Carphone Warehouse 2013 Annual Report Download - page 67

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ANNUAL REPORT 2013 CARPHONE WAREHOUSE GROUP PLC 65
BUSINESS REVIEW GOVERNANCE FINANCIAL STATEMENTS
5 EMPLOYEE COSTS AND SHAREBASED PAYMENTS
The aggregate remuneration recognised in the income statement in each year is as follows:
2013 2012
£m £m
Salaries and performance bonuses 3.8 3.1
Social security costs 0.5 2.0
Other pension costs 0.1 0.1
4.4 5.2
Share-based payments (see below) 0.1 14.9
4.5 20.1
The average number of employees (including directors) during the year ended 31 March 2013 was 22 (2012: 18).
Compensation earned by key management, comprising the Board of Directors and senior executives, was as follows:
2013 2012
£m £m
Salaries 1.7 1.5
Performance bonuses 1.3 0.9
Share-based payments 0.1 14.5
3.1 16.9
At 31 March 2012 loans to key management of £4.0m were outstanding in respect of the TalkTalk VES (£2.9m to directors of the Company).
These loans, together with accrued interest, were repaid in full during the year.
At 31 March 2013 loans to key management in relation to the Carphone Warehouse 2010 LTIP were £0.7m (2012: £0.7m).
As detailed in note 5f, a number of shares were gifted to key management during the year. Loans of £0.1m, which were outstanding
atthe end of the year, were advanced to cover the tax arising on this gift. Interest is charged on these loans at market rates.
SHAREBASED PAYMENTS
a) VALUE ENHANCEMENT SCHEMES
Prior to the Demerger during the year ended 31 March 2010, 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 allowed participants to invest at market value in shares which allowed them to share in up to 2.24% of any
increase in value of Best Buy Europe over an opening valuation as at 1 April 2009. The incremental value was measured after a minimum
annual rate of return of 7% on this valuation, and was subject to an adjustment for any change in the Company’s market capitalisation
since 6April 2009.
The Group advanced loans totalling £5.8m to participants to allow them to purchase A shares in CPW Retail Holdings Limited, which
held part of the Group’s investment in Best Buy Europe. The Company had an obligation to acquire these shares if performance conditions
were met, to provide participants with the share of value described above. Performance was to be measured over performance periods
to July 2013 and July 2014, at which point participants had put options over the shares.
In order to facilitate the Best Buy Mobile Disposal and the B/C Share Scheme, these shares were exchanged for shares in the Company
at fair market value, as determined by the Remuneration Committee, supported by third party advisors. As part of this agreement
participants are not permitted (unless the Remuneration Committee determines otherwise) to sell the shares until June 2015.
Theloans, together with accrued interest, were repaid by participants in February 2012.
Prior to the Demerger, Old Carphone Warehouse introduced the TalkTalk VES, a long-term incentive scheme in which certain Company
directors and other key management participate. Whilst the obligation to settle the scheme lies with TalkTalk Group, the Group advanced
loans to participants to enable them to participate. A market rate of interest is charged on these loans and they were fully repaid during
theyear ended 31 March 2013.
b) SHARE OPTION SCHEMES
At the start of the year ended 31 March 2012 a number of options were held over the Company’s shares by employees and former employees
of the Group, OldCarphone Warehouse Group and TalkTalk Group. These options included schemes which had vested prior to the Demerger
and options issued to employees of the Group under the Carphone Warehouse 2010 LTIP.
In the year ended 31 March 2012 the Carphone Warehouse 2010 LTIP was allowed to vest early in order to avoid a substantial loss in value
following the B/C Share Scheme. Loans of £2.5m were made to participants in relation to tax and national insurance due on the exercise of the
share options. These loans bear interest at market rates. Loans outstanding at 31 March 2013 including interest were £2.5m (2012: £2.5m).