Marks and Spencer 2016 Annual Report Download - page 58

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56
MARKS AND SPENCER GROUP PLC
DIRECTORS’ REPORT: GOVERNANCE
REMUNERATION POLICY
CONTINUED
ELEMENT APPROACH
Base salary,
benefi ts and
pension
benefi ts
Annual Bonus
Scheme
Long-term
incentive
awards
Repatriation
Legal
expenses &
outplacement
> Payment made up to the termination date.
> There is no contractual entitlement to a bonus payment. If the director is under notice or not in active service at either the end
of the bonus year or on the payment date, awards (and any unvested deferred bonus shares) may lapse. The Committee may,
however, use its discretion to make a bonus award, typically pro-rated for time and based on the performance assessed at the
end of the bonus year.
> The treatment of outstanding share awards is determined in the accordance with the respective plan rules.
> Where a director leaves in certain circumstances, for performance share awards held for at least 12 months, awards typically
vest at the end of the relevant performance period (to the extent to which any performance conditions are met) and are
pro-rated for time. The plan rules allow for the Committee to permit these awards to vest at the time the director leaves and
to not apply time pro-rating.
> M&S may pay for repatriation where a director has been recruited from overseas.
> Where a director leaves by mutual consent, M&S may reimburse for reasonable legal fees and pay for professional
outplacement services.
FIGURE 3: TERMINATION POLICY
TERMINATION POLICY
The Company may choose to terminate the
contract of any executive director in line
with the terms of their service agreement
either by means of a payment in lieu of
notice or through a series of phased
payments. Service agreements may be
terminated without notice and without
payments in certain circumstances, such
as gross misconduct.
The Company’s policy toward exit
payments allows for a variety of
circumstances whereby a director may
leave the business. In all circumstances,
the Committee does not intend to ‘reward
failure’ and will make decisions based on
the individual circumstances ensuring they
are in the best interests of the Company
and shareholders at that time, and reflect
the director’s contractual and other
legal rights.
The table below summarises our
termination policy for executive directors
under their service agreement and the
incentive plan rules.
The full Policy sets out further detail
on the treatment of the executive
directors’ pay arrangements, including the
treatment of share schemes in the event
of a change of control or winding-up of the
Company and some legacy long-term
incentive plans which the Company
operates. No current executive director
holds unexercised awards under these
legacy plans.
CONSIDERATION OF WIDER WORKFORCE PAY & SHAREHOLDER VIEWS
The Committee monitors and reviews the
e ectiveness of the senior remuneration
policy and has regard to its impact and
compatibility with remuneration policies
in the wider workforce. Throughout the year
the Committee is provided with information
and context on pay in the wider workforce
to enable its decision-making. This includes
the approach for UK pay review, the total
annual bonus cost budget and PSP awards
to be made to directors below the Board.
The Committee receives updates on a
variety of employee engagement initiatives
including our annual ‘Your Say’ employee
survey which asks employees about the
fairness and reasonableness of employee
pay and benefits. Employee representatives
in our Business Involvement Groups are
annually provided with an explanation of
the executive directors’ pay arrangements
during the year, and are able to ask
questions on the arrangements and their
fi t with the other reward polices at this time.
The Committee is committed to an open
and transparent dialogue with its
shareholders. The Committee annually
engages in a process of investor
consultation, which is typically in written
format. Where appropriate, the Committee
will actively engage with shareholders and
shareholder representative bodies, seeking
views which may be taken into account
when making any decisions about changes
to the directors’ Remuneration Policy.
The Committee Chairman is available to
answer questions at the Annual General
Meeting (AGM) and the answers to specific
questions are posted on our website.
EXECUTIVE DIRECTORS’ REMUNERATION POLICY CONTINUED