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Dixons Carphone plc Annual Report and Accounts 2014/15
Corporate Governance
Remuneration report
54
Chairman’s statement
The period since we last reported has seen significant change
especially in relation to the Merger. The Prospectus and
Circular have already set out details in respect of the existing
incentive schemes of Carphone Warehouse Group plc and
Dixons Retail plc and how these were impacted by the Merger.
This Remuneration report sets out the Group’s proposed future
Remuneration policy of the new combined Company which is
broadly in line with the Remuneration policy approved by
shareholders in 2014.
We have used the opportunity of the Merger to review our
approach to remuneration to ensure it is aligned to our
strategic direction, appropriate for a FTSE 100 company and
focused on driving superior shareholder returns.
After careful consideration we have decided to continue to
align our executive pay structure for the combined Group to a
more leveraged approach focused on creating shareholder
value. This is reflected in our long term incentive plans (LTIPs)
and our shareholding policy, which was strengthened to
require executive directors to hold 200% of their base salary
in the Company’s shares.
We have also maintained our approach of providing a strong
link between our levels of annual bonus with the performance
and delivery of our strategic priorities. When setting targets for
our annual bonus and our LTIPs, we start with the strategy of
the business and the behaviours we want to encourage and
design metrics around them. In order to keep overall
remuneration weighted towards variable pay that incentivises
outperformance we are providing a modest level of benefits.
In order to harmonise we have had to adjust some elements of
pay for all executive directors, such as reducing the annual
bonus which existed previously within Carphone from 200% of
base salary to 125% and reducing pension contributions for
the former Dixons executive directors from 20% to 10%.
At the time of the Merger we gained, by special resolution,
shareholder agreement to make adjustments to existing
awards and grant additional awards under our long term
incentive plans. This was to ensure the existing participants
were no better or worse off following the Merger and to make
awards to the new executive directors and other senior
leaders. These plans align the interests of our management
with our shareholders, providing the opportunity for them to
earn significant value but only if superior shareholder returns
are delivered.
We have also responded to the feedback received on the
policy during 2014 and have excluded the executive directors
from being eligible to participate in the mid term incentive plan
introduced following the Merger.
Although no substantial changes have been made to the
remuneration policy following the Merger, we have taken the
opportunity to make some administrative changes, such as
updating the provisions in our LTIPs to include the ability for
the Remuneration Committee to apply malus and clawback
conditions in certain specified circumstances.
Due to the changes made to the components of the
remuneration packages of the executive directors at the time
of the Merger, no further changes are proposed to base
salaries as part of the annual pay review process this year.
Bonus payments this year will reflect the positive business
performance and will be paid at 125% of base salary. No
LTIPs vested during the year for executive directors serving
on the Board.
We are also acutely aware that our success is largely down to
the dedication and hard work of all our employees and that it is
vital that they continue to feel fairly and appropriately rewarded
and that they are able to share in the success of the business.
We are therefore very pleased this year to have been able to
launch a combined Dixons Carphone plc Sharesave plan for
all UK and Ireland employees, which has enjoyed a take-up
rate of approximately 20% of the combined UK and
Ireland workforce.
The proposed Remuneration policy set out in this Annual
Report and Accounts will be put to shareholders for approval in
a binding vote at the Annual General Meeting on 10 September
2015 where they will be asked to approve the policy for a
period of three years.
John Gildersleeve
Chairman of the Remuneration Committee
16 July 2015