has, slowly and in stages, provided an explanation. You may not like that explanation. But its move does not necessarily constitute a breach of anything.

Continue reading “M&S shareholders should think before they speak”

The UK’s Combined Code on Corporate Governance requires public companies to comply with its recommendations, or explain why they have chosen to ignore them. As of today Marks and Spencer has a lot of explaining to do.

From 1 June, the company said today, Sir Stuart Rose will become executive chairman, effectively combining the roles of chair and CEO. This flies in the face of Combined Code orthodoxy. True, other colleagues are stepping up to take on some of Sir Stuart’s duties. Ian Dyson, currently finance director, will take on the additional responsibility of HR and operations. Kate Bostock, head of women’s wear, and Steve Esom, head of food, join the board.

Sir Stuart now says he will not leave the company before 2011, thus allowing his fellow executive directors time to build their case to win the top job in due course.

Shareholders and analysts will be concerned that this move formally concentrates too much power in Sir Stuart’s hands. One, L&G, went on the record with its objections only a few hours after M&S’s announcement.

Personally, I will take some of the governance gurus’ objections with an unhealthily large pinch of salt. Sir Stuart is clearly his own man, and has been well and truly in charge at M&S for several years. Lord Burns, the outgoing chairman, says that execs and non-execs alike at M&S are happy with the new arrangements. Where is the problem?

If Sir Stuart were a crook, or an incompetent, we might have grounds for concern. But this is someone who turned down the prospect of absolutely gigantic rewards, running M&S for Sir Philip Green’s private equity-style bid in 2004, and instead took the riskier and relatively much less well paid option of keeping M&S public. He has done an excellent job so far. If this is his chosen method of exit, and this seems to him to be the best way of blooding a successor, I think we should trust him and back his judgment.

Of course, if things now go badly wrong for him and the company I will be among the first to condemn him.