Big shake-up costs M&S £3.5m

MARKS & Spencer has revealed its shock boardroom blitz will cost the company more than £3.5m.

Stuart Rose, who has just been drafted in as chief executive to fight off a £10bn takeover challenge by billionaire Philip Green, will be paid a signing on fee of £1.25m. He will also be paid an annual salary of £850,000, although with bonuses, the figure could be double that, the company said in a stock market announcement.

The company also revealed Charles Wilson, who worked with Rose at Argos and Top Shop-owner Arcadia, will become executive director. He will receive a golden hello of £900,000, followed by a £500,000 salary, again with 100% bonus potential.

The company must also pay golden handshakes to former chief executive Roger Holmes, who was ousted last night, and former chairman Luc Vandevelde.

Holmes will receive 12 months salary of £620,000 and another £200,000 for loss of benefits, such as pension. Vandevelde will receive 12 months payment in lieu of notice paid in shares. His 162,000 shares-allocation would amount to £592,000 at the current M&S price.

It has emerged that the non-executives at M&S had decided to dump Holmes even before Monaco-based billionaire Green made his bid approach last week.

This was confirmed by Paul Myners, M&S's senior non-executive director who was appointed interim chairman until a permanent appointment is made. He has indicated he will not accept any additional salary for his role. His fee is currently £50,000 a year.

Both Rose and Wilson are on a 12-month rolling contract and must give six months' notice. They will not receive their golden hellos for six months.

Rose, who spent the first 17 years of his career at M&S, is widely respected in the City and in the retailing world and will put up a strong case for M&S to retain its independence. Britain‘s largest clothes retailer is preparing to fend off an expected £10bn takeover bid from Green, owner of Arcadia Group and Bhs.

The appointment of the highly-respected Rose makes M&S a much tougher bid candidate, but the Green camp refused to accept that their chances of success had been dented by the coup.

One key member of the team said today: 'The people who own the company will decide. It's a simple choice - do they want to do business with us, or with them?'

Rose was also in fighting mood today, declaring that the ball was firmly in Green's court. 'We have had no proposals,' he said.

It is not known whether Green is prepared to go hostile on M&S, but if he does, it will be one of the fiercest takeover battles to be seen in the City in recent years.

Analysts speculated that the next M&S casualty could be Vittorio Radice, the flamboyant former Selfridges boss brought in to run the homeware operation Lifestore, which has failed to live up to its early hype.

But Rose made it clear today that he has no preconceived ideas and will be talking to Radice later this week.

Questions to be answered

THE £10bn of financing for the Marks & Spencer bid is now virtually all in place, with Green understood to be prepared to put as much as £1bn of his £3.6bn fortune into the deal, in what would be one of the biggest private cheques ever written.

Green is extremely keen to cut the bidding short, in a fast-track 30-day affair, and is prepared to forgo time-consuming due diligence.

But he has said he wants a number of key questions answered before he makes his final decision. These include:

The precise nature of Marks & Spencer's trading arrangement with George Davies, the former Next boss who designs the successful Per Una clothing range. M&S has never fully disclosed details of the deal with Davies and Green will also want to know if there is any change of ownership clause with Davies.

The full value of M&S's freehold property empire, which analysts have put at about £1.2bn. Green, who is as expert at property dealing as he is in the retail trade, will be looking for details about the full worth of the High Street portfolio and its leasehold liabilities.

Full details of the group's capital spending plans. This includes more information about plans to revamp the High Street stores chain, where figures as high as £1bn have been rumoured.

Marks & Spencer shares closed up 6p at 365 1/2p.