The Association of British Insurers (ABI) is considering throwing its weight behind calls for Sir Stuart Rose, the chief executive of Marks & Spencer, to stand for reelection to the retailer’s board this year.

The lobby group for some of Britain’s most influential investors said yesterday that shareholders needed a proper explanation for the controversial plans to elevate Sir Stuart to executive chairman at M&S and an opportunity to voice their views on the plans.

Moving Sir Stuart to chairman from chief executive flies in the face of the Combined Code of recommendations on good boardroom practice and has sparked a furious response among some of the retailer’s top institutional shareholders.

Peter Montagnon, the director of investment affairs at the ABI, has said already that the appointment “raises some pretty fundamental concerns for our members”.

The ABI has also questioned plans by the retailer to award Lord Burns, the departing chairman, a pay-off of £450,000, a full year’s salary.

“The key thing is that shareholders will want to have a proper explanation in the annual report and annual meeting documentation,” a spokeswoman for the ABI said last night. “Once they have been given a proper explanation, they will want a way to express their views. One of those ways is for Sir Stuart to stand for reelection.”

Sources close to the ABI emphasised that it was still in talks with its members and M&S over the issue and that it had yet to reach a decision.

It is understood to be discussing other ways for shareholders to express their views. Shareholders could insist that M&S appoint a new senior independent director who has no previous links to Sir Stuart to ensure that he is properly policed in his new role.

Sir David Michels, the incumbent, has had a close working relationship with Sir Stuart and has been named as deputy chairman.

It is understood that M&S has been holding a series of meetings with its shareholders to try to explain the rationale behind its plan. Legal & General, M&S's biggest shareholder, has described M&S’s plans for Sir Stuart as “unwelcome”.

M&S said that it would be pressing ahead with the agenda for its July annual meeting as previously scheduled. “Shareholders will be voting for who goes on to the board but not for what role they do. Stuart’s role as executive chairman is not subject to a vote,” a spokeswoman said.

She said that M&S had held talks with more than half its institutional shareholder base in recent weeks and the majority of investors either supported the move or were broadly comfortable, she said. “So we are not aware of where this came from.” Sir Stuart was voted on to the retailer’s board in 2004 and reelected in 2006. His popularity as a retailing “guru” means it is unlikely that shareholders would want to see him ousted from the retailer entirely. Under the leadership of Sir Stuart, who was parachuted into the company in 2004 to defend a 400p-a-share takever bid by Sir Philip Green, the retail billionaire, M&S has reinvented itself. It has won plaudits for the high quality of its food offerings and the popular appeal of its fashion ranges, advertised by, among others, Twiggy and Myleene Klaas.

Shares nudged 750p last July as annual pretax profits for the year to the end of March touched £1 billion. They have slid since amid fears of a slowdown on the high street and the knock-on effects of the credit crunch. M&S shares ended last week at 387p.

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