Wednesday, July 08, 2009

M&S Owners are Revolting

Some of my earliest memories are of being really bored to tears while out shopping with my Mum and sisters in “Markies”. They would it seemed to me at the time spend hours and hours deciding what to buy, queue to try stuff on, then queue at the tills. Then the following week come back and queue to return the same clothes as unsuitable and start the whole long laborious process all over again.

I now depend on MS for their black socks and lovely pre-cooked grub.
So I have a sort of “love-hate” relationship with “Marks and Spencers”.

Today I was at a meeting of the Local Authority Pension Fund Forum (LAPFF). My Pension scheme is a relatively new member of the Forum.

According to its mission statement “LAPFF exists to promote the investment interests of local authority pension funds, and to maximise their influence as shareholders whilst promoting corporate social responsibility and high standards of corporate governance amongst the companies in which they invest.

Formed in 1990, the LAPFF Forum brings together a diverse range of local authority pension funds with combined assets of over £75 billion”.

Later that day LAPFF Representatives were going to move and vote on their resolution at the M&S shareholders AGM about splitting the role of its Chairperson and CEO, Sir Stuart Rose, who currently holds both positions in the company.

This combined role of the two most powerful positions in a company is a complete nonsense and goes against all good modern day governance advice. Not because Sir Stuart is doing that bad a job but it is very poor practice for a modern day top public company to have a management structure that you are more likely to find in an overseas company run by the Russian mafia than our dear old M&S.

In the long run, such poor governance is bad for the company, bad for the shareholders, bad for pension funds and therefore bad for my members. By definition Pension investments should be in for the long term.

The LAPFF resolution was very successful. They never expected to win but they received nearly 40% of the vote which is unheard of in such an AGM. The BBC reported here that the vote was twice as high as any other shareholder resolution in a top FTSE 100 company.

I expect M&S to "take on board" this message.

LAPFF members only hold less than 2% of the total shares of M&S so this is a great result for them and for better governance of our investments.

It is only a pity that they were not in the past able to challenge the rubbish governance of the risk management and remuneration committees of our Banks and other Financial institutions. If they had we would not be in the mess we are in and many pension schemes would not be under threat.

Check out Tom P at Labour and Capital for some great analysis here, here and here

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