Marks and Spencer 2002 Annual Report Download - page 17

Chairman’s bonus
Under the terms of Luc Vandevelde’s service contract, on recruitment in February 2000, the Company set strategic
and qualitative targets for the award of his first annual bonus in 2001, which were subsequently met. However, in
advance of the Committee meeting (in May 2001) to determine his bonus award, he informed the Committee that
he wished to:
•Waive any entitlement to a bonus for the year under review. This included 100% of 13 months’ salary totalling
£704,000 and an opportunity to enhance this, over time, by a further £112,000;
•Reduce his notice period entitlement from 12 months to nine months.
Last year the Committee agreed the following in relation to the Chairman’s bonus for the year to 30 March 2002:
•Award bonus of 100% of annual salary if financial targets set by the Committee were met;
•Add to this bonus potential a sum equal to half of last year’s waived bonus (£352,000) if those same financial
targets were met;
•Issue shares to him in May 2002, equal to the value of the other half of the waived bonus (£352,000).
Long Term Incentive Plan
To align directors’ remuneration more closely with shareholders’ longer term interests, the Company has an
Executive Share Option Scheme with stretching earnings per share targets and will propose at this year’s AGM
to introduce a Long Term Incentive Plan in the form of an Executive Share Matching Plan with total shareholder
return measured against comparator groups of companies (see AGM Notice of Meeting booklet for further details).
Shorter term shareholder interests are aligned through the cash bonus scheme which is linked to financial
performance on an annual basis.
Executive Share Option Scheme
Executive Share Option Schemes, open to all senior management, have operated for over 20 years. In order to
provide more flexibility and a closer link with Company performance, the latest Scheme was approved by
shareholders at the AGM in July 2000. Details of the Scheme are given in section 6 of this report.
Shareholding policy
A requirement has been introduced this year that the executive directors within five years of 1 June 2002 or within
five years of appointment (whichever is the later) should hold shares whose market value at that time is equivalent
to or greater than their then current gross annual base salary.
New directors
Alison Reed, an existing member of senior management, was appointed to the Board as Finance Director on 11 July
2001. Laurel Powers-Freeling was recruited and appointed to the Board on 6 November 2001 as Chief Executive
of Marks & Spencer Financial Services. Further details of the terms of her appointment can be found in section 2 of
this report. Jack Keenan was appointed as a non-executive director with effect from 1 September 2001. Paul Myners
was appointed as a non-executive director with effect from 2 April 2002.
Service contracts
All members of senior management have service contracts. These contracts can be terminated with 12 months’
notice from the Company. Exceptions may exist where new recruits have been granted longer notice periods for
the initial period of their employment. No directors currently have a Service Contract entitling them to more than
12 months’ notice. Luc Vandevelde’s contract entitles him to nine months’ notice.
Non-executive directors
The non-executive directors have service agreements with the Company for an initial three-year term which
is terminable on three months’ notice. They do not participate in any of the Company’s Share Schemes nor
the Annual Bonus Scheme. The Chairman and the executive directors determine the remuneration of
non-executive directors.
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