UPDATE: M&S Chairman Defends Senior Exec, CEO Pay Policy

14th Jul 2010 17:12

(Adds chairman, company comment, detail.) By Simon Zekaria Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Marks & Spencer Group PLC (MKS.LN) Chairman Stuart Rose Wednesday defended the retailer's senior executive remuneration policy and the pay awarded to Chief Executive Marc Bolland at the company's annual shareholders meeting. "We pay bonuses based on independently set targets," Rose said, presiding over his last investor meeting at the company. Bolland, who joined the clothing, food and homeware retailer from U.K. grocer William Morrison Supermarkets PLC (MRW.LN) three months ago, is to receive a performance-related pay package worth up to GBP15 million in his first year at the helm of the company. This package includes a basic salary of GBP975,000, an annual bonus up to 250% of salary, an exceptional award worth 400% of salary and GBP7.5 million to compensate for his early exit from Morrisons. Rose himself was paid GBP2.61 million for the fiscal year ended March 27, according to the group's annual report. "We were not desperate to get Marc Bolland, but we think we picked the best candidate," Rose said. Rose also said Bolland indicated to the company's board that he would stay at the group "for a substantial period of time." Some 91.4% of shareholders approved the company's proxy vote on its renumeration policy, with 8.6% voting against. Rose's re-election as chairman and Bolland's election as CEO was passed with 96.9% and 96.5% shareholder approval respectively. On receiving a sustained round of applause, Rose said: "My time has come to an end, but I know you will be in good hands." Rose, who joined the company in May 2004, will leave the group by March next year. He previously said his successor would be appointed by the autumn. The group's board said Rose led the company "bravely and vigorously," particularly in protecting the company from a takeover. Rose said that although the retailer is trading in "challenging times," there are signs that "consumer confidence is beginning to improve." Earlier this month, Marks & Spencer said it made a good start to the year after reporting a 3.6% rise in first-quarter sales, but that it remains cautious about the outlook in the face of macroeconomic headwinds. The food, clothing and homeware retailer, often viewed as a bellwether for U.K. consumer sentiment, said sales from stores open at least a year rose 3.6% in the 13 weeks to July 3 from a year earlier. This compares with a 5.1% rise in the fourth quarter last year and a 0.8% rise in the third quarter. At the end of May, the group declared that the worst of the U.K. recession was over as it posted higher annual profits and sales, including the first rise in food sales since 2007. However, retailers are concerned that spending cuts, combined with a forthcoming raise in tax on sales of goods to 20% from 17.5% on Jan. 4 next year, will hit consumer sentiment. Economists also warn that factors including inflationary pressure and concerns about job security could keep consumer spending muted in the coming months. Bolland, who formally took over the reins as CEO from Rose this month, will deliver his strategic plan at the interim results in November. Analysts say Bolland will be charged with updating the group's clothing line, step up its food operations, expand its international business and deal with a pension fund deficit. -By Simon Zekaria, Dow Jones Newswires; +44 207 842-9410; [email protected] (END) Dow Jones Newswires July 14, 2010 12:12 ET (16:12 GMT)