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Dixons Carphone plc Annual Report and Accounts 2014/15
Corporate Governance
61
Illustration of remuneration policy
The remuneration policy scenario chart below illustrates the level and mix of potential total remuneration the current executive
directors could receive under the remuneration policy at four levels of performance including an annualised potential payout for
the Share Plan. As described in the policy table above, our long term incentive arrangements are designed to align executives’
interests with those of shareholders and incentivise and reward for the delivery of significant shareholder value. Our
arrangements are intentionally more leveraged than a standard UK performance share plan: no payouts would be due at a
threshold level of performance and the higher payout levels would result only where significant shareholder value had been
created (for example, £1.6 billion of incremental shareholder returns at the Maximum level).
Remuneration policy scenario chart
The assumptions underlying the chart in respect of the percentage of maximum opportunity payable are set out below:
Notes:
(1) Fixed pay comprises basic salary, taxable benefits and pension contributions.
(2) Annual variable pay represents the annual bonus entitlement. No bonus is assumed at the minimum performance level. Threshold
performance assumes a payment of 25% of base salary, super stretch performance a payment of 75% of base salary and maximum
performance a payment of 125% of base salary.
(3) Long term incentives relate to the Share Plan, in which the executive directors participate. These are illustrative amounts and the actual
outcomes may differ depending on share price growth.
(4) The Share Plan vests partly in 2017 and partly in 2018 and therefore the total value of the scheme has been annualised over the
performance period which is five years for the first set of awards, and four years for the second set of awards made following the Merger.
For Sebastian James, Humphrey Singer and Katie Bickerstaffe the Share Plan has been annualised over four years. Andrew Harrison and
Graham Stapleton were granted a second set of awards to align their overall awards with other Dixons participants and therefore the Share
Plan has been partially annualised over five years and partially over four years.
(5) No Share Plan payout is assumed at the minimum performance level. Threshold performance for the Share Plan is an annual rate of return
of 7% on invested capital and therefore there will be no payout at threshold. Super stretch performance reflects the generation of £1 billion
of incremental shareholder returns over the term of the scheme. Maximum performance is fixed at the point at which the overall dilution
cap of 4% is expected to apply (each set of awards being subject to a 2% dilution cap), representing £1.6 billion of incremental
shareholder returns.
(6) The value of the Share Plan at vesting has been reduced by the value of the loan outstanding (excluding interest payments).
0 1,000 2,000 3,000 4,000 5,000
£‘000
Minimum
Threshold
Super stretch
Maximum
Minimum
Threshold
Super stretch
Maximum
Minimum
Threshold
Super stretch
Maximum
Minimum
Threshold
Super stretch
Maximum
Minimum
Threshold
Super stretch
Maximum
Sebastian
James
Andrew
Harrison
Humphrey
Singer
Katie
Bickerstaffe
Graham
Stapleton
20%
21%
18%
18%
31%
82%
100%
18%
32%
82%
100%
21%
29%
81%
100%
19%
28%
81%
100%
19%
32%
82%
100%
4,915
2,820
1,120
915
1,712
654
3,057
728
1,755
685
560
3,024
2,403
536
2,145
591
1,737
611
496
3,080
Total
48%
62%
20% 51%
21%
24%
47%
62%
18%
20%
19%
55%
22%
19%
19%
53%
59%
21%
22%
18%
46%
60%
Fixed pay Annual variable
Long term incentive