Tesco 2015 Annual Report Download - page 58

Details of the rights under the Tesco pension scheme are set out below.
Age at 28
February
2015
Years of
Company
service
Total
accrued
pension at
28 February
20152,3
(£’000)
Increase
in accrued
pension
during the
year4
(£’000)
Increase
in accrued
pension
during the
year (net of
inflation)5
(£’000)
Transfer value of
increase in accrued
pension (previous
column) at 28
February 2015 (less
Director’s
contributions)
(£’000)
Transfer
value of
total accrued
pension at
22 February
2014
(£’000)
Transfer
value of
total accrued
pension at
28 February
2015
(£’000)
Increase in
transfer value
(less Director’s
contributions)
(£’000)
Single
figure
pension
value
(£’000)
Philip Clarke154 40 658 25 18 293 11,482 13,694 2,212 160
Laurie Mcllwee152 14 381 21 18 257 5,669 6,665 996 223
1 Laurie Mcllwee left the Scheme on 3 October 2014. Philip Clarke left the Scheme on 19 January 2015.
2 The accrued pension is that which would be paid annually on retirement at 60 based on service to the member’s date of leaving active service.
3 Some of the Executive Directors’ benefits are payable from an unapproved pension arrangement. This is secured by a fixed and floating charge on a cash deposit.
4 The increase in accrued pension over the year is additional pension accrued during the year.
5 Inflation over the year has been allowed for using the September 2014 CPI inflation of 1.2%.
Payments to former Directors
This information has been audited.
There were no payments made to former Directors which exceeded the de minimis threshold of £10,000 set by the Company. Payments
made to Philip Clarke and Laurie McIlwee in respect of them ceasing employment are set out below.
Loss of office payments
This information has been audited.
Early in the investigation of the commercial income issue, the Company announced that it had suspended payment of the termination
amounts due. The Company, with legal advice, then fully evaluated the available evidence relating to Philip Clarke and Laurie McIlwee in
relation to the commercial income issue. Under the relevant service contracts, payments were legally due and payable unless Tesco was able
to establish a case of gross misconduct by the relevant Director. Having taken detailed legal advice, the Board determined that there was not
any basis to continue to withhold payments, and that defending potential claims that may arise, in the absence of such a basis, would not
be in the Company’s best interests. Therefore, the payments have been made. However, if new information arises which would change this
assessment, we have explicitly reserved the Company’s rights to pursue recovery of these payments.
Leaving arrangements for Philip Clarke
Philip Clarke stepped down as CEO and as an Executive Director of Tesco PLC on 1 September 2014 when the new CEO, Dave Lewis,
joined the Company. He remained with the Company and was available to provide support to the business until 19 January 2015.
During this period he continued to receive his salary of £1,145,000 and relevant benefits.
On termination of employment, in accordance with the terms of his contract, Philip Clarke was entitled to receive a termination payment of
£1,217,000 consisting of 12 months’ base salary (£1,145,000) and benefits (£72,000 consisting of colleague discount, private healthcare and
health insurance, and car and car-related benefits). No additional amount will be paid in respect of pension. The termination payment of this
amount was made on 6 February 2015 and should it be determined in the future that there was gross misconduct the Company will seek
recovery of the termination payment.
Philip Clarke did not receive a bonus in respect of 2014/15. On cessation, he did not have any unvested deferred bonus awards. He has until
19 January 2016 to exercise vested deferred bonus awards.
PSP awards granted to Philip Clarke in 2012 (1,074,643 shares) and 2013 (909,660 shares) lapsed upon him leaving the business.
He may exercise vested PSP awards granted in 2008 (325,749 shares) and 2009 (188,521 shares) until 19 January 2016.
Philip Clarke may exercise vested discretionary share option awards granted in 2006 (404,896 shares), 2007 (298,844 shares), 2008
(353,114 shares) and 2009 (467,848 shares) until 19 January 2016, in accordance with the terms of the plan rules. These awards
are, however, currently underwater. His 2005 option award (379,856 shares) lapsed on 22 April 2015.
The awards granted under the all-employee Sharesave scheme in 2009 (948 shares), 2010 (788 shares), 2011 (824 shares), 2012
(1,063shares) and 2013 (931 shares) lapsed on termination. Shares held under the all-employee Share Incentive Plan (19,170 shares)
were transferred from the Trust on 27 February 2015, in accordance with the rules of the plan.
The Company will pay for outplacement services and legal costs in connection with Philip Clarke’s termination of employment up to a
maximum of £75,000 and £10,000 excluding VAT respectively. In line with Company policy, he will also retain his staff discount for life.
Leaving arrangements for Laurie McIlwee
Laurie McIlwee resigned as CFO and as an Executive Director of Tesco PLC on 4 April 2014. He remained an employee of Tesco for a period
of six months until 3 October 2014 and he was available to provide support to the business during this time. During this period he continued
to receive his salary of £886,420 and relevant benefits.
56 Tesco PLC Annual Report and Financial Statements 2015
Directors’ remuneration report continued
Annual remuneration report