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Filter by: Board | Shareholders | Customers | Employees | Plan A

Why was the Board awarded such a high percentage increase of salary and bonus compared to both employees on the shop floor and inflation?

A: The success of the Company is dependent on the retention, attraction and motivation of high calibre individuals. Pay increases and bonus levels are set to ensure that we are competitive against FTSE 100 companies and other similar sized retailers.

The Remuneration Committee reviews Executive pay on behalf of the Board and takes into account market conditions, level of increase awarded to employees throughout the business and the responsibilities and skills of individual directors. It is comprised wholly of independent Non-Executive Directors and keeps informed of all relevant developments and best practice in the field of remuneration seeking advice where appropriate from external advisors such as New Bridge Street Consultants LLP.

Following the excellent company performance in 2006/07, resulting in significant progress in sales, profit, EPS and share price, Executive Directors received the maximum bonus being 250% of salary, 60% of which was deferred into shares to be held for three years, to align their interests with shareholders.

Our reward package for store staff remains highly competitive against the market. An additional allocation of discretionary bonus totalling £26m was awarded for customer assistants in 2006/07.

Please explain the rationale for changing the Earnings Per Share (EPS) target for the Performance Share Plan, especially for exceptional awards and to assure shareholders that these targets are appropriate for the level of awards.

A: The three year EPS targets were reviewed because it is unlikely that a company can continue to generate the level of growth at the same rate as M&S has done in recent years. It is likely that we will return to EPS growth that is a little more normal against the market. We looked at what other companies had as targets for EPS and have distinguished the targets for awards at the higher end of the scale. The higher end is now at inflation plus 4 to 12%. To generate the full award earnings growth of RPI plus 12% over the 3 year period will be a very stretching target. We did consult with our major shareholders on the EPS targets and moderated them as a result.

It is the Company’s intention to be fair both to shareholders and executives by setting EPS targets that are motivational and achievable but still high against our competitors. Our reward strategy is very closely linked to shareholders and delivering returns for them through paying for performance. It is worth noting that the annual bonus contains a compulsory deferral into shares of 60% of the bonus paid to align executive interests with shareholders.

With the majority of customers being women, why are there only two women on the board?

A: The Board members are selected for their wide range of skills and experience. The current Board has a 20% representation of women. Martha Lane Fox joined the Board on 1 June 2007 and Louise Patten joined on 1 February 2006.

M&S also has significant female talent within the executive team, with a 21% representation by women, such as Kate Bostock, Director of Womenswear, Lingerie and Girlswear, Nayna McIntosh, Director of UK Store Presentation,
Jude Bridge, Director of Marketing Communications and Flic Howard-Allen, Director of Communications & Corporate Social Responsibility.

The Nomination Committee keeps under review the required blend of skills, knowledge and experience on the Board. Appointments are made on merit and against objective criteria to ensure that the Board maintains an appropriate balance of skills and experience.

Why was Paul Myners provided with a car and driver for 2 years after he left Marks & Spencer? Isn’t it the responsibility of his new company, Land Securities?

A: The previous chairman, Paul Myners did an outstanding job during his time with the Company and declined to take the full fee for his services whilst with M&S. The Company felt it right when he left the Company in July 2006 to bridge the period until he had put alternative arrangements in place.

From 1 July 2007 Land Securities has now taken on this cost.

Are the Company’s finances, as distinct from trading operations, vulnerable to interest rate changes?

A: We are very well positioned as a business in terms of interest rate changes from the point of view of the company’s finances. Approximately 80% of our debt is fixed interest and therefore protected against any upward movement in interest rates. That leaves 20% which is open to fluctuations in the cost of borrowing – a 1% increase in the interest rate increases our interest charge by about £3 million. In the context of a business that makes £965 million it is relatively immaterial.

Do the 170 million shares which you are asking permission to buy back in Resolution 11 represent 10% of the Company’s share capital? Why 10%, that would be an enormous amount and the only way you could do it is by taking on a level of debt which would possibly cripple the Company.

A: The 170 million shares do represent 10% of the company’s issued share capital. Resolution 11 is a standard resolution which most public companies seek authority for at each AGM. The provisions are contained within the Companies Act 1985 and allow the Company to buy back a maximum of 10%.

However we have not said at this stage that we would use this authority in full, it is simply prudent to seek general authority from shareholders to be able to act if circumstances arose in which the directors considered such purchases to be desirable.

Footnote
During 2006/07 no shares were bought back under this authority.

Your Dividend Reinvestment Plan (‘DRiP’) minimum dealing charge at £1.25 exceeds the normal 0.5% charge. The significance of this is that you need quite a lot of shares to minimise the effect of this charge. When will the Board standardise the charge in line with other sectors?

A: Following comments at last year’s AGM we conducted a thorough review of our policy. The conclusions the Board reached were that we are in line with other companies with large registers which do charge and that it would not be appropriate to reintroduce the subsidy, which was substantial and would effectively be borne by all shareholders.

Footnote
We have 230,000 shareholders, and a further 40,000 holding shares via our corporate nominee. Some 70,000 participate in our DRiP with holdings varying from less than 10 shares to more than 50,000 shares. When the fee was introduced in 2005 negative feedback from participants was minimal.

There are many companies that only charge 0.5% of the dividend as a re-investment fee. There are also companies that advise that the scheme may not be appropriate for holders of a certain number of shares. We believe it is for the shareholder to decide if the DRiP is suitable for them. This is still the cheapest method of obtaining shares in Marks & Spencer.

Why are shareholder vouchers issued with limitations, I mainly buy food at Marks & Spencer and I therefore lose out on money off vouchers on clothing, why can’t we have a year round discount card?

A: M&S has to consider the interests of all shareholders and whilst we appreciate a small number of private shareholders would like to see a discount card it would not be in the interest of all of our shareholders, many of whom are pension funds, overseas shareholders etc, who would gain no benefit from such an offer. In addition a discount card is very hard to control and would prove extremely costly.

M&S has therefore issued annual spend and save shareholder vouchers our next vouchers will be distributed in January 2008 and be valid throughout February and March. You can save £35 by spending £315 across our ranges. We are also extending the offer to technology products and shopping online via our website.

Have you changed supplier of ladies shoes? They do not appear to fit anymore in the size I have always worn.

A: M&S uses more than one supplier and is one of the largest retailers of footwear in the Country. We offer a wide range of styles and sizes (including half sizes) and have recently won an award from Drapers Record for footwear.

Why isn’t your main womenswear range as stylish as per una? I want the same flair in womenswear for us oldies as you have in per una and Autograph.

A: M&S continues to work hard to interpret each season’s key trends and incorporate them in clothing offers for all our customers across all age groups. M&S has recently introduced the new Autograph Weekend range which aims to bridge the gap between casual dressing and occasionwear and is aimed at the 30+ customer and a new golf-inspired range for both men and women.

The classics range remains one of the biggest brands for M&S. Our Classic Collection team recently canvassed the views of over 1,200 members of the Women’s Institute who were pleased with the improved quality of fit and material used within the range.

M&S aims to make sure that every woman finds something that she wants to buy every time she visits our stores.

Why is Marks & Spencer lamb from New Zealand rather than local Farmers?

A: M&S is committed to both food sourcing within the UK and Europe and
increasing regional food sourcing. On 8 June we announced a lamb price pledge for a group of Welsh farmers supplying lamb to Marks & Spencer stores across Wales. Also stores in Republic of Ireland were selling only Irish Spring lamb from 22 May this year, being 5 weeks earlier than last year.

This year the weather conditions have made it difficult to predict the start of the seasons therefore M&S has extended the season of New Zealand lamb to continue to offer choice to our customers. Local food sourcing remains a top priority.

Why is Gloucester store in such a poor state compared to other

A: M&S is working hard to improve store environment and currently remodelling 25% of stores. By Christmas 2007, some 70% of stores will have been modernised. Unfortunately, we have underinvested in our store portfolio for many years and it will take us time to refurbish the whole chain.

When will M&S be opening stores again in prime sites in Europe such as Nice and Paris?

A: M&S is looking at opportunities in Western Europe but has no plans to open there at the moment.

International has performed well and we are continuing to develop the franchise business, opening larger stores and extending the reach of the Marks & Spencer brand. M&S entered four new markets this year being Slovakia, Latvia, Bulgaria and Switzerland.

We also opened our first joint venture store in Taiwain in January 2007 and will open a further two stores in Taipei by the end of the year.

M&S is currently reviewing other development opportunities overseas and is exploring new markets for potential including China.

Please develop smaller and/or single portions with the “grown-up” generation in mind.

A: M&S offers a range of smaller food options, for example we sell our popular pies in individual portions. We have worked hard to increase our range of single portion total meal solutions including Count on Us range, which is now also free of colours and preservatives together with our range of nutritionally balanced ready meals.

Is it possible for the pension staff to tell retiring pensioners where the nearest clubs are?

A: M&S already publishes a regular newsletter “Pensions Update” for retired staff who are members of the M&S pension scheme. It’s an excellent suggestion and M&S will seek to include details of local clubs in forthcoming editions.

Q: Given that M&S is among the most popular and successful retailers of fresh food and flowers, should it now consider setting a limit to the number of air miles used in bringing these products to the market?*

A: M&S has recently launched an initiative called “Plan A” which we have implemented to reduce our environmental impact. We are as concerned as our customers about the impact our business has on our relationships with consumers, suppliers and the environment.

As one of Britain’s largest retailers, our carbon footprint is a large one, the combined result of our own UK and Irish operations, our suppliers’ activities and the CO2 that’s emitted whenever you shop with M&S and use our products.

One of our top five priorities is to reduce our carbon footprint, because if a big business like ours takes action and involves suppliers and customers, we can all do our bit to tackle climate change.

Climate change is a complex area and we do not claim to have all the answers, but we do know that we need to act fast. That is why our goal is to make our operations carbon neutral in the next five years and to help our customers and our suppliers cut CO2 emissions too. The issue of food miles is one we know we need to work particularly hard on.

That is why we aim to:

Source as much food from Britain and Ireland as we can – for example, continuing to sell 100% British/Irish fresh poultry, eggs, milk, beef, pork and salmon;
Double regional food sourcing within 12 months and grow our local supply networks;
Work with growers over the next three years to extend British growing seasons through new varieties and growing techniques;
Continue to research our food’s carbon footprint with the Carbon Trust and setting targets to reduce it over the next year;
Set targets to reduce the amount of food we import by air;
Offset our remaining CO2 emissions from air-freighted food within 12 months;
Label all air-freighted foods as “flown” within six months.

Footnote
More information on Plan A, including further details of the five areas mentioned above, can be found on our website www.marksandspencer.com/plana

*Question registered and answered before the AGM

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