Marks and Spencer 2011 Annual Report Download - page 56

Senior remuneration framework
How is the senior remuneration framework aligned to
Company strategy?
As highlighted in the introduction to this Remuneration report, the
Committee has undertaken a thorough and comprehensive
review of the senior remuneration framework to ensure that is
aligned to the Company strategy. The Company must be able to
attract and retain leaders who are focused and encouraged to
deliver the evolving business priorities within a framework that
continues to be aligned with the interests of the Company’s
shareholders, for example through bonus deferral and
shareholding requirements. In addition, the Committee has
ensured that the incentive plans are effective in not only delivering
the required financial results, but are integrally aligned to the
current business strategy; in driving behaviours that uphold the
Company’s high ethical standards; and adequately take account
of risk.
When completing the strategic review of the remuneration
framework, the Committee considered that the existing incentive
framework was fundamentally fit for purpose but that it required
key changes to the performance measures, together with a
rebalance to provide greater emphasis on medium to long-term
performance.
In setting the remuneration for directors, the Committee has the
discretion to take into account performance on environmental,
social and governance matters. Having reviewed the performance
targets for 2011/12, the Committee has decided that these should
continue to be an integral part of strategic individual objectives. All
executive directors and senior managers have individual
objectives aligned not only to the business strategy and operating
plan but also to Plan A.
What are the key elements of remuneration for
executive directors?
The key elements of remuneration are:
– base salary and benefits;
– Annual Bonus Scheme with compulsory deferred shares; and
– Performance Share Plan (PSP), the Company’s long-term
incentive plan.
The Committee considers these components in total to ensure
there is the right balance between reward for short-term success
and long-term growth.
What has the Committee done during the year?
continued
Other items:
– review of and agreement to all executive director and senior
manager joining and leaving arrangements, covering all
elements of their reward package. In particular, the
Committee approved the joining arrangements for Alan
Stewart (Chief Finance Officer) and Laura Wade-Gery
(Executive Director, Multi-channel E-commerce) as well as
the leaving arrangements for Sir Stuart Rose and Ian Dyson;
– selection and appointment of new external advisors to the
Committee;
– review of the current senior remuneration strategy and
incentive arrangements and the design and development of
a new remuneration package for all executives for 2011/12,
as described in the introduction to this report; and
– review of pension arrangements for executive directors and
senior managers in response to changes to tax relief.
What is the action plan for 2011/12?
As a result of a full review of the Committee’s performance
and effectiveness, the following actions points have been
agreed for next year:
– review Committee composition;
– review learning / training and induction of Committee
members and ensure appropriate and timely updates on
market developments; and
– continue focus on shareholder engagement following
implementation of the new senior remuneration framework.
Marks and Spencer Group plc Annual report and financial statements 2011
54
Governance
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