Carphone Warehouse 2004 Annual Report Download - page 22

Remuneration Report
Compliance
During the period the Financial Reporting Council issued a new Combined Code which comes into effect for reporting years beginning on or after
1 November 2003. The Remuneration Committee has considered the new Combined Code and next year’s Remuneration Report will be prepared in
accordance with it. This Remuneration Report has been prepared in accordance with the Directors’ Remuneration Regulations 2002 (‘Regulations’)
and the Combined Code, applicable for the period ended 27 March 2004 (‘Original Combined Code’). Except as stated below, 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 Original 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 Original Combined Code. As required by the Regulations, a resolution to approve this Report will be proposed at the Annual General
Meeting to be held on 28 July 2004.
The Regulations require the Auditors to report to the Company’s members on the “auditable part” (indicated *) of this Report and to state that 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 Board of Directors. 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: John Gildersleeve, Sir Brian Pitman and Martin Dawes. Martin Dawes was appointed to the
Committee during the period and notwithstanding the disclosure on page 18 of the Annual Report regarding his independence during the period,
the Board of Directors and the Committee believe that Martin Dawes was, for the purpose of dealing with Committee matters during the period,
independent in character and judgement and that there were no relationships or circumstances which were likely to affect or could appear to have
affected his judgement when dealing with matters of the Committee, primarily because the Committee did not consider any matters that may have
affected any additional consideration payable in respect of the acquisition of Opal Telecom plc. Consequently, none of the members of the
Committee has, or had during the period, 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.
During the period New Bridge Street Consultants (NBSC) were appointed as lead advisors to the Committee and conducted a Total Reward Survey
for Executive Directors and other senior management. Deloitte & Touche LLP provided advice to the Remuneration Committee on the administration
of Share Option and Save As You Earn schemes.
The Group Director of Human Resources provided internal advice to the Committee on all aspects of the Company’s reward policies and structures.
No Director plays a part in any discussion about his or her own remuneration.
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;
•The development of new business streams.
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.
Components of remuneration
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);
•share option scheme based on 3 years’ relative Total Shareholder Return (‘TSR’) (variable); and
•long-term incentive plan based on 3 years’ EPS and relative 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 at least 100% of their annual salaries.
Salaries & benefits
Executive Directors’ base salaries are reviewed annually and take into account the roles, responsibilities, performance and experience of the
individuals and information obtained from published market data on the salary rates for similar positions. As a result of such a review, all the
Executive Directors received salary increases effective from January 2004. Executive Directors also receive market median benefits in respect of cars
or car allowances, private medical cover and a defined contribution pension scheme.
20
www.cpwplc.com