Carphone Warehouse 2015 Annual Report Download - page 60

Dixons Carphone plc Annual Report and Accounts 2014/15
Corporate Governance
Remuneration Policy report
58
Long term incentive schemes (variable pay): Share Plan
• Purpose and link to strategy Long term incentive schemes are transparent and demonstrably aligned with the
interests of shareholders over the long term.
The Share Plan is designed to reward and retain executives over the longer term whilst
aligning an individual’s interests with those of shareholders and in turn delivering
significant shareholder value.
• Operation The executive directors participate in the Dixons Carphone (formerly Carphone
Warehouse Group plc) Share Plan approved by Carphone Warehouse shareholders.
The intention is to use this plan for the most senior management of the Company.
New executive directors appointed from time to time may participate in the Dixons
Carphone Share Plan or the Share Option Plan described on page 59.
Participants acquire at market value participation shares in a subsidiary company that
holds the Company’s interests in the Group’s main operating businesses. The Group
grants loans to participants at a commercial rate of interest to acquire the shares.
Loans are ordinarily repayable in full if performance conditions are met.
The performance of the plan will ordinarily be measured at the end of the performance
period (in or around July 2017 for the current participants), when 60% of the shares vest,
with 40% deferred for a further year. When the awards vest, the value of the shares held
by participants will be based on the incremental value (if any) of Dixons Carphone plc in
excess of the opening valuation together with the minimum return on invested capital.
These shares will then be purchased by the Company for cash and / or the Company’s
ordinary shares.
A
‘bad leaver’ will be required to transfer the participation shares to such party as the
Company designates for an amount equal to the total amount outstanding under the
loan (and any accrued interest). If the market value of the shares is less than the amount
of the outstanding loan (and any accrued interest) then the participant may be required
to repay up to 20% of the shortfall out of their own resources.
A
participant shall only be a ‘good leaver’ at the sole discretion of the Committee
and may be permitted to retain an award notwithstanding the termination of their
employment.
The Committee has the ability to apply malus and clawback provisions to any awards
made after March 2015.
The mechanics of the plan may be varied by the Committee if necessary to ensure that
participants are neither advantaged nor disadvantaged by a variation of the share capital
of the Company, bona fide merger, reconstruction or similar reorganisation.
Further details on the operation of the Share Plan following the Merger are provided
in note (1) below this policy table.
• Maximum opportunity The total pool for distribution to participants is subject to a cap of 4% of the total issued
share capital of the Company on the measurement date.
Under the Share Plan there are now two pools, one for the original grant in December
2013 and one for the second grant in September 2014, each being subject to a cap of
2% of the total issued share capital of the Company.
The allocation for the Group Chief Executive is 11% of the pool created by the second
set of awards.
The allocations for other executive directors are set out in the Annual Remuneration
report.
• Performance assessment
/
targets The Share Plan is designed to share 10% of the incremental value created in Dixons
Carphone in excess of an opening valuation (assessed over an appropriate period) and
beyond an annual rate of return of 7% on invested capital. The plan is also underpinned
by a minimum annual compound TSR growth of 5% and outperformance of the median
TSR of the FTSE 250.