Carphone Warehouse 2005 Annual Report Download - page 30

Remuneration Report
The Carphone Warehouse Group PLC Annual Report 2005
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Compliance
This Remuneration Report has been prepared in accordance with the Directors’ Remuneration Report Regulations 2002 (‘Regulations’) and the new
Combined Code on Corporate Governance issued in July 2003 (the ‘Code’). The constitution and operation of the Remuneration Committee are in
compliance with the Code. In framing its remuneration policy the Committee has given full consideration to the matters set out in Schedule A of the Code.
As required by the Regulations, a resolution to approve this Report will be proposed at the Annual General Meeting (‘AGM’) to be held on 28 July 2005.
The Regulations require the Company’s auditors to report to the members on the “auditable part” of this Report (marked with a *) and to state, in their
opinion, that this 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 for the Group lies with the full Board of Directors. The Remuneration Committee is
responsible for making recommendations to the Board on the remuneration of the Chairman, Executive Directors and senior managers. The terms of
reference of the Committee are available on the Group’s website (www.cpwplc.com) or on request from the Company Secretary.
The Committee’s current composition is John Gildersleeve (Chairman), Sir Brian Pitman, Martin Dawes and Adrian Martin (who was appointed to the
Committee on 27 January 2005), all of whom are independent Non-Executive Directors. Upon becoming Non-Executive Chairman of the Company at the
AGM, John Gildersleeve will relinquish the Committee chairmanship in line with the requirements of the Code, and a new Chairman will be appointed. 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.
New Bridge Street Consultants LLP (‘NBSC’) have been appointed lead advisors to the Committee and have conducted a total reward survey for Executive
Directors and other senior managers. NBSC have no other connection with the Group. Deloitte & Touche LLP (‘Deloitte’) provided advice to the Remuneration
Committee on the administration of share option and SAYE schemes. Deloitte are the Group’s auditors and provide other services to the Group as set out in
the Corporate Governance Report on pages 23 to 25. The Deputy Chairman, the Group Director of Human Resources and the Company Secretary also
provided internal advice in respect of matters raised by the Committee. No Director nor any person advising the Committee 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 managers;
• The Group’s competitiveness in the market place, assessed through independent external market comparisons;
• The growing international nature of the Group;
• The development of new business streams; and
• Pay and conditions throughout the Group as a whole.
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. Before long-term incentive
share awards are taken into account, approximately 43% of Executive Directors’ remuneration earned in the year was performance related. Messrs Dunstone
and Ross do not receive long-term incentive share awards.
Components of remuneration
The main fixed and performance related elements of remuneration that can be awarded to Executive Directors are as follows:
• basic salary, and benefits and pension contributions (fixed);
• annual performance bonus (variable);
• share options (variable); and
• Performance Shares (see below) (variable).
The Company operates a minimum shareholding policy, requiring Executive Directors to build up and retain a shareholding in the Company equal
to at least 100% of their annual salaries.
Salaries and benefits
Executive Directors’ basic 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 in companies of a similar size. Salaries are reviewed on 1 July each year.
Following the most recent review, salaries from 1 July 2005 will be as follows:
Charles Dunstone £450,000, David Ross £210,000, Roger Taylor £300,000, Geoffroy Roux de Bezieux £285,000, Jim Dale £128,000, David Goldie £250,000.
The increases over the year reflect very strong Group performance and a further increase in the size of the business and complexity of the Directors’ roles.
These basic salaries remain generally below market median levels compared to companies of a similar size. Executive Directors also receive benefits in
respect of cars or car allowances, private medical cover and a defined contribution pension scheme.
Annual performance bonus
The Company operates a bonus scheme designed to reflect the performance of the Group. Bonuses are governed by performance conditions set by
the Remuneration Committee to ensure that maximum variable rewards are paid only for exceptional performance. The bonus scheme for the period