Marks and Spencer 1998 Annual Report Download - page 44

The Company operates two types of share option scheme:
(i) a Save A s You Earn (SAYE) Option Scheme approved by shareholders in 1981 and renewed by shareholders in 1987 and 1997.
The Scheme is open to all employees, including ex ecutive directors, who have completed two yearsÕ ser vice and who open an approved savings
contract. Inland Revenue rules limit the max imum amount which can be saved to £250 per month. When the savings contract is started
options are granted to acquire the number of shares that the total savings will buy when the savings contract matures; options cannot
normally be ex ercised until a minimum of three years has elapsed.
(ii) a Senior Staff Share Option Scheme, which is open to ex ecutive directors, divisional directors and ex ecutives. While the Company has operated
this type of Scheme for the past 20 years, the new Scheme, approved by shareholders in 1997, differs from the Schemes approved by
shareholders in 1977, 1984 and 1987, in order to take account of changes in legislation and changes in corporate practice.
A two-tier option Scheme has been introduced, comprising first tier options of up to four times annual earnings, and second tier options of up
to four times annual earnings. The overall Scheme limit is eight times annual earnings. In response to the Greenbury Repor t on DirectorsÕ
Remuneration, since 1996 the Committee has imposed performance criteria on the exercise of options. The criteria for the new Scheme are:
¥ First tier options will be ex ercisable between 3 and 10 years from grant, and will be ex ercisable if the growth in the CompanyÕs normalised
earnings per share, over the three year period, has ex ceeded growth in the Retail Price Index over that period, by an average of at least
3% per annum.
¥ Second tier options will be exercisable between 5 and 10 years from grant, if the CompanyÕs normalised earnings per share growth, over any
five year period, would place it in the upper quar tile of the FTSE 100 companies.
First tier options may not be granted to an individual if it would cause the aggregate subscription price of shares over which options have been
granted in the past ten years to ex ceed four times his/ her annual earnings. A ll grants in the past ten years will count towards the overall limit
of eight times earnings.
Participants who hold options granted under the 1984 and 1987 Schemes will continue to be bound by their Max imum Option Value ( MOV) of four
times earnings, and may only ex ercise options up to this value. This means that many participants hold more options than they will be able to
ex ercise. A t the discretion of the Committee, MOV can be increased in line with earnings. As soon as options have been exercised up to a value of
four times earnings, all outstanding options automatically lapse.
Following the 1996 Finance A ct, new grants of Inland Revenue Approved Options have been limited to £30,000. Grants in ex cess of this limit, under
the 1997 Scheme, will be Unapproved Options which confer no tax advantage on the participants. First grants under the 1997 Scheme will be
awarded in June 1998.
Directors’ long-term benefits
The options detailed in the table below may not be ex ercisable for two reasons:
(i) they have not been held for the minimum period (described below as ÔNot yet exercisableÕ) or
(ii) their value is in ex cess of the Max imum Option Value (described below as ÔNot ex ercisable (ex ceed MOV)Õ).
Options under the Senior Schemes are granted in consideration of a £1 payment. The market price of the shares at the end of the financial year
was 591.5p; the highest and lowest share prices during the financial year were 664.5p and 484p respectively.
Granted Ex ercised Option Ex ercise
At 1 A pril during during At 31 March price price
1997 the year the year 1998 (pence) (pence) Option period
Sir Richard Greenbur y
Exercisable 17,710 30,638 329.0 May 95 Ð May 02
Not yet ex ercisable 4,434(2) 4,434(2) 389.0 Jan 02 Ð Jun 02
Not ex ercisable (exceed MOV) 955,719 938,110 386.0( 1) May 95 Ð May 05
83,108 527.0 Jun 00 Ð Jun 04
87,789 254.0 530.0
J K Oates
Exercisable 269,296 87,771 330.0(1) May 95 Ð May 03
Not yet ex ercisable 9,336(2) 9,336(2) 296.0 Jan 99 Ð Jun 02
Not ex ercisable (exceed MOV) 323,311 354,212 436.0( 1) May 96 Ð May 05
74,235 527.0 Jun 00 Ð Jun 04
224,859 271.0( 1)603.0(1)
P G McCracken
Exercisable 269 251 329.0 May 95 Ð May 02
Not yet ex ercisable 12,853(2) 10,554(2) 302.0( 1) Jan 99 Ð Jun 05
Not ex ercisable (exceed MOV) 274,314 325,986 423.0( 1) May 95 Ð May 05
65,654 527.0 Jun 00 Ð Jun 04
668(2) 467.0 Jan 05 Ð Jun 05
14,000 329.0 592.5
2,967(2) 182.0 587.0
P L Salsbur y
Exercisable 137,645 151,135 309.0(1) May 94 Ð May 03
Not yet ex ercisable 16,897(2) 9,480( 2) 301.0(1) Jan 99 Ð Jun 04
Not ex ercisable (exceed MOV) 281,477 333,641 425.0( 1) May 96 Ð May 05
65,654 527.0 Jun 00 Ð Jun 04
7,417(2) 182.0 580.0
Lord Stone of Blackheath
Exercisable 72,383 34,134 341.0 May 96 Ð May 03
Not yet ex ercisable 11,324(2) 11,324(2) 291.0( 1) Jan 99 Ð Jun 04
Not ex ercisable (exceed MOV) 302,110 349,472 419.0( 1) May 96 Ð May 05
61,555 527.0 Jun 00 Ð Jun 04
52,442 329.0 619.0
(1) Weighted average price. (2) SAYE grant or ex ercise.
5 LONG-TERM BENEFITS
REPO RT OF TH E REM UNERATION CO M M ITTEE
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