Marks & Spencer investors have hit out against the retailer’s announcement yesterday to elevate Sir Stuart Rose to executive chairman, which some claim is in clear defiance of the UK’s corporate governance code.

M&S’s second largest shareholder, Legal & General Investment Management, said the news was “unwelcome”, as other shareholders voiced their disapproval at the move.

Legal & General Investment Management head of equities Mike Burgess said: “As set out in the Combined Code, we believe strongly in the separation of the roles of chairman and chief executive, believing that this provides a much-needed balance in the boardroom and prevents potentially damaging concentration of power.”

Another investor told the Financial Times: “This is a very retrograde step.”

M&S said yesterday that Rose will be promoted from June and will stay on in his new role until 2011, two years more than he had previously stated. M&S finance director Ian Dyson will take on additional responsibilities, while executive directors Kate Bostock and Steve Esom will join the board.

Rose defended the move, insisting that just under 30 per cent of the shareholding base contacted by M&S were broadly comfortable with the arrangement. He said: “In the short term in the economic downturn, a change of management is not helpful. I don’t believe we are through this economic blip and this time next year we will be in deep doobie-land – not just us, but British plc and global plc.”

He said he now had 38 to 40 months to find a successor, rather than just a year. Outgoing chairman Lord Burns said this was the best solution to keep Rose on board, while creating space for new executives to flex their muscles.