Marks & Spencer has defied management norms to promote chief executive Stuart Rose to executive chairman, extending his tenure by two years and bringing several potential successors into the limelight.

The move is controversial by running contrary to UK corporate governance codes that recommend a chief executive should not move to become chairman of the same company so he is not compromised when pursuing shareholders' interests.

It prompted the Association of British Insurers (ABI) to yesterday issue an "amber-top" warning to members saying M&S needed to provide a "convincing explanation".

Institutional investors seem to be split with many appearing content to accept the breach of normal standards if it means Rose, the man they credit with overseeing an dramatic turnaround in the last three years, stays at the business and succession speculation dies off. But others are concerned that Rose, already seen as a strong figure, could dominate the firm.

Rose's elevation will mean the departure of Lord Terry Burns, the former Treasury mandarin who took over from Paul Myners less than two years ago, on June 1. To beef up the non-executive presence hotelier Sir David Michels, former chief of the Hilton Group, will be appointed deputy chairman from the same date and the company will hire an additional director.

The revamp will also see finance director Ian Dyson add the operations director position to his role, with additional responsibilities managing the group's store network and human resources, on top of his current duties which include information technology and logistics.

Some investors view Dyson sceptically as a potential successor to Rose because his background is with Mecca Bingo owner Rank Group rather than in retailing. Two other potential challengers were yesterday boosted by being elevated to the board. Kate Bostock, who has been credited with turning around a clothing range previously seen as frumpy, will assume responsibility for all clothing, excluding its Per Una brand. Steven Esom will also step up as he continues to be responsible for food. Their appointments, and Dyson's expanded role, take immediate effect.

Rose, 58, had originally said he would serve three years. The new role is intended to give him the space to "groom" his successor, M&S said.

A spokesman said: "The thinking is to secure for the company the best person to lead it forward and the best person to finish what he started."

Since moving to M&S in summer 2004 from Top Shop owner Arcadia to replace embattled predecessor Roger Holmes, Rose has aggressively squeezed better deals out of suppliers to help M&S regain its reputation for value for money, added an ethical dimension to the company's ranges and has undertaken high-profile marketing fronted by celebrities such as 1960s' model Twiggy.

But some of the shine came off that achievement when the company revealed falling like-for-like sales of clothes and, to a lesser extent food, over the Christmas period.

These signs of a consumer slowdown, said one fund manager who wanted to remain anonymous, are actually a reason to keep Rose at the helm.

"M&S needs continuity of management - particularly now trading is getting more difficult in both general merchandise and good."

Resolution Asset Management's Dennis Wyles added that the positive side of the new arrangement is that Rose will be sticking around until 2011.

"He is a good retailer," Wyles said.

But he acknowledged that by taking a step back from the day-to-day running of the business he may not be able to exert the same control.

But for other investors the concern is quite the opposite. A source at one fund management house cast doubt on Rose's ability to undertake the chairman's role of representing shareholders while also overseeing the business and said the promotion could make it even harder to find a successor.

"The fact of the matter is that he is a formidable guy.

"It seems like it might be the cause that is is sucking up all the oxygen from potential candidates and it might be difficult for them to rise up."

Peter Montagnon, director of investment affairs at the ABI said: "The approach as announced does raise some pretty fundamental concerns for our members. We need a convincing explanation which should be available to all shareholders of why this new board structure is necessary."

M&S shares closed down 3p at 375p.