Marks and Spencer 2011 Annual Report Download - page 94

Marks and Spencer Group plc Annual report and financial statements 2011
92
Notes to the financial statements continued
13 Share-based payments continued
B. Performance Share Plan
The Performance Share Plan is the primary long-term incentive plan for approximately 100 of the most senior managers and was first
approved by shareholders in 2005. Under the Plan, annual awards, based on a percentage of salary, may be offered. The extent to
which the awards vest is based on adjusted (underlying basic) earnings per share growth over three years. The value of any dividends
earned on the vested shares during the three years will also be paid on vesting. Further details are set out in the Remuneration report
on page 58. Awards under this scheme have been made in each year since 2005.
C. Deferred Share Bonus Plan
The Deferred Share Bonus Plan was introduced in 2005/06 as part of the Annual Bonus Scheme for approximately 450 of the most
senior managers. As part of the scheme, the managers are required to defer a proportion of any bonus paid into shares which will be
held for three years. There are no further performance conditions on these shares, other than continued employment, and the value of
any dividends earned during the deferred period will be paid on vesting.
During the year, 4,982,573 shares (last year 98,515) have been awarded under the Plan in relation to the annual bonus. The fair value
of the shares awarded was 341.2p (last year 286.1p). As at 2 April 2011, 4,948,663 shares (last year 307,309) were outstanding
under the scheme.
D. Restricted Share Plan
The Restricted Share Plan was established in 2000 as part of the reward strategy for retention and recruitment of senior managers who
are vital to the success of the business. The e Plan
are made as part of ongoing reviews of reward packages, and for recruitment. The shares are held in trust for a period of between one
and three years, at which point they are released to the employee, subject to them still being in employment. The value of any dividends
earned during the restricted period will also be paid at the time of vesting.
During the year, 651,000 shares (last year 342,600) have been awarded under the Plan. The weighted average fair value of the shares
awarded was 355.2p (last year 348.6p).
E. Share Matching Deal Plan
The Share Matching Deal Plan was introduced in 2006 for those employees who were eligible to receive a cash-only bonus.
The Plan was not open to those employees who participated in the Deferred Share Bonus Plan. The lan allows employees to
invest a proportion of their bonus in shares of the Company. These investment shares must be held by the participant for three years,
during which time they will receive dividends. At the end of the three year holding period, if the participant is still in employment with
the company, and still holds the investment shares, they will receive one matching share for every four that they bought.
No shares were awarded under the Share Matching Deal Plan during the year. There were not any shares outstanding under the Plan
at 2 April 2011 (last year 22,000).
F. Republic of Ireland Save As You Earn Scheme
Sharesave, the company’s Save As You Earn Scheme was introduced in 2009 to all employees in the Republic of Ireland for a ten year
period, after approval by shareholders at the 2009 AGM. The scheme is subject to Irish Revenue rules which limit the maximum monthly
saving to €500 per month. The company chose in 2009 to set a monthly savings cap of €320 per month to align the maximum savings
amount allowed within the UK scheme. When the savings contract is started, options are granted to acquire the number of shares that
the total savings will buy when the contract matures, at a discounted price set at the start of the scheme. The price at which the options
may be offered is 80% of the average mid-market price for three consecutive days preceding the offer date. Options cannot normally be
exercised until a minimum of three years has elapsed.
During the year, 147,100 options (last year 287,235) were granted, at a fair value of 124.9p (last year 113.1p).
G Marks and Spencer Employee Benefit Trust
The Marks and Spencer Employee Benefit Trust (the Trust) holds 8,851,592 (last year 7,299,755) shares with a book value of £27.6m
(last year £24.1m) and a market value of £29.8m (last year £27.1m). These shares were acquired by the Trust in the market and are
shown as a reduction in retained earnings in the consolidated statement of financial position. The Trust used funds provided by Marks
and Spencer plc to meet the Group’s obligations. Awards are granted to employees at the discretion of Marks and Spencer plc and
shares awarded to employees by the Trust in accordance with the wishes of Marks and Spencer plc under senior executive share
schemes, including the Restricted Share Plan. Dividends are waived on all of these plans except for the Deferred Bonus Share Plan and
Restricted Share Plan where dividends are paid via a Dividend Reinvestment Plan for awards made in the form of forfeitable shares.
Nil cost options
Awards made under the Performance Share Plan (PSP), Deferred Share Bonus Plan (DSBP) and Restricted Share Plan (RSP) were
originally granted as conditional awards of shares, vesting on specified vesting date. For the DSBP and PSP the vesting date is
three years from the date of grant. For the RSP, the vesting date will vary by each award. All outstanding awards under these plans
were restructured as nil cost options from 1 November 2010 to permit exercise of the option at any point between the vesting date and
the tenth anniversary of grant. All awards made since 1 November 2010 have been made as nil cost options. There has been no
amendment to the original performance conditions, performance, deferred or restricted period as a result of this change.
Plan operates for senior managers below executive director level. Awards under th
P
a
*
*
*
*