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News that Marks and Spencer’s deputy chairman, Sir David Michels, is touting himself replacement to Sir Stuart Rose as chairman will stir worrying memories among investors. After all, the 1998 attempt by then deputy chairman Keith Oates to unseat Sir Richard Greenbury – who similarly combined the chairman and chief executive roles – helped pitch the retailer into a crisis with repercussions still felt today. Succession has been M&S’s Achilles heel. The current confusion reinforces concerns among shareholders, still bitter about Sir Stuart uniting the top jobs, that this is a perennially dysfunctional board.
This is not, however, 1998 again. Unlike Mr Oates, Sir David does not seek to oust the boss and become chief executive but wants to become chairman when Sir Stuart leaves. The recent annual report outlined a succession timetable. This talks of appointing a new CEO “during 2010”, with Sir Stuart remaining chairman for a “suitable” handover period. That should not be allowed to drag on unnecessarily. M&S is understood to want a CEO in place by the July 2010 annual meeting. The formal search, comparing outsiders with internal candidates such as Ian Dyson, finance and operations director, should get going now.
M&S should also rebuild City bridges by appointing a new senior independent director to drive the process. Sir David’s image has been tarnished by association with decisions unpopular with investors. Jan du Plessis was seen as a potential counterweight when he joined the board in November, but now has his hands full chairing Rio Tinto. UK institutions and US investors should press their case with a more united voice. But much is down to M&S itself. Though relearning how to listen to customers, it still has too much of a tin ear with its shareholders.