Marks and Spencer 2016 Annual Report Download - page 64

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62
MARKS AND SPENCER GROUP PLC
DIRECTORS’ REPORT: GOVERNANCE
PERFORMANCE SHARE PLAN (PSP)
The Committee believes that long-term
share awards reward executives for the
delivery of long-term business goals
and make annual awards under the
Performance Share Plan (PSP) to incentivise
executive directors and senior managers.
At the 2015 AGM, shareholders were
asked to approve the introduction of
a replacement PSP as the previously
approved plan had expired. The terms of
this Plan were broadly the same as those
of the previous 2005 Plan. With nearly 98%
of shareholders approving the 2015 Plan,
awards of 250% of salary were awarded
to each executive director in July 2015.
PSP AWARDS MADE IN 2015/16 (audited)
As we disclosed last year, minor
amendments to the performance
conditions were made for 2015/16 awards.
Awards will vest subject to the achievement
of stretching targets in those measures
determined to appropriately refl ect the
key drivers of shareholder value and our
strategic business priorities. Targets were
set to reward the delivery of consistent,
ambitious long-term performance.
The Committee regularly reviews
estimated performance throughout
the vesting period.
As shown in Figure 18, performance for
these awards is measured against EPS,
ROCE, sales growth (in M&S.com and
International), cumulative free cash fl ow
and UK Clothing & Home gross margin.
Each performance condition is measured
independently over the three-year period
to the end of the 2017/18 fi nancial year.
Awards will vest on 24 July 2018 to the
extent that the performance conditions
are met.
FIGURE 16: PSP AWARDS MADE IN 2015/16
Basis of award
Face value of award1
£000 End of performance period2
Marc Bolland 250% of salary 2,438 31/03/2018
Patrick Bousquet-Chavanne 250% of salary 1,365 31/03/2018
Steve Rowe 250% of salary 1,391 31/03/2018
Laura Wade-Gery 250% of salary 1,421 31/03/2018
Helen Weir 250% of salary 1,475 31/03/2018
1. The face value of awards is calculated as the number of nil-cost options/conditional shares awarded multiplied by the average mid-market share price on the fi ve dealing days prior to
the date of grant. For this year, the share price was calculated as being £5.334, being the average share price between 17 July 2015 and 23 July 2015. Further details of these awards are
shown in the table on pages 65-66.
2. For threshold performance, 20% of the shares awarded will vest.
FIGURE 17: PSP AWARDS VESTING IN 2015/16 (audited)
For directors in receipt of PSP awards
granted in 2013, the awards will vest on
24 June 2016 based on three-year
performance over the period to
2 April 2016. Performance has been
assessed and it has been determined that
4.8% of the award will vest.
Details of performance against the specific
targets set are set out in the table below.
Performance target
Total vesting6
EPS Growth2ROCE (%)
Revenue (£ 2015/16)
UK3Multi-channel4International5
50% of award 20% of award 10% of award 10% of award 10% of award
Threshold performance targets15.0% 15.0% £8,900m £900m £1,400m
Maximum performance targets112.0% 18.5% £9,600m £1,100m £1,800m
Actual performance achieved 2.9% 14.7% £8,386m £971m £1,034m
Percentage of maximum achieved 0.0% 0.0% 0.0% 4.8% 0.0% 4.8%
1. 20% of an award vests for threshold performance with full vesting for achieving or exceeding maximum performance. Vesting is a straight line between these two points.
2. Based on base EPS in 2012/13 of 31.9p (restated as a result of IAS19) and fi nal EPS of 34.8p in 2015/16.
3. Excluding Multi-channel.
4. Net of VAT/gross of returns.
5. Excluding Multi-channel/including Republic of Ireland.
6. Details of the number of shares awarded to each director in 2013 are shown in the table on pages 65-66. The estimated value of these awards, including the dividend equivalents,
are set out in the single fi gure table on page 58.
EXECUTIVE DIRECTORS’ REMUNERATION CONTINUED
REMUNERATION REPORT
CONTINUED