Carphone Warehouse 2011 Annual Report Download - page 42

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38 Carphone Warehouse Group plc Annual Report 2011
GOVERNANCE
REMUNERATION REPORT CONTINUED
Components of remuneration
The main fixed and performance-related elements of remuneration for executive directors are as follows:
Component Reason
Basic salary and benefits (fixed) Provide fixed remuneration and benefits reflecting skills, experience
and responsibilities to attract and retain key employees.
Pension (fixed) Provide reasonable and competitive retirement benefits.
Annual performance bonus
(short-term variable)
Reward individual and Group performance on both financial
and non-financial measures.
Value enhancement and share option
schemes (long-term variable)
Align long-term interests of key employees and shareholders,
through incentivising a good return on shares in the Company.
Basic salary and benefits
Salaries are reviewed annually with
changes ordinarily taking effect on 1 July
each year. Salary reviews take into account
individual and business performance and
market data. There has been no change in
the salaries of the executive directors
during the year. Taxable benefits consist of
car allowances and private medical cover.
Pension
The Company pays 5% of the executive
directors’ basic salary to defined
contribution pension schemes or self-
invested pension plans. The Company does
not operate any defined benefit pension
schemes for the executive directors.
Non-executive directors do not participate
in any pension schemes.
Annual performance bonus
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 year ended 31 March 2011
was based on Headline EPS together with
specific business unit targets based on
a balanced scorecard approach. The
scorecard considers the achievement
of financial, customer, employee and
strategy related objectives.
The bonus scheme has a maximum
payment of 200% of annual salary. The
bonus scheme for 2011-12 will have a
similar structure.
The Remuneration Committee is satisfied
that this bonus structure provides an
excellent link between reward and
performance and that it drives the
creation of further shareholder value.
The Chairman and non-executive
directors do not receive an annual
performance bonus.
Medium-term incentive plan
Old Carphone Warehouse had a medium-
term incentive plan for Roger Taylor which
rewarded increases in the market
capitalisation of this group between June
2009 and December 2010. This incentive
plan has been measured using the
combined share price of the Group and
TalkTalk Group, and the maximum payout
of £1.0m was made. This payment was
made by TalkTalk Group and as such has
not been included in Roger’s aggregate
remuneration from the Group.
Value enhancement scheme
Prior to the Demerger, Old Carphone
Warehouse introduced the Best Buy
Europe VES, to provide long-term
incentives to its senior management
group in relation to Best Buy Europe.
The Best Buy Europe VES enables
participants to share in up to 2.24% of any
increase in the value of Best Buy Europe
over an opening valuation determined by
the Old Carphone Warehouse board as at
1 April 2009. The incremental value is
measured after a minimum annual rate of
return of 7% on this valuation. The Group
advanced loans to participants to enable
them to purchase A shares in CPW Retail
Holdings Limited, which holds part of the
Group’s investment in Best Buy Europe.