Sir Stuart will take up the combined role on 1 June when current chairman Lord Burns retires. He has also committed to stay at M&S until July 2011 when he will retire.
However, investors said the appointment was “unwelcome” and could breach City rules.
“As set out in the Combined Code, we believe strongly in the separation of roles of chairman and chief executive, believing that this provides a much needed balance in the boardroom and prevents potentially damaging concentration of power,” Mark Burgess, head of equities at M&S's second largest shareholder Legal & General Investment Management told the Financial Times.
Sir Stuart defended the move: “In the short term in the economic downturn, a change of management is not helpful,” he said.