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Filter by: Board | Shareholders | Employees | Customers

Why, Chairman, are you leaving? Chairing any major public company, you say in your statement, is an honour, but Chairing M&S is a special privilege. You reportedly have expressed sadness at leaving. The Chief Executive, at the end of his Annual Report statement, has paid tribute to his collaboration with you, and the support you have given; and he has done so orally here today.

A: It is true that I am sad to be standing down, but I have had a thrilling two years since taking the Chair at the time of the Phillip Green bid, and having the huge good fortune of appointing Stuart Rose, and then assembling this extraordinarily high-quality Board - not only in the executive directors but in our three new recruits as non-executive directors.

Through a proper process, it was determined that it would be appropriate to change the Chairman. I am glad that I was given an extra year to show that Stuart and I could make the progress which we promised to you that we could deliver when we spoke to you at our Annual General Meeting at the Royal Festival Hall in 2004. Terrence Burns is an excellent candidate to succeed me as Chairman; he brings to the Board remarkable skills in terms of leading a team in a supportive manner - a team with a broad range of skills which is entirely fit and appropriate for the purpose going forward.

Many shareholders would like to know from Mr Lomax why he precipitated the appointment of a new Chairman.

A: (Chief Executive) We have been through a period of great transition in the business, and the Board did have a very thorough and full discussion about the potential change of Chairmanship during the middle part of last year. We did decide to postpone the change until today. I am absolutely delighted that Paul and I were able to fulfil our obligation to you and to other shareholders, to deliver the value that we said was here in the business - but, equally I am delighted to welcome Terry Burns to the Chairmanship because I know that his experience in business over many, many years will be immensely valuable to us as wise counsel, and we look forward to working with him from tomorrow morning.

Chairman and members of the Board, can I just say I know I speak for all my fellow shareholders to say, once more, what a fantastic support you have been, Paul, to Stuart and his team, holding what was a badly floundering ship steady whilst they got on with their repair jobs. Paul, I know I speak for us all in offering you a very, very big thank you and well done, and to wish you all the luck with your new ventures. Thank you very much.

A: Thank you very much indeed for those kind words.

Would your successor, Lord Burns, and David Michels, confirm that they will always act in the best interests of the shareholders, regardless of their own personal interests, from now on, with regard to Marks & Spencer?

A: You can rest assured that they absolutely will.

Why is Lord Burns's pay as non Executive Chairman twice that of yours, Paul Myners? Does that mean we are going to get double the performance we've already had?

A: (Chief Executive) Lord Burns is being paid the going rate for the Chairmanship of a FTSE100 company. I think you will be well pleased with the value for money that you get from him over the next few years. With regard to Paul, we owe him thanks because Paul specifically asked that his salary was not reviewed at the time of the bid, beyond the £200,000 per annum that he was being paid; and he maintained that stance through the latter part of his Chairmanship, and we thank him for that.

I would like to understand what Lord Burns with his banking and public office background can bring to Marks & Spencer to continue the progress that you have currently made. *

A: Lord Burns is an excellent candidate to succeed me as Chairman, he brings a wide range of experience of both the public and private sector which will add great value to the Board. The Chairman's role is to bring independence to the Board and to balance the operational skills of the other board members. I am confident that his balance of skills and experience will help to guide the company through its next phase.

*Those questions asterisked were registered but not asked on the day because of time constraints.

At last year's AGM, the Board said they were working on helping their shareholders who hold their shares in nominee accounts. And I have to say thank you very much for my vouchers, which I look forward to receiving through my letterbox any moment now. However, getting the relevant documentation, such as the notice of meeting, seems unavailable to me, from either your shareholders' advice line, your registrars or my stockbroker. I have spent hours on the phone being passed from one to the other without success. Is there any chance I will receive this paperwork next year in advance of, I believe, a new act of parliament. At present, I am made to feel as though this request is: a) unusual, b) not my right, c) a darn nuisance.

A: Your stockbroker's nominee name, is the name which appears on the share register and that is the name to whom we are legally obliged to send documentation.

However, we want to communicate openly with as many of our private shareholders as we can, including those held in nominee accounts. We do make efforts to get documentation to you, the beneficial owner, indeed a facility is available for nominees to receive multiple copies of the Annual report and Notice of Meeting, however some are reluctant to forward these documents onto the underlying beneficial owner of the shares because it is a cost to them. Those who hold shares within our corporate nominee receive all documentation and this nominee is open to all. Alternatively you could transfer your shares or a share into your own name in order that you will appear on the register. For your information, all the documentation is available on our website including the Annual Report and Notice of Meeting.

Why has a minimum commission and charges fee been applied to the Dividend Reinvestment Plan (DRIP), which means that small shareholders are perhaps paying four or five times the normal fee? Yours is only one of some 20 companies in which I reinvest my dividends, and yours is the only one that has done this; and in fact some of them absorb all the charges.

A: We must ensure that we don't subsidise one type of shareholder at the expense of another. We are covering our costs by charging a commission of 0.5%. A charge of £1.25 is still significantly less than buying shares through a broker. This minimum charge is to make the DRIP self-financing and recoup the cost, in the interest of shareholders as a whole.

What is the justification for new Article 109 in the Notice of Meeting, allowing only two directors to form a quorum? This could be dangerous.

A: In line with legislative changes the minimum number of directors required by our Articles has been lowered from 4 to 2. However in reality the Board will develop its own internal rules and practices, and you can rest assured that the Board would not meet with only 2 directors present without every director being supportive of that approach.

Can I, on behalf of Birmingham City Council, welcome you once more to Birmingham. Can I also say that don't leave it too long before you come back to Birmingham - because you will be most welcome.

A: Can I say, Councillor, this is a wonderful facility you have here. You and your staff could not have been more welcoming. I don't think there is anywhere else in the country with a large hall like this, where a leading member of the Council would come along to check that a major company holding its AGM, like Marks and Spencer, was comfortable, and that we would be well supported by the community. You and your staff are wonderful ambassadors to this wonderful city. Thank you very much.

Could I make a suggestion that, as you've got such very splendid attendance here, whether you should not follow other companies procedures and have simultaneous meetings in Birmingham and London, linked by video? That would mean that the many loyal shareholders and customers living in the Midlands could take part in the shareholders' meeting if they are held in London.

A: We are always looking at ways we can improve and enhance our Annual General Meeting. We will look at the suggestion of holding our AGM in London with a video link to Birmingham as part of our preparations for future AGMs, including associated cost and logistical implications of such a move. For those planning to come and join the Board at the AGM on 10 July next year, we will hold the meeting at 2pm - three hours later than our traditional London start time - making travelling both easier and more cost effective, in response to shareholder feedback at this year's and last year's AGM. We will also be broadcasting the AGM live on www.marksandspencer.com/thecompany

Mr Chairman, I am most distressed at the takeover of British industry by foreign companies. Would it not be appropriate for unsuccessful bidders to have to pay, say, 65% or 75% of the defence costs? It seems intolerable that this great company should have been lumbered with £38 million of costs to defend ourselves against an unwanted bid.

A: We did indeed incur £38m of costs in 2005 defending ourselves against an unsolicited bid approach. The costs referred to were incurred in 2005 primarily for the professional advice we received, in very short period of time, as we developed and implemented a new business strategy in response to the possible offer from Revival Acquisitions Limited. The City Code on Takeovers and Mergers is currently going through a review and this may be an area that is looked at, I am sure you will register your view. Indeed I, on Radio 4 this morning, suggested that the current 90 day limit available for a company to assemble a bid simply isn't, in all circumstances, sufficient time to review the options.

It has been good that the AGM has come to Birmingham for the last couple of years. Are there any plans to hold AGM's in other cities in the North as opposed to the South?

A: We review the AGM location each year and look at a number of options, although there are only a limited number of locations which can hold such a large meeting. In 2007 we will be returning to London. However, we take all shareholder views into consideration when planning future AGMs.

*Those questions asterisked were registered but not asked on the day because of time constraints.

I would like to understand what consultation went on before the funding was taken away from the Retired Staff Association, and why the members weren't given the chance to be involved in consultation? Do the Board realise that the Retired Staff Association was the only lifeline for some long serving members, and that the increase in retired staff discount doesn't compensate for what was taken away?

A: We carried out a full review over the last 12 months of the arrangements made for retired staff, to ensure that we were making the very best use of resources and that they were fully and properly appreciated by previous employees. As a consequence of this, we are reducing the amount of subsidy paid to Retired Staff Associations in 2006/07 and will cease to make payments from April 2007. We are, however, supporting RSA branches through this period of change as they choose whether to continue on a self funding basis. Already 66 branches have decided to become self-funding, 43 have decided to close and 72 are still considering what they want to do.

Turning to the point about consultation, last year we received many letters from retired staff about their benefits. We know from these letters that retired staff consider their most important benefits to be their pension and their retired staff discount. Although the Retired Staff Association is valued by some people, around 75% of retired staff either do not belong to or do not regularly attend RSA meetings. So rather than formal consultation, we took into account what we were hearing from employees about the things which really matter to them, and we had to make a judgement on what was the best for the largest number of people. Please have no doubt that we continue to value our retired employees very much. This is one of the reasons why Marks & Spencer pays amongst the most generous pensions of any company in the UK. It is also why retired employees continue, for life, to receive 20% discount on clothing and food purchases in stores, and it is why believe that increasing the dividend was so important, because so many of our former employees are shareholders. We also continue to have a Welfare Department and Helpline which is on hand to support retired employees. Looked at in totality we continue to be very benevolent and very supportive towards our retired staff and since we announced the changes, the letters we have received from former employees have supported, in aggregate, this proposal, by a proportion of about two to one.

What action is the board of directors going to take about the pension deficit? I consider it can do one of 3 things: 1. make the scheme paid up, 2. career average related earnings, 3. increase staff contribution to 50% of regular contribution. *

A: The Company acknowledges and takes seriously the size of the pension scheme deficit and has a good history of making payments to address the deficit - £515m since 2004.

We also acknowledge that our UK scheme is valued by our employees. An actuarial valuation of the scheme as at 31 March 2006 is currently underway.

Initial results will be available for discussion between the company and the scheme trustees towards the year end. The company will be looking at a range of options as the valuation proceeds, it is too early to comment on what these might be.

*Those questions asterisked were registered but not asked on the day because of time constraints.

Could the M&S labelling on food product and Christmas cards be improved? For example, the M&S on the back of the cards is larger than the greeting inside, which is not a very good idea. The back of the envelopes are also embossed where, if one is sending the card abroad, might write one's own address. Furthermore, on food packaging, one is told to keep the product upright - but the cooking instructions are on the bottom.

A: (Chief Executive) I share your frustration when it comes to food products. Food labelling is a real problem for us because not only do customers want to know a lot about how they cook the foods, but we have, by legislation, also to put on the back what the ingredients are, etc, etc. So, if you are cooking with your oven, if you are cooking with your microwave, or whatever way you are cooking, we need to get all that on, plus the legislation, plus the information coming on now about health, plus the new Government regulations that will soon be in force about what else you need to know about. One easy way on some of the prepared foods is to take the food out of the sleeve. We will continue to look at it. With regard to the Christmas cards, I will review your comments with the buying team.

Where did the company close the seven stores referred to in the Annual Report? Also, where has the company opened new stores? Is the company investigating the possibility of repurchasing the stores which they sold on a leaseback? Will the company make a statement to the effect that they will not make any more sale and leasebacks? A debenture secured on the leasehold must be preferable.

A: (Chief Executive) If I could answer that question in reverse order, I don't think it is feasible for us to commit, at any time, to what we might or might not do in terms of signing any undertakings not to either lease things, or undertake any other form of financing. What we intend to do, and it is publicly stated, is to actually retain flexibility in our store portfolio. We don't intend, in the short term, to undo what has been done, but I would never say 'never'.

In terms of the stores that we closed, we closed Margate, Wembley, North Finchley, Stourbridge, Leadenmill, Purley Way and Moorgate. We closed those stores because they were stores where we were making a marginal contribution. We closed them because the demographics in those particular areas were mitigating against the future of those stores. They were tough decisions because Marks & Spencer in the past has not closed stores with any regularity.

Conversely we opened quite a number of new stores. We have talked about the 50 Simply Food stores that we have opened; we have also opened a whole online store at Arena Park Coventry; we have opened at Cardinal Place in Victoria; at Kingston Park Milton Keynes; at Tamworth; at the Fort in Birmingham; at Valley Park Croydon and Galway. and there are a number of other stores in the pipeline which we will announce shortly.

I regret to say I am not wearing one piece of Marks & Spencer clothing. The vast improvement in ladies' clothes over the last few years is very noticeable. Are there any plans for such a programme for menswear? I find the menswear very drab and uninteresting.

A: (Chief Executive) One of the first things I said when I came to the business was 'I want more colour', and colour applies to men just as it does to women. So I agree with you. I think it is unfair, actually, to label us with that today. When I came to the business two years ago, I was reluctantly in some M&S clothes. I am very proud to tell you that I am practically never out of them and I think that is because we have a fabulous range of menswear.

I would like to invite you and one of my senior members of staff to go and look around the menswear section and see what we can find for you. Now, if you are talking about men's suits, I do concede that we may not have quite as much colour.

When can I monitor my M&S cards online? Also, are you able to monitor what the shareholders and cardholders would like to see in their local stores?

A: (Chief Executive) We are actively looking at the functionality required to enable Cardholders to monitor their accounts on line. Although we are not yet in a position to offer this at the moment, we expect to make an announcement later in the year.

The information we receive regarding Cardholder transactions provides us with an understanding of what customers are buying and what they are not buying and this is something that we review on a regular basis.

There is nothing more infuriating than arriving at a store and not being able to find the size of the length of skirt that you are looking for. You have an ordering system but, quite often, the warehouse is out of stock. It doesn't seem to be possible for your staff to be able to tell through the computerised system, which store might have the garment, and if necessary I would go and fetch it myself.

A: (Executive Director, Marketing, E-Commerce, Store Design and Development) Yes you are right, we don't have the capability to do that now. We are working with Amazon to have a completely joined-up ability to be able to track stock right across our entire network. So whether it is in the store you are in, in the warehouse, or in another store, you will be able to access it and have it either delivered to the store you are in, or to your home for a small extra charge. That, sadly, won't be available until the New Year, but by January or February of next year, that will be a facility that will be available to you.

In the days of calls for energy efficiency. Has the company considered a better system for the existing automatic doors in the stores? They seem to be a terrible waste of energy; they open up and let out great volumes of hot air on cold days, and cold air on warm days.

A: (Chief Executive) Absolutely fair point. It is actually a subject that is much closer to our hearts than you might think. Energy costs are rising and, in addition to that, we are committed, ourselves, to making sure that we do our bit for climate change. Over the last three years, we have opened 44% more stores and we have reduced our energy costs by some 5%. We do have big demand from our customers to have automatic doors. We are experimenting with a number of things, including air blankets etc. We are also experimenting with recycling of hot air coming from other parts of the store and, conversely, cold air when the temperature is in the reverse. There is no simple solution, but I can assure you that it is at the top of our agenda.

I notice that there is £901 million of medium term loans repayable within a year. Are you taking steps to lengthen the debt so that we can lock in to lower interest rates?

A: (Finance Director) Last year the business was cash generative and we reduced our net debt by over £500m. In March we re-financed the five-year committed bank facility in the light of improved market conditions. A combination of the bank facility together with cash generated from operations will allow us to finance the maturity of the medium term notes.

As we all worship the god of profit (naturally) we are a wealthy country -what will M&S do rather than pay lip service to Fair Trade? Coffee, tea, chocolate, t-shirts etc is an excellent start - but where to for 2007 - 2008? Cheap clothes good but at whose expense? *

A: Our customers, shareholders and employees have been very clear with us. They want great products, great quality and great value, but not at any cost. Operating responsibly is at the very heart of how we do business, it's the right thing to do but we also believe it makes good business sense. It helps us to attract shoppers to our stores, recruit and retain the best people, form better partnerships with our suppliers, make the communities in which we trade vibrant places and ultimately create great value for our shareholders.

In the last 12 months we have received several awards for our work in this area. Greenpeace and the Marine Conservation Society named us as the leading UK food retailer for responsible fish sourcing. The RSPCA named us as the leading fashion retailer for animal welfare and commended us for our work in Foods. Retail Week named us as the CSR Retailer of the Year and we also received the CSR prize in the Great Places to Work Awards.

We also believe that Fairtrade is a great model for linking UK consumers with farmers in some of the very poorest countries in the world. We only offer Fairtrade coffee and tea in our 202 Café Revives. All the coffee in our stores is Fairtrade and we are converting all the tea this summer. We also sell Fairtrade chocolate and fruit in our stores.

We were also the first major high street retailer to launch clothing ranges made from Fairtrade cotton. Fairtrade cotton has only been available since November 2005, by March 2006 we had socks and T-shirts made from Fairtrade cotton in our stores. We are currently extending our use of Fairtrade cotton to cover jeans, babywear and men's formal shirts. We are also working directly with farmers in India to help more of them to convert to Fairtrade standards.

In addition to this Fairtrade commitment we continue to apply high social, environmental and animal welfare standards to all the products we sell, wherever in the world they are produced. For example, last year over 1,000 labour standards audits were undertaken in factories producing products for us.

With more cooking programmes on TV on how to cook. With more and more women working and therefore having less time M&S plus other supermarkets are selling more pre packaged food (ready to cook). How does the excellent food group know what option to take?*

A: Our customers shop with us for a wide variety of products, ranging from prepared food to high quality meat and produce that they use for preparing their own food. We are constantly seeking innovative products to meet our customers needs, for example we have launched a new range of semi prepared food, Marks & Spencer Cook!, that is totally free of additives and allows our customers to get involved in cooking.

Why is café Revive more like more old school canteen rather than a comfortable restaurant in which I can relax? The chairs are very uncomfortable and its very noisy. *

A: We agree that our Café Revives have not been the most inspiring environments. We are addressing this as part of our modernisation programme to improve seating, lighting and menus. We are also looking to enhance our 'eat-in' offer, and by October 2006 we will have 15 Fresh Food Fast cafes and 4 Eat Over Deli's. In addition we will launch our first full restaurant in Newcastle in October this year.

*Those questions asterisked were registered but not asked on the day because of time constraints.

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