Carphone Warehouse 2005 Annual Report Download - page 31

Remuneration Report continued www.cpwplc.com 27
ending 1 April 2006 will have targets based on improvements in Headline EPS (see note 10 to the financial statements). This performance measure was
chosen to focus the Executive Directors on the key measure of the Group’s short-term financial performance, thereby aligning the Executive Directors’
interests with those of shareholders.
The Remuneration Committee has determined that for the forthcoming financial year the annual bonus potential should be increased from 100% to 195% of
base salary and that the threshold for compulsory deferral (into the Annual Deferred Bonus Plan) should be raised from 60% to 100% of salary. In addition, the
bonus award for reaching target has been increased from 40% to 60% of base salary. These changes have been made after considering the following factors:
• Targets are extremely stretching, with no bonus payable if targets are not met.
• First level target for Headline EPS in the forthcoming year is higher than Headline EPS for the year ended 2 April 2005. The upper end of the EPS range
represents truly exceptional performance.
• Considering other elements of pay, including the fact that these percentages are leveraged off generally below median base salary levels, total
remuneration is still considered to be no higher than market median levels.
Headline EPS performance and its implications for bonuses payable will be disclosed in next year’s Remuneration Report to provide shareholders with a
clear indication of the link between reward and performance.
Annual Deferred Bonus Plan
In the forthcoming year, any bonus earned in excess of 100% of salary will be compulsorily paid as a deferred share award under the Annual Deferred
Bonus Plan approved by shareholders at the Annual General Meeting on 28 July 2004.
Executive Directors and senior managers also have the option of taking some or all of their cash bonus in the form of a deferred share award. The rights to
deferred shares cannot be exercised for 12 months. Matching shares may also be awarded if the deferred share award is not exercised for up to a further two
years. The number of matching shares awarded equates to 12.5% of the deferred amount at the beginning of each year. The share equivalent of dividends
which would have been paid on the shares is added to the deferred share award each year. Given the modest level of potential match and the Committee’s
aim of encouraging Executive Directors to build up a significant shareholding, no additional performance criteria are attached to the matching shares.
Share options
The Company has a performance related share option scheme for Executive Directors and senior managers both in the UK and overseas. No options were
granted to Executive Directors in the period ended 2 April 2005 and it is currently not envisaged that grants will be made to them in the forthcoming year.
A UK savings related share option scheme is open to all eligible employees in the UK, including Executive Directors. No Executive Director currently
participates in the scheme.
Performance Share Plan
Senior managers, including Executive Directors, received awards of Performance Shares (as defined in the Annual General Meeting on 28 July 2004) in the period
ended 2 April 2005. These awards are subject to a mixture of Headline EPS and Total Shareholder Return (‘TSR’) performance targets measured over a three
or four year performance period. Details of the grants to Executive Directors and the performance targets are set out in the share tables later in this Report.
It is not envisaged that further awards of Performance Shares will be made to the Executive Directors in the forthcoming year. The Remuneration
Committee intends to review the Group’s remuneration requirements during the next year with a view to seeking shareholder approval, if required,
for revised arrangements at the Annual General Meeting in 2006.
Aggregate remuneration*
The total amounts of Directors’ remuneration and other benefits (excluding pension contributions) were as follows:
Basic Taxable Annual 2005 2004
salary/fees benefits (ii) bonuses (iii) Total Total
Director £’000 £’000 £’000 £’000 £’000
Executive
C W Dunstone 375 14 300 689 632
D P J Ross (i) 229 7 177 413 620
R W Taylor 270 14 216 500 448
G Roux de Bezieux 240 14 192 446 409
J H Dale 150 9 120 279 251
Non-Executive
Hans Roger Snook 150 – – 150 150
Sir Brian Pitman 35 – – 35 33
J Gildersleeve 35 – – 35 33
A H Martin 45 – – 45 42
M Dawes 31 – – 31 23
D Wilson – – – –8
Aggregate emoluments 1,560 58 1,005 2,623 2,649
(i) Includes a salary supplement in lieu of pension and company car. During the period David Ross moved to a part-time role as Deputy Chairman.
(ii) The taxable benefits provided consist of a company car or car allowance, car insurance and fuel and private medical cover.
(iii) Annual bonuses for the period ended 2 April 2005 were accrued at the balance sheet date and will be paid in June 2005. For this period the bonus was
based on improvements in Headline EPS. Headline EPS for the period was 9.39p which meant that a bonus of 80% of salary was earned (out of a maximum
potential of 100% of salary). Only bonus worth up to 60% of salary is payable in cash. The remainder of the bonus will be payable in deferred shares under
the Annual Deferred Bonus Plan. Details of the deferred share awards (and the related potential matching shares) will be announced separately for Directors
and will be disclosed in next year’s Remuneration Report. At the time the Report was prepared the time period for the Directors to decide if any of the 60%
bonus should be paid in shares instead of cash had not yet expired. Messrs Dunstone and Ross do not participate in such a plan.