M&S to face meeting after warning

M&S to face meeting after warning

Retail giant Marks & Spencer's annual meeting on Wednesday is likely to be an uncomfortable affair for chief executive Sir Stuart Rose.

A shock profits warning this week after the group's worst like-for-like sales performance in three years during the 13 weeks to June 28 dealt another blow to the M&S share price, which is just a third of levels seen a year ago.

The bleak high street conditions are set to continue well into 2009, offering little immediate respite for investors and analysts have rushed to downgrade forecasts.

But the abrupt departure of Steven Esom from the helm of the food business may prompt questions over the direction of the division, which has been weakened by supermarket competition and shoppers trading down amid soaring inflation.

Shareholders at the meeting in London's Royal Festival Hall may also voice concerns over Sir Stuart's appointment as executive chairman - in breach of corporate best practice - following the retirement of Lord Burns.

Sir Stuart, who has agreed to stay with the group until 2011, has attempted to soothe concerns among institutional investors by submitting himself to a yearly re-election.

However, pension fund adviser PIRC said this week: "Wednesday's surprise profit warning will only further fuel investors' worries over the company's strategic direction and governance."

Investors will also vote on the firm's remuneration report. The latest annual report showed that M&S has cut its bonus Htargets for top directors as high street trading becomes ever-tougher.

Sir Stuart will have to grow M&S's earnings per share by 8% above inflation over the next three years to achieve a maximum bonus of 400% of his £1.13 million salary under its long-term incentive scheme.

This compares with 12% in the previous year, although the company insists the new target is "at least as challenging" in the gathering economic gloom.