Carphone Warehouse 2014 Annual Report Download - page 77

Carphone Warehouse Group plc
Annual Report 2014 75
FINANCIAL STATEMENTS
5 EMPLOYEE COSTS AND SHARE‑BASED PAYMENTS
a) EMPLOYEE COSTS
The aggregate remuneration recognised in the income statement in each year is as follows:
2014 2013
£m £m
Salaries and performance bonuses 246 4
Social security costs 34 1
Other pension costs 4—
284 5
Share-based payments 4—
288 5
The average number of employees (including directors) during the year ended  March  was:
2014 2013
Administration 1,464 22
Sales and customer management 7,243 —
8,707 22
Compensation earned by key management, comprising the Board of directors and senior executives, was as follows:
2014 2013
£m £m
Salaries 42
Performance bonuses 41
Social security costs 2—
Share-based payments 1—
11 3
During the year loans were advanced to key management to cover the tax arising on the exercise of share options that vested as part of the
CPW Europe Acquisition. In addition, loans were advanced to members of key management in relation to the Carphone Warehouse Share
Plan. At  March  loans to key management in relation to these schemes totalled £m (: £m). Interest is charged on loans at market
rates and interest of £.m (: nil) has been recognised during the year ended  March .
b) SHARE-BASED PAYMENTS
i) CARPHONE WAREHOUSE SHARE PLAN
During the year the Group introduced the Carphone Warehouse Share Plan which allows participants to share % of the incremental value
created in CPW in excess of an opening value (assessed over a three month period prior to approval by shareholders in June ) and beyond
an annual rate of return of % on invested capital. The plan is underpinned by a minimum annual compound TSR growth of % and
outperformance of the median TSR of the FTSE .
Participants acquired at market value participation shares in a subsidiary company that holds the Company’s interests in CPW Europe. The
Group granted loans to participants at a commercial rate of interest to acquire the shares. Loans are ordinarily repayable in full if performance
conditions are met.
The performance of the scheme will ordinarily be measured in or around June , when % of the shares vest, with % deferred for a
further year. When the awards vest, the value of the shares held by participants will be based on the incremental value (if any) of CPW in
excess of the opening valuation together with the minimum return on invested capital. These shares will then be purchased by the Company
for cash and/or the Company’s ordinary shares.
A ‘bad leaver’ will be required to transfer the participation shares to such party as the Company designates for an amount equal to the total
amount outstanding under the loan. If the market value of the shares is less than the amount of the outstanding loan (and any accrued
interest) then the participant may be required to repay % of the shortfall out of their own resources.
A participant shall be a ‘good leaver’ at the sole discretion of the Remuneration Committee and may be permitted to retain an award
notwithstanding the termination of their employment.
The mechanics of the plan may be varied by the Remuneration Committee if necessary to ensure that participants are neither advantaged
nordisadvantaged by a variation of the share capital of the Company, bona fide merger, reconstruction or similar reorganisation.