Annual report and financial statements 2008

Relations with shareholders

 

Communication

We are committed to ongoing engagement with shareholders and have a well-established cycle of communication based on the Group’s financial reporting calendar. This includes our preliminary results in May, Annual report in June, half year results in November and Interim management statements in January and July. Our website provides up-to-date information including simultaneous webcasts of our financial results and AGM presentations; regulatory announcements; Annual reports; corporate governance and share price information and answers to frequently asked questions. Following shareholder approval in July 2007, the website is now our principal means of communicating with investors.

 

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Institutional investors

Our investor relations department is the focal point for contact with our institutional investors and is in regular contact with them as well as with analysts and brokers during the year. Our Chairman, Chief Executive and Group Finance and Operations Director play key roles in our relationship with major shareholders and the presentations of full and half year results are attended by all the executive directors. The Senior Independent Director is also available for shareholders as required. An investor relations summary is produced for each Board meeting and each year the Board receives feedback from independent advisers on institutional investor views of management and Company performance, based on the results of their extensive survey. From 1 June 2008 the Deputy Chairman will maintain contact with principal investors and representative bodies on a regular basis, keeping the Board informed.

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Private investors

Private investors own a high percentage of our shares compared to most other large UK companies. The Board is also interested to know their views and we make a special effort to ensure communications and policies are appropriate to their needs. They can contact us in writing, by email at chairman@marks-and-spencer.com, or by telephone on 0845 609 0810 for shareholder queries and 0845 302 1234 for customer queries.

In January 2008 we consulted with shareholders on electronic communication – nearly 40,000 shareholders confirmed that they wished to continue to receive hard copy documents, such as the Annual report. The remainder will be notified when the Annual report is available on our website. However, all shareholders will continue to receive an AGM Notice of Meeting, together with key financial and governance information to enable them to vote.

Postage-paid topics cards are sent with the AGM Notice of Meeting giving shareholders further opportunity to make their views known to us. The three most frequently raised topics are addressed at the meeting and a summary of all comments is given to the Board and directors of each business unit.

Our registrars, Equiniti, continue to enhance their services for shareholders through their website at shareview.co.uk. This offers a number of capabilities ranging from electing to receive communications electronically to checking shareholdings and dividend information online.

Many shareholders are also customers and each year we send them Spend and Save vouchers to use in our stores. These are very popular, and in spring 2008 the offer was extended to technology products and online shopping.

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Annual General Meeting

 

The AGM is an important event in our corporate calendar and is well attended by shareholders. Prior to the meeting an exhibition is hosted by our senior retail and business managers. The meeting commences with a business presentation and then the Chairman, Chief Executive and other members of the Board answer questions raised by shareholders. All directors are present, including the Chairman of the Audit, Remuneration and Nomination Committees. Shareholders are then invited to vote on the resolutions contained in the Notice of Meeting, which is sent to them at least 20 working days beforehand. The business presentation, voting results and a summary of the questions raised and answers given at the meeting are made available on our website.

 

In 2007, 89.6% of the proxy votes received were lodged through the CREST system. We encourage private investors to register their vote before the meeting on the website at sharevote.co.uk or by proxy card.

Since 2004 voting at the meeting has been conducted by poll, using the electronic Votenow system, rather than on a show of hands. This gives a more democratic result as all shares represented at the meeting and those lodged before the meeting are included on a one share, one vote basis. Our registrars record all proxy votes received up to 48 hours prior to our AGM and report the votes ‘For’, ‘Against’ or ‘Vote withheld’ to the Chairman prior to the meeting. These votes are included in the indicative poll result screened at the meeting. The final results are announced via the London Stock Exchange. In 2007 votes cast represented 53.5% of the ordinary share capital. All resolutions were passed with votes ‘For’ resolutions ranging from 94.7% to 99.9%.

The next AGM will be held on Wednesday 9 July 2008 at the Royal Festival Hall in London. In addition to routine resolutions, shareholders will be asked to vote on the adoption of new Articles of Association enabling us to benefit from the recent changes brought about by the Companies Act 2006.

 

Compliance with the Combined Code

The Company complies with all the provisions of the Code with the following exceptions:

  • throughout the year ended 29 March 2008: the Board did not fully consult major shareholders in advance of our announcement on 10 March that our Chief Executive would become Chairman from 1 June 2008 (A.2.2); and
  • from 1 June 2008: the role of Chairman and Chief Executive will be exercised by the same individual (A.2.1) and our Chief Executive will become Chairman (A.2.2).

 

Read our reasons for departure from the Code.

 

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Governance of the Group’s pension schemes

The Group operates a defined benefit scheme for all employees with an appointment date prior to 1 April 2002 and a defined contribution scheme open to those joining the Company on or after 1 April 2002. More information is given in note 11.

The Board of the Pension Trust (‘Trustee Board’) manages the assets of the pension scheme which are held under trust separately from those of the Group. The Board comprises Tony Watson as independent Chairman and Law Debenture Trust as independent Trustee, together with five company representatives and five member representatives.

The Trustee Board has reviewed the external auditor appointment and appointed KPMG LLP in place of PricewaterhouseCoopers LLP with effect from February 2008.

The Trustee Board has also carried out a review of its own performance through questionnaire responses, one-to-one discussions and collective agreement of areas of focus for future development.

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