Tuesday, 7 July 2009

M&S vote tomorrow

The M&S AGM is tomorrow, and there is a lot of speculation about what sort of vote there might be on the LAPFF resolution seeking the appointment of an independent chair. Just to recap LAPFF filed this resolution in order to address the issue of Stuart Rose combining chair and chief executive positions, in breach of the Combined Code. Its stated reason for doing so is to enable shareholders to demonstrate concern about the company's governance with having to vote against Rose himself. LAPFF has called on its members to back Rose's re-election at the AGM, making clear that this isn't a personal issue.

It's also worth remembering why M&S said that the combined roles were necessary - apparently in order to succession plan. I say apparently as I can't think of another company ever having used this argument, and literally not a single shareholder I have talked to about this issue says that they accept that as a valid argument.

All of this info is in the public domain, and has been for weeks, so it's a bit disheartening to read in a few places that LAPFF is seeking to oust Sir Stuart. Even Robert Peston gets it a bit wrong today -
So it is possible to characterise the LAPFF position as a preference for finding a chief executive in panicky hurry rather than in a methodical and sensible fashion (the LAPFF would of course say that it wouldn't want Rose to evacuate the building immediately).
Not really, since the LAPFF resolution is about the role of the chair, not the chief exec. Rose giving up the chair's role need not have any impact on the hunt for the new exec.

Equally it appears that the company has talked a few investors round by arguing that a big vote on the resolution might mean that Rose walks, rather than simply gives up the chair and reverts to just chief executive... within 12 months!

As to what kind of level of support the resolution might attract, it's impossible to say. The support of RiskMetrics is pretty significant, as it will inevitably swing a chunk of the vote. And a sizeable number of institutions look set to vote in favour. But equally some fund managers would rather bite their own hands off than vote for a shareholder resolution. I suspect that the real story will be, like last year, a large number of abstentions.

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