Marks and Spencer 2016 Annual Report Download - page 56

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MARKS AND SPENCER GROUP PLC
DIRECTORS’ REPORT: GOVERNANCE
Salaries are reviewed annually by the Committee, considering a number of factors, including:
> Salary increases in the wider M&S workforce.
> The experience, responsibility and contribution of the individual.
> Salaries for comparable roles in appropriate comparator groups
(such as major retailers and our peer group of FTSE 25-75 companies).
In line with our policies, executive directors are eligible to receive benefi ts which may include:
> A car or cash allowance and a driver.
> Life assurance.
> Relocation and tax equalisation allowances in line with our mobility policies.
As with all employees, directors are also o ered other benefi ts including:
> Employee discount.
> Salary sacrifi ce schemes.
> Participation in our all-employee share schemes.
Executive directors may choose to:
> Participate in our defi ned contribution pension scheme; or
> Receive cash payments in lieu of pension contributions.
The defi ned benefi t pension scheme is closed to new members. Directors who are members
of this scheme will continue to accrue benefi ts.
All directors are eligible to participate in the Annual Bonus Scheme, which is a discretionary,
non-contractual scheme. Performance is measured against quantifi able one-year fi nancial
and individual performance targets linked with the sustainable delivery of our business plan.
Targets are set at the start of the year and approved by the Remuneration Committee. At least
half of awards are measured against fi nancial measures which typically includes Underlying
Group Profi t Before Tax (PBT).
Corporate and individual elements may be earned independently, but no part of the
individual objectives may be earned unless a ‘threshold’ level of PBT has been achieved.
For threshold performance, up to 40% of maximum may be payable for the achievement
of individual objectives.
At least half of any bonus earned is paid in shares which are deferred for three years. The value
of any dividends during the deferral period will be payable.
The Committee can, in circumstances it believes appropriate, reduce to zero unvested deferred
share awards. In certain circumstances, the Committee can also reclaim all or part of the cash
bonus for up to three years after the payment date, for payments made after July 2015.
To encourage long-term shareholding, to retain directors and to provide greater alignment
with shareholders’ interests, all directors are eligible to participate in the Performance Share
Plan. This is a non-contractual, discretionary scheme and is M&S’s main long-term incentive
scheme. Performance is measured against a balanced scorecard of three-year fi nancial
measures set prior to grant. Measures currently include Earnings per Share (EPS) and Return
on Capital Employed (ROCE).
The value of any dividends during the vesting period will be payable.
The Committee can, in circumstances it believes appropriate, reduce to zero unvested PSP
awards. In addition, the Committee can, for awards made after June 2015, reclaim all or part
of vested awards for up to two years after the vesting date in certain specifi ed circumstances.
OPERATIONELEMENT OPPORTUNITY
This report sets out a summary of
M&S’s policy on remuneration for
executive and non-executive directors.
The Policy in full was approved by
shareholders at the AGM on 8 July 2014
and can be found on our website at
marksandspencer.com/thecompany.
The Policy took e ect from this date and
may operate for up to three years.
The Policy remains to attract, retain and
motivate our leaders and ensure they are
focused on delivering business priorities
within a framework designed to promote
the long-term success of M&S, aligned with
our shareholders’ interests.
REMUNERATION
SUMMARY
REMUNERATION POLICY
Annual increases are normally in line
with those in the wider workforce,
although no maximum is set.
Individual adjustments may be made
in appropriate circumstances (e.g.
where the role scope has changed
or as part of salary progression for
newly-appointed directors).
There is no set maximum,
however any provision will be
commensurate with local markets
and for all-employee shares
schemes, the local statutory limits.
A maximum of 25% of salary
for executive directors (30% for
the CEO).
Total maximum annual bonus
opportunity is capped at 200% of
salary for each executive director.
The maximum annual value
of shares at grant is capped at
300% of salary for each
executive director.
SUMMARY EXECUTIVE DIRECTORS’ REMUNERATION POLICY (AS APPROVED ON 8 JULY 2014)
FIGURE 1: SUMMARY EXECUTIVE DIRECTORS’ REMUNERATION POLICY TABLE
Base salary
Benefi ts
Pension
benefi ts
Annual Bonus
Scheme
including
Deferred Share
Bonus Plan
(DSBP)
Performance
Share Plan
(PSP)