Tesco 2012 Annual Report Download - page 77

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Performance measures and payouts
Maximum opportunity 2011/12 payout
Return on capital
employed – Group
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vesting for Group ROCE of 12.2%.
 -+XWi[Zedf[h\ehcWdY[W]W_dijjWh][jm_j^(+XWi[Zed
the Committee’s assessment of the quality of ROCE performance.
 =hWdj[Z_d(&&/%'&$
 F[h\ehcWdY[f[h_eZ[dZ[Z(&''%'($
 CWn_ckcWmWhZe\
100% of salary.
69.7% of maximum
opportunity vested.
Return on capital
employed –
International
 CWn_ckcl[ij_d]\eh?dj[hdWj_edWbHE9;e\-$&m_j^j^h[i^ebZ
vesting for International ROCE of 5.5%.
 -+XWi[Zedf[h\ehcWdY[W]W_dijjWh][jm_j^(+XWi[Zed
the Committee’s assessment of the quality of ROCE performance.
 =hWdj[Z_d(&&/%'&$
 F[h\ehcWdY[f[h_eZ[dZ[Z(&''%'($
 CWn_ckcWmWhZe\
50% of salary (except
for Tim Mason, US
CEO).
0% of maximum
opportunity vested.
Group ROCE performance 2011/12
25% vesting
Full vesting
Te s c o
ROCE
12.0%
12.5%
13.0%
13.5%
14.0%  Performance for 2011/12 – Post Tax Group ROCE performance was adjusted down to take account,
inter alia, of the Japan business which has been discontinued. Based on this performance, 69.7% of
the first 75% of the award will vest.
 Reported ROCE – Reported ROCE for 2011/12 excludes the discontinued Japan business and was
13.3%. The Committee determined, however, that it was appropriate to base vesting of PSP awards on
ROCE including the impact of Japan to ensure alignment with shareholders.
 Assessment of the quality of ROCE – The Committee also exercised its judgement as to the
extent to which the remaining 25% of the PSP award should vest by reference to the overall quality
of ROCE performance, taking into account factors including:
– the level of ROCE achieved;
– the expected ROCE for additional and existing capital investment;
– whether capital spend was in line with strategic objectives and balanced short-term and long-term
investment needs; and
– the level of sales and underlying profit growth and whether this reflected other developments in
the marketplace.
 The Committee considered these factors and concluded that there were no reasons to treat the
remaining 25% of the award differently and therefore determined that the vesting for the remaining
25% of the award should be in line with vesting for the first 75% of the award. Overall therefore
69.7% of the maximum award vested.
International ROCE performance 2011/12
25% vesting
Full vesting
Te s c o
ROCE
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%  Post Tax International ROCE 2011/12 including the discontinued Japan business was below the level
of International ROCE required for threshold levels of vesting and therefore 0% of the International
award will vest.
Tesco PLC Annual Report and Financial Statements 2012 73
STRATEGIC REVIEW PERFORMANCE REVIEW GOVERNANCE FINANCIAL STATEMENTSOVERVIEW
General information Directors’ remuneration reportBoard of Directors Principal risks and uncertainties Corporate governance