Marks and Spencer 2002 Annual Report Download - page 16

Remuneration report
Strategy
The success of Marks & Spencer is dependent upon the skill and experience of motivated employees throughout all
levels of the business, and it is part of our strategy to attract, motivate and retain high calibre individuals who are
able to secure the recovery of the business and continuously build for the future. The level of remuneration and
benefits we offer is key to supporting this objective and maintaining our market position as an employer of choice.
The Board has adopted the principles of good governance relating to directors’ remuneration as set out in the
Combined Code. The Remuneration Report follows the provisions in Schedule B to the Code.
Remuneration Committee (the Committee)
The Committee comprises Dame Stella Rimington (Chairman), Brian Baldock, Tony Ball and Jack Keenan (appointed
September 2001).
It recommends to the Board the reward framework to allow the Company to attract and retain its executive directors
and senior management, giving due regard to the financial and commercial health of the Company. The Committee’s
approach reflects the Company’s overall philosophy that all employees should be appropriately rewarded, in
particular for delivering superior performance which contributes to improved business results.
The Committee keeps itself fully informed of all relevant developments and best practice in the field of
remuneration and seeks advice where appropriate from external advisors.
Remuneration policy
The Company aims to align the interests of all employees closely with the interests of shareholders in securing the
Group’s recovery.
Total remuneration comprises fixed pay, variable pay and benefits. The performance-related element now forms
a more significant proportion of the total potential package and, consistent with the focus on delivering results,
is set against agreed targets to deliver improved business performance. There are two components to variable pay:
annual bonus and long-term incentives in the form of share schemes.
Profit sharing and SAYE schemes, encouraging employees at all levels to acquire and hold shares in the Company,
are key elements of the policy. Employees have maintained their strong commitment to share ownership in recent
years, and currently 42,700 employees hold approximately 31 million shares in their own right and 31,000
employees hold options on 78 million shares under the SAYE scheme.
Salaries and benefits
Salaries and benefits for executive directors are reviewed annually. Salaries are benchmarked against equivalent
market salaries for companies with a similar turnover and market capitalisation and are currently set around the
median point of the comparator group. The salaries are set by the Committee after consideration of the Company
performance, market conditions, the level of increase awarded to employees throughout the business and the need
to reward individual performance. With the exception of his personal remuneration, the Chairman assists the
Committee in this review.
Annual Bonus Scheme
The Annual Bonus Scheme is designed to reinforce the relationship between individual and corporate performance
and reward.
The targets are determined annually by the Committee and incorporate a mixture of financial measures and business
targets. The achievement of targets for all executive directors is assessed by the Committee.
The current maximum bonus for directors is 50% of base salary for on-target performance and up to 100% for
exceeding targets.
All staff are now eligible to participate in the Annual Bonus Scheme. Bonus payments are based on measurable
achievement of challenging financial and business targets, set in the corporate operating plan each year and
approved by the Board.
14 Marks and Spencer Group p.l.c.