Marks and Spencer 2002 Annual Report Download - page 19

2 Recruitment of executive directors
During the year, Laurel Powers-Freeling was recruited and appointed to the Board as Chief Executive of
Marks & Spencer Financial Services. She was appointed as a director on 6 November 2001 on the following terms:
•salary of £320,000 p.a.;
•payment of £100,000 as compensation for loss of future benefits from her previous employer (included within
benefits in section 1);
•a guaranteed bonus of £100,000 as compensation for loss of bonus from her previous employer and in lieu of
joining the 2001/02 annual cash bonus scheme (included under bonus in section 1);
•supplement of 10% of the difference between the pension earnings cap and her base salary (see section 4 –
Pensions) (included within benefits in section 1); and
•award of shares under 2000 Executive Share Option Scheme with a market value at the date of employment
of four times base salary (see section 6 – Long-term benefits).
3 Termination payments
As disclosed in last year’s Annual Report, a total of £2,742,000 was paid to directors who retired during
last year as compensation for termination of their service contracts (12 months’ salary and benefits and loss
of pensionable service).
In addition to last year’s payments the directors listed below are entitled to compensation for the senior
management bonus payable for this financial year on a pro-rata basis as shown:
Bonus
compensation
2002
£000
Retired directors (retirement date)
Clara Freeman (18 September 2000) 65
Guy McCracken (18 September 2000) 97
Peter Salsbury (18 September 2000) 140
Roger Aldridge (19 July 2000) 48
Joe Rowe (19 July 2000) 48
Total 398
4 Directors’ pension information
The executive directors, management and employees (except for staff employed by Marks & Spencer Outlet Ltd)
all participate in the Company’s defined benefit Pension Scheme provided their date of permanent appointment
was prior to 1 April 2002. The Scheme is non-contributory and the subject of an Independent Trust. The normal
retirement age under the Pension Scheme for senior management is 60 to harmonise with the Company contractual
retirement age. For all other employees the normal retirement age is 65 (previously 60) but for those employees who
joined the Scheme prior to 1 January 1996 their accrued rights were not affected by this change.
The Pension Scheme enables members to achieve the maximum pension of two-thirds of their salary in the 12 months
ending at normal retirement date after 30 years’ service. For employees (including senior management) who joined
the Scheme prior to 1 January 1996 no actuarial reduction is applied to pensions payable from the age of 58.
Employees who joined the Scheme on or after 1 January 1996 are subject to an actuarial reduction in their pension
if payment starts prior to their normal retirement date.
In the case of earnings over £100,000 p.a., the pensionable salary is usually based on an average of the earnings
over the last three years to retirement.
Pension commutation to enable participants to receive a lump sum on retirement is permitted within Inland
Revenue limits.
For death before retirement, a capital sum equal to four times salary is payable, together with a spouse’s pension
of two-thirds of the member’s prospective pension at the age of 65 (60 for senior management). For death in
retirement, a spouse’s pension is paid equal to two-thirds of the member’s current pension. In the event of death
after leaving service but prior to commencement of pension, a spouse’s pension of two-thirds of the accrued
preserved pension is payable. In all circumstances, children’s allowances are also payable, usually up to the age of
16. Substantial protection is also offered in the event of serious ill health.
Post-retirement increases for pension earned from 6 April 1997 are awarded on a statutory basis. For pension earned
prior to 6 April 1997 it was the Company’s practice to award discretionary increases, usually in line with inflation.
With effect from 26 July 2000, it was agreed that, in future, all pension earned for service prior to 6 April 1997
would be guaranteed to increase by the rise in inflation, up to a maximum of 3% per annum. Increases beyond this
figure will continue to be reviewed on a discretionary basis.
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