Carphone Warehouse 2003 Annual Report Download - page 18

Compliance
This Remuneration Report has been prepared in accordance with the Directors’ Remuneration Regulations 2002 (“Regulations”) and The Combined
Code, appended to the Listing Rules, as issued by the Financial Services Authority (“Combined Code”). The constitution and operation of the
Remuneration Committee are in compliance with the Principles of Corporate Governance and the Code of Best Practice contained in the Combined
Code. In framing its remuneration policy the Committee has given full consideration to the matters set out in Schedules A and B to the Combined
Code. As required by the Regulations, a resolution to approve the report will be proposed at the Annual General Meeting to be held on 31 July 2003.
The Regulations require the Auditors to report to the Company’s members on the “auditable part” (indicated *) of this report and to state in their
opinion, that part of the Report has been properly prepared in accordance with the Companies Act 1985 (as amended by the Regulations).
Remuneration Committee
Responsibility for the establishment of overall remuneration policy lies with the full Board. The Remuneration Committee is responsible for making
recommendations to the Board on the remuneration of Executive Directors and senior management. The Committee is composed exclusively of
independent Non-Executive Directors. None of the members of the Committee has any personal financial interest, other than as shareholders, in the
matters to be decided by the Committee, no potential conflicts of interest arising from cross-memberships and no day-to-day involvement in running
the Group’s business.
Remuneration policy
The primary aim of the Committee is to ensure that remuneration aligns the interests of management and shareholders and reinforces behaviour
which will lead to the continued long term development of the business.
The Committee makes its recommendations by taking into account:
• The experience of Executive Directors and other senior management;
• The Group’s competitiveness in the market place through independent external market comparisons;
• The growing international nature of the Group.
During the year independent reports from IDS, Monks Partnership and the Reward Group on the reward levels applicable in the markets relevant to
the Company were utilised by the Committee.
The Group Director of Human Resources provided internal advice to the Committee on all aspects of the Company’s reward policies and structures.
Deloitte & Touche provided advice to the Remuneration Committee.
No Director plays a part in any discussion about his or her own remuneration.
The overall remuneration policy is to provide competitive remuneration packages to attract, retain and motivate executives of the calibre required,
and to align their interests with those of shareholders by relating a significant element of the remuneration package to specific performance
measures. The approach is to set fixed remuneration at market median levels and to offer variable rewards which are linked to the performance
of the Group. For Executive Directors approximately 30% of total on target cash remuneration is performance related.
The main fixed and performance related elements of remuneration for Executive Directors are as follows:
• basic salary, including benefits and pension contributions (fixed);
• annual performance bonus based on Earnings Per Share (“EPS”) growth (variable); and
• share option scheme based on 3 years’ relative Total Shareholder Return (“TSR”) (variable).
The Company operates a minimum shareholding policy, requiring the Executive Directors to build up and retain a shareholding in the Company equal
to 100% of their annual salaries.
Components of remuneration
The main components of the remuneration package for the Executive Directors are:
Salaries & benefits
Executive Directors’ base salaries are reviewed annually and take into account the roles, responsibilities, performance and experience of the
individual and information obtained from published market data on the salary rates for similar positions. Executive Directors also receive market
median benefits in respect of cars or car allowances, private medical cover and a defined contribution pension scheme.
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The Carphone Warehouse Group PLC Annual Report 2003
Remuneration Report