M&S pledge to shareholders

THE new team at Marks & Spencer again declared its determination to 'deliver the full potential' of the struggling retail business 'for the benefit of its shareholders and customers' as it posted its annual report to investors today.

Printed before the dramatic events of the past fortnight, including news yesterday of director Vittorio Radice's departure, the report is largely an historic document, peppered with promises to do better from the former chairman Luc Vandevelde and ex-chief executive Roger Holmes.

But in an accompanying letter to shareholders, interim chairman Paul Myners details the board changes and bid approach from Bhs billionaire Philip Green, and says the group is 'well placed' for recovery under the leadership of Rose.

There is little new financial information in the report, which shows Radice earned £556,000 last year in salary and benefits. Holmes' salary was £693,000 while former head of clothing David Norgrove received a pay-off of £754,000.

Monaco-based Green will be taking a close look at the report, however, as he ponders whether to come up with a new all-cash offer for the group following the City's lukewarm reception to his cash-and-equity offer last week.

Meanwhile, property tycoon Gerald Ronson is said to be interested in buying a significant chunk of M&S's extensive property portfolio, last valued by the retail group at £2.1bn. Ronson, who has bounced back after being jailed for his part in the Guinness affair, has yet to approach the M&S board.

Radice's departure highlights the folly of handing out expensive 'golden hellos'. He was given a £1.2m signing-on package when he joined just 15 months ago to open a single furniture store.

His total earnings are likely to top £2.5m. He gets a 12-month pay-off of more than £600,000 including pension, plus the rest of his golden shares - worth more than £500,000 thanks to Philip Green's takeover approach.

M&S is already handing out £820,000 to ousted chief executive Roger Holmes, plus £600,000 in shares for ex-chairman Luc Vandevelde. More costly departures are likely.

The clothing chain appears to believe that joining fees are de rigueur for top executives. Rose was handed a £1.25m 'golden hello' despite being out of work for more than a year. His unemployed colleague Wilson got £900,000.

Rose has reshuffled his top team to build defences against a possible £9bn assault by Green. Rose, in the job for eight days, said: 'There was not entirely a meeting of minds between Vittorio and myself.'

Radice's brainchild, M&S Lifestore, is also likely to be sidelined. The first furniture Lifestore in Gateshead cost £14m, but has been a flop. Rose described Lifestore as 'an experiment', saying it is 'one initiative we will be reviewing over the next three weeks'. He is likely to halt the 20 new stores.

Rose will not commit to any new projects for now and is likely to renegotiate the per una deal with George Davies.

Green is 'having a think and talking to advisers' to decide whether to raise his bid. Many believe he will pull out.

Rose, who joked that he has been 'walking round with a pair of dark glasses and moustache' since Green grabbed him by the lapels at Marks' headquarters last week, has also been speaking to shareholders.

He is trying to unpick some decisions by his predecessor Roger Holmes. Maurice Helfgott, who spent six months heading the food division despite no experience, returns to run menswear, childrenswear and home. Rose will recruit a new food boss.

Meanwhile, the spurt in Marks shares has put a bunch of staff options in the money. How many have taken their profit by selling? Marks says some may have sold, but most will stay loyal. Some 90m options are outstanding.