Tesco 2015 Annual Report Download - page 50

Fixed element
Performance-related element
Salary + pension + benefits
c. 20% of total reward if maximum performance achieved
Short-term performance Long-term performance
Cash bonus Deferred share
bonus (3 years) Performance Share Plan (3 years)
50% Sales
30% Profit
20% Individual measures
c. 80% of total reward if maximum performance achieved
70% Relative TSR
30% Retail Cash
Generated from Operations
The following report outlines our remuneration framework, how the remuneration policy was implemented in 2014/15 and how the
Committee intends to apply policy in 2015/16. This Annual Remuneration Report will be submitted to an advisory shareholder vote
at the AGM on 26 June 2015.
Remuneration strategy
Our approach to remuneration throughout Tesco is guided by a framework of common objectives and principles, which are outlined
in the table below.
Reward objectives Reward principles
Attract
• Enable Tesco to recruit the right people
Motivate
• Incentivise colleagues to deliver our business
goals together
Recognise
• Acknowledge individual contribution
and performance
Align
• Create shareholder value and support
the achievement of business strategy
Retain
• Foster loyalty in Tesco so that colleagues
want to stay with us
Competitive
• We assess competitiveness on a total reward basis
• Reward reflects an individual’s role, experience,
performance and contribution
• Reward is set with reference to external market
practice and internal relativity
Simple
• Reward is simple, clear and easy to understand
• We avoid unnecessary complexity
• Reward is delivered accurately
Fair
• Policies are transparent and applied consistently
and equitably
• Reward decisions are trusted and properly governed
• Reward is legal and compliant
Sustainable
• Reward is aligned to the business strategy,
reflects our performance, and is affordable
• Our reward framework is flexible to meet
the changing needs of the business
• We reward in a responsible way
To tal reward
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Key changes from last year
• Simplification of annual bonus
to focus on fewer, more relevant
measures
• Performance Share Plan measures
changed to align with priorities
to deliver significant value to
shareholders and return the
business to one that generates
sustainable, quality cash flow
• Addition of clawback to ensure
the Company is able to take back
awards in the event that results
are materially misstated or the
participant has contributed to
serious reputational damage
The following chart and accompanying table provide a summary of how remuneration policy will be applied in 2015/16 to Executive Directors.
48 Tesco PLC Annual Report and Financial Statements 2015
Directors’ remuneration report continued
Annual remuneration report