Carphone Warehouse 2016 Annual Report Download - page 73

Dixons Carphone plc Annual Report and Accounts 2015/16
Corporate Governance
71
The performance metrics and their weightings for 2016/17 are
shown in the table below:
Weighting (as a percentage of
maximum bonus
opportunity)
EBIT 60%
Net Debt 10%
ROCE 10%
Customer net promoter score 10%
Employee engagement 10%
Recovery and withholding provisions apply for material
misstatement, misconduct and reputational damage enabling
performance adjustments and / or recovery of sums already
paid. These provisions will apply for up to three years
after payment.
iv) LTIP
Subject to shareholder approval at the AGM on 8 September
2016, the Committee intends to make an award of 275% of
salary to each of the executive directors in 2016/17, which
will vest after three years based on continued service and the
achievement of the performance measures noted below.
These awards will be subject to a further two-year post vesting
holding period, during which the executive director is not
permitted to sell any shares vesting, other than those required
to settle any tax obligations.
When setting the proposed award levels, the Committee took
account of a number of reference points, including the
potential total remuneration against a number of scenarios of
performance. The Committee believes that the greater
weighting of variable pay towards long term incentives is better
aligned with the interests of shareholders and focuses on
sustainable long-term performance. The common level of long
term incentive plan award to all executive directors is reflective
of the collegiate approach of the executive director team,
which was established through the Merger and has been
a key part of the success of the Group.
For 2016/17 these awards will be subject to two equally
weighted performance conditions. Half of the awards will be
subject to the achievement of a relative TSR performance
condition, measured against the companies ranked FTSE
51-150 at the start of the performance period. The remaining
half of the awards will be subject to the achievement of
adjusted EPS growth targets.
The relative TSR condition will be assessed over a three year
period, with vesting determined as follows:
Rank of Company TSR against Comparator
Group TSR
% of TSR element vesting
Below Median 0%
Median 25%
Between Median and Upper
Quartile
Pro rata between 25%
and 100% on a straight
line basis
Upper Quartile or above 100%
EPS growth will be assessed over a three year period. Due to
current uncertainties in the market, the Committee is
deliberating further over the appropriate EPS targets for the
awards to be made in September 2016, subject to
shareholders approving the new LTIP. The EPS targets will be
published on the Company’s website in sufficient time before
the AGM for shareholders to review them ahead of voting on
the new LTIP.
When setting the EPS growth target range the Committee will
take into consideration a number of reference points including:
the internal business plan, external market consensus, the
strong growth in 2015/16, a broad view of the macroeconomic
environment and, to a lesser extent, growth targets in other
similarly sized retailers. The Committee will set a range of
targets straddling consensus, with consensus at or slightly
below the middle of the range. The target range proposed will
provide the correct balance between incentivisation and further
performance motivation, without creating any undue risk.
Calculations of the achievement against the targets will be
independently performed and approved by the Committee.
The Committee will retain discretion to adjust for material
events which occur during the performance period and will
make full and clear disclosure of any such adjustments in the
Directors’ Remuneration Report, together with details of the
achieved levels of performance, as determined by the above
definitions at the end of the performance period.
Awards will be subject to recovery and withholding provisions
for material misstatement, misconduct and reputational
damage enabling performance adjustments and / or recovery
of sums already paid. These provisions will apply for up to
three years after vesting.
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