He’s had enough of ‘guff’ in annual reports and wants digital AGMs, now M&S’s Archie Norman says: I’m starting a revolution… so EVERYONE can have a stake in UK plc
Archie Norman, the chairman of Marks & Spencer, wants to spark a revolution in popular capitalism. The last time this was attempted was in the Thatcher-era privatisations of the 1980s. His aim, however, is to create a shareholder democracy for the digital world of the 21st Century.
He is this week launching a ‘Share Your Voice’ campaign to update company law because he believes small shareholders are in danger of being disenfranchised.
His proposals include improving companies’ ability to communicate directly with all their small shareholders, something not happening at the moment due to outmoded rules.
He also wants online annual general meetings (AGMs) to be recognised as valid, so that companies are no longer obliged to hold a traditional shindig where shareholders can question bosses in person.
He believes that virtual gatherings would lead more private investors to get involved.
And he is critical of the weighty, old-fashioned paper annual reports that descend with a thud through investors’ letterboxes, suggesting that streamlined communications, whizzed over by email, would in many cases be more effective.
So what has inspired him to embark on this path? ‘We’re Marks & Spencer. We are the supremely British company, so even people who don’t own our shares think they own us. We have more than 30 million customers and a large private investor base. Why aren’t we setting out to show people they can invest in British companies and that these companies will talk to them and engage with them? Back in the 1980s there were a lot more small shareholders. Then, the Government were the creators of popular capitalism and wanted to give people a stake.’
In the intervening four decades, however, the proportion of shares held by individual savers has fallen inexorably. Most of UK plc is now owned by big City institutions and foreign investors. So it may seem quixotic to champion the small shareholder – though if anyone can do it, then Archie Norman can.
One of the most respected figures in British business, Norman, 68, has made a career of turning around struggling businesses, including Asda, ITV, and now M&S, where he has been in the chair since 2017.
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Educated at Charterhouse and Cambridge University, he spent eight years in politics, as a member of the Conservative Party and served as Shadow Secretary of State for the Environment under William Hague. Married with a daughter, he lives in London and North Yorkshire.
His most radical proposal is to reform the rules on annual general meetings (AGMs). At present, a purely online meeting is not legitimate under company law.
Norman describes it as ‘madness’ that meetings are still stuck in the past. ‘I remember going to my first Asda annual general meeting. We had 800 people in the room and an overflow room, including Yorkshire farmers with their trousers tied up by string, banging the table. ‘That is never going to happen again. We have clung on to an old system which no longer speaks to people.’ Before Covid, many of his shareholders relished turning up at the annual meetings, not least for the spread of food and wine.
They would berate the board about weak knicker elastic, the quality of sweaters and the lack of elegant long-sleeved dresses as well as questions on executive pay and dividends.
Small investor power peaked at the annual meeting in 2004, when almost 3,000 people lined up behind the M&S board and repelled a £9.1 billion bid from Sir Philip Green. The former Bhs and Topshop tycoon backed away, and the rest is history.
But, Norman says, nostalgia for the AGMs of old is ill-placed.
Pre-pandemic, M&S held its meeting at Wembley stadium. Most shareholders, he says, ‘don’t want to trek across the country’ for a meeting and are put off by the ‘whole idea of this noisy brouhaha’ where they have to stand at a microphone in front of everyone to ask a question. ‘That’s not modern life and it’s for show-offs, isn’t it?’
Isn’t there some value in being able to see the whites of the directors’ eyes? ‘I don’t think so. I think physical presence is for the loudmouths. Some female CEOs have been subjected to misogynistic questions from small shareholders.’ M&S has trebled participation in three years since it started hosting digital meetings alongside physical ones due to the pandemic.
At the most recent event, BBC radio and TV presenter Anita Anand chose the shareholder questions. Some 1,750 people tuned in with another 2,500 views subsequently. ‘This year I want 5,000,’ Norman says. A virtual meeting is preferable, he says, because everyone can attend, including shareholders living abroad. Why not have a hybrid and keep everyone happy? He argues that would risk ‘just filming the town hall meeting’.
As for annual reports, he says they are far ‘too long’. ‘At Asda annual reports were about 80 pages and we thought they were too long then. Now the M&S annual report is well over 200 pages.’ While it does contain important information, he argues there is also a lot of ‘guff’.
‘I have never met anybody who has read all of it, except possibly our audit partner. It is not designed to tell shareholders how the company is doing, it is to tick a load of governance boxes.’
He believes shareholders would benefit from shorter but more meaningful online communications. ‘We should try to make it interesting, but we have regulated annual reports to the point where they are so large they are of no use. We sent out 10,000 copies of the last annual report, this thing that nobody reads. It has added 40-50 pages this year because of the new sustainability reporting. It is absurd.’
Scrapping the old-style meeting and annual report would save M&S around £1 million a year, which Norman says could be used more productively.
Private shareholders have always been very important to M&S. In the past five years, the performance of their investment has been disappointing. Christmas trading was strong with its market share in clothing and home rising to a seven-year high. The company is to create 3,400 jobs as part of plans to revamp its stores. It is closing shops in unprofitable locations and investing in more lucrative sites.
The shares have recently enjoyed a rally, rising 30 per cent this year so investors will be hoping Norman’s turnaround plan is finally bearing fruit.
Bizarrely, he cannot be sure how many private shareholders he has on his register, because of the popularity of ‘nominee accounts’, where individuals’ shares are pooled together with those of other savers and held by a stock broker. He says that ‘we don’t know’ how many individual shareholders M&S has ‘because so many are held through nominees’. He adds: ‘The number of direct shareholders is declining every year.’
Nominee accounts are cheap and convenient. But, Norman says, nominee holders are ‘third-class citizens’ because companies, under current law, cannot automatically communicate with them directly.
Within 30 years, he claims, M&S will not be able to speak to a single one of its individual shareholders, unless the rules are changed.
Norman also wants a push to encourage employee share ownership with tax incentives. ‘We have 65,000 current employees and many more former staff. It would be wonderful if we could make them all shareholders.’
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