Column Revival of M&S continues but faces big challenges

Arrogance, introspection and standing still. Yes, Sir Stuart Rose's indictment of Marks & Spencer's performance in the five years before his return was fair. So all hail Sir Stuart the Saviour?

That seemed to be the stage manager's script for Rose's last annual meeting. Twiggy greeted a "great businessman and perfect gentleman"; non-executive director Sir David Michels applauded Rose's "bravery and vigour"; and the man himself trumpeted the statistics the 400m removed from the cost base, the 3.4bn invested in the company and the 4.6bn handed to shareholders in the past six years.

Now, nobody should doubt that Rose has been far more impressive than Peter Salsbury, Luc Vandevelde and Roger Holmes, his hapless predecessors. The brand and the products are stronger now than then, just as Rose promised they would be when he saw off Sir Philip Green's cheeky takeover approach in 2004. But let's not get carried away with the idea that the Rose years represented a return to a golden age.

Two statistics stand out. First, M&S made more pre-tax profit in 2004 than it did in the past financial year 740m versus 700m. Okay, 2004 was a boomtime for retailers and 2009-10 was the midst of a recession. All the same, not every big retailer suffered as heavily as M&S in the downturn.

Second, the share price is back where it was when Rose arrived at 350p-ish. It has had an exciting journey (up to 750p, down to 200p) but the net result is sideways. That is despite 2.7bn being spent on a tender offer for shares and buy-backs. Again, comparisons must be treated with care: the retailing sector's halo has been removed by investors during the same period.

But the point is this: if you really want to know how well Rose performed, wait to see what returns emerge over the next five years as that 3.4bn of capital investment is made to sweat. In the circumstances, the celebratory almost triumphalist tone of themeeting jarred. The revival of M&S remains a work in progress.

Still, the shareholder rebellions at M&S over pay are getting smaller. Fewer than 10% of shareholders voted against the pay report this time, despite the big golden hello for incoming chief executive Marc Bolland. Professor Murray Dalziel from the University of Liverpool Management School was moved to declare beforehand: "Concern over soaring executive pay is overdone of course, you expect big results for big money. But shareholder rights are exaggerated. Shareholders are fickle and can buy and sell at a whim."

The professor misses the point that in too many cases big money is being paid for mediocre results, and that this trend might be dampened if investors behaved more like long-term owners. Never mind, his second declaration is better: "It would be good to see public disclosure of investment managers' compensation and whether they deserve what they earn."

Amen to that. This week we have learned a lot about how much headteachers can earn. It's a safe bet that more revelations about public sector pay will follow as the coalition government's cuts bite. More disclosure about the millionaires on the payrolls of banks are promised. Yet the pay and perks of investment managers remain largely a mystery.

You can dig at Companies House to discover a few examples of remuneration at privately owned companies and partnerships. In the publicly quoted arena, details tend to emerge only when fund managers sit at board level, which is usually when their duties extend beyond day-to-day investment.

True, retail investors can generally get a good handle on the overall charges levied by a fund. But that's not the same as being able to judge whether individual investment managers, or even a group of managers, are being paid small fortunes to deliver humdrum returns or to hug an index. Let's have the details.