Carphone Warehouse 2006 Annual Report Download - page 30

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Compliance
This Remuneration Report has been prepared in accordance with the Directors’ Remuneration Report Regulations 2002 (Regulations) and the Combined
Code on Corporate Governance (Code). The constitution and operation of the Remuneration Committee are in compliance with the Code. In framing
its remuneration policy the Committee has given full consideration to the matters set out in Schedule A of the Code. As required by the Regulations,
a resolution to approve this Report will be proposed at the Annual General Meeting (AGM) to be held on 27 July 2006.
The Regulations require the Company’s auditors to report to the members on the “auditable part” of this Report (marked *) and to state, in their opinion,
that this part of the Report has been properly prepared in accordance with the Companies Act 1985 (as amended by the Regulations).
Remuneration Committee
Responsibility for the establishment of overall remuneration policy for the Group lies with the full Board of Directors. The Remuneration Committee is
responsible for making recommendations to the Board on the remuneration of the Chairman, Executive Directors and senior managers. The terms of
reference of the Committee are available on the Group’s website (www.cpwplc.com) or on request from the Company Secretary.
The Committee’s current composition is Sir Brian Pitman (Chairman), Adrian Martin, David Mansfield (who was appointed to the Committee on
29 September 2005), Steven Esom (who was appointed to the Committee on 29 September 2005), and Sally Morgan (who was appointed to
the Committee on 1 November 2005), all of whom are independent Non-Executive Directors. None of the members of the Committee has any
personal financial interest, other than as shareholders, in the matters to be decided by the Committee, no potential conflicts of interest arising from
cross-memberships and no day-to-day involvement in running the Group’s business.
New Bridge Street Consultants LLP (NBSC) are lead advisors to the Committee and have no other connection with the Group. Deloitte & Touche LLP
(Deloitte) provided advice to the Remuneration Committee on the administration of share option and SAYE schemes. Deloitte are the Group’s auditors
and provide other services to the Group as set out in the Corporate Governance Report on pages 22 to 25. The Deputy Chairman, the Group Director of
Human Resources and the Company Secretary also provided internal advice in respect of matters raised by the Committee. No Director nor any person
advising the Committee plays a part in any discussion about his or her own remuneration.
Remuneration policy
The primary aim of the Committee is to ensure that remuneration aligns the interests of management and shareholders and reinforces behaviour which
will lead to the continued long-term development of the business.
The Committee makes its recommendations to the Board by taking into account:
• The experience of Executive Directors and other senior managers;
• The Group’s competitiveness in the market place, assessed through independent external market comparisons;
• The growing international nature of the Group;
• The development of new business streams and the added complexity of the business;
• Pay and conditions throughout the Group as a whole;
• The performance and growth of the Group which is now comparable to companies in the lower end of the FTSE 100.
The overall remuneration policy is to provide competitive remuneration packages to attract, retain and motivate executives of the calibre required,
and to align their interests with those of shareholders by relating a significant element of the remuneration package to specific performance measures.
In particular, the Committee has recognised that the complexity of the Group has increased significantly and that the remuneration policy should be
adjusted to reflect the calibre of executives needed to continue to develop and grow the business.
The approach is to set fixed remuneration at median levels and to offer variable rewards which are linked to the performance of the Group, which can
provide significant overall levels of remuneration for exceptional performance and shareholder value creation. Before long-term incentive share awards
are taken into account, approximately 65% of Executive Directors’ remuneration earned in the year was performance related. Charles Dunstone does
not receive long-term incentive share awards.
Components of remuneration
The main fixed and performance related elements of remuneration that can be awarded to Executive Directors are as follows:
•basic salary, benefits and pension contribution (fixed);
•annual performance bonus (variable);
• share options (variable); and
•Performance Shares (variable).
The Carphone Warehouse Group PLC Annual Report 2006
26
Remuneration Report