Part gig, part rally, Your M&S

Last week’s hot ticket was, of course, the annual M&S gig at Royal Festival Hall. A reported 1,500 shareholders turned up, many hoping for the chance to put a question to executive chair Stuart Rose. The Festival Hall was certainly buzzing, and inside M&S staff from around the country welcomed, fed and watered the faithful.

Inside the meeting itself, the atmosphere was a mixture of “An audience with…” and a political party rally. Rose led the way, talking up the company’s progress and expansion in between bursts of the M&S equivalent of tractor production figures. There were some nice rhetorical touches too. Rose compared the company to a smoke detector, setting off the alarm early about failing consumer confidence and falling spending. And the soundbite of the day was a defence of the company’s recent record, which he said had turned M&S “from a weak business in a strong market, into a stronger business in a weak market.”

Next came the audience participation part of the show, as individual shareholders put their questions of the board. Why weren’t there more cotton dresses with long sleeves? Why doesn’t M&S spend its charitable donations on local causes? Why are you charging for plastic bags? Each was batted back with a promise to look at the issue in question. Even on the question of plastic bags, where opinion broadly seems supportive of the need to provide an incentive to reuse and recycle, there was a commitment to review the policy.

Rose clearly knows how to work the crowd in the Q&A, telling one young woman who had complained about the lack of trendy clothes in stores that either clothing director Kate Bostock or he himself would take her on a personal shopping trip. He also offered to personally deal with another shareholder’s query about shoes if she felt it wasn’t answered speedily enough.

Back in party rally mode deputy chair, and investors’ hope of the main source of independent oversight in the M&S board, David Michels had a touch of Fidel Castro about him, giving a ‘history will absolve us’ style defence of the board’s decision to back combined roles. Meanwhile, playing the role of obsequious party loyalist was former deputy chair Clinton Silver who pleaded with the M&S faithful to “cling” to the Glorious Leader. “For if you go, when comes such another?” he wailed.

Onwards to the voting: the report and accounts passed easily, despite some investors using this vote as an outlet for unease at the new governance arrangements. The remuneration report saw a fairly sizeable 13% vote against, which would have been of note in itself had not all eyes been on the Rose vote. Resolution 5, to re-appoint the recently expelled head of food and M&S non-person Steve Esom, was dropped from the agenda. At least he wasn’t airbrushed from the AGM brochure, instead a hastily attached sticker reported his departure.

Then the moment we were all voting for - the vote on the leader himself. “Are you nervous?” Michels jokingly asked Rose, no doubt fully aware of the pre-AGM voting. And up it flashed – 94.1% in favour, 5.9% against. The crowd cheered, presumably failing to spot over 140 million abstentions also recorded. You can’t blame them, as this unfortunate statistic only appeared on the screen for a matter of seconds. When you add abstentions into the total vote that makes sizeable 22% failing to back Stuart Rose, a clear signal of concern from some of the large M&S shareholders. Surely even David Davis would baulk at calling this a ‘victory’.

What happens next? For one thing, Rose’s now-established position as the unifying figurehead of the business means that his own fortune will be tied even closer to that of the business. The recent profits warning already damaged his previously Teflon-coated reputation amongst M&S shareholders. In addition the situation, unfortunately, gives us another opportunity to test the hypothesis that concentration of power at the head of a company is not a good thing for shareholders. Evidence in either direction will surely be pounced upon.

The company has of course put Rose up for annual re-election, meaning that the vote at next year’s AGM will form a focal point for those unimpressed by the company’s performance and/or concerned at the breach of governance best practice. This one looks set to rumble on.

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