Marks and Spencer 1999 Annual Report Download - page 15

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MARKS AN D SPEN CER p.l.c.
5 LONG-TERM BENEFITS (CO N TIN UED )
(ii) a Senior Staff Share O ption Scheme, approved by shareholders in 1997, which is open to executive directors, divisional directors and
executives.The Company has operated this type of scheme for over 20 years, following shareholder approval for earlier schemes in 1977,
1984 and 1987.
The 1997 Scheme is a two-tier scheme, comprising first tier options of up to four times annual earnings, and second tier options up to four times
annual earnings, with an overall scheme limit of eight times annual earnings.The Remuneration Committee has imposed performance criteria for
the exercise of all options granted since 1996.The performance criteria for the 1997 Scheme are:
• First tier options will be exercisable between three and 10 years from grant, and will be exercisable if the growth in the Company’s
normalised earnings per share, over the three-year period, has exceeded 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 five and 10 years from grant, if the Company’s normalised earnings per share growth,
over any five year period, would place it in the upper quartile 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 10 years to exceed four times his/her annual earnings. All grants in the past 10 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 Maximum O ption Value (MO V) of
four times earnings, and may only exercise options up to this value.This means that many participants hold more options than they will be able to
exercise.At the discretion of the Committee, MO V 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 Act, new grants of Inland Revenue Approved O ptions have been limited to £30,000. Grants in excess of this limit,
under the 1997 Scheme, will be Unapproved O ptions which confer no tax advantage on the participants.
At the discretion of the Remuneration Committee, retiring directors can take their options for all schemes into retirement. O ptions held under
the 1984 and 1987 Schemes continue to be bound by their MO V and can be exercised subject to the option period. For options held under the
1997 Scheme the performance criteria and time restrictions are waived but they will lapse if not exercised within 12 months of retirement.
Directors’ long-term benefits
The options detailed in the table below may not be exercisable for any one of the following reasons:
(i) their value is in excess of the MO V
(ii) the options have not been held for three years and therefore cannot be exercised under scheme rules
(iii) the options have not met the appropriate performance criteria.
The market price of the shares at the end of the financial year was • p;the highest and lowest share prices during the financial year were • p and
• p respectively.
Granted Exercised/ O ption Exercise
At 1 April during lapsed during At 31 March price price
1999 the year the year 2000 (pence) (pence) O ption period
Sir Richard Greenbury
Exercisable 87,458 329.0 May 95 – May 02
N ot exercisable 881,290 390.0(1) May 95 – May 05
SAYE 4,434 389.0 Jan 02 – Jun 02
P L Salsbur y
Exercisable 204,824 323.0(1) May 94 – May 04
N ot exercisable 435,134 480.0(1) May 97 – Jun 08
SAYE 5,550 351.0(1) Jan 03 – Jun 04
557.0 Jun 03 – Jun 08
229.0 333.25
PG McCracken
Exercisable 46,386 340.0(1) May 95 – May 03
N ot exercisable 472,823 486.0(1) May 96 – Jun 08
SAYE 6,624 346.0(1) Jan 00 – Jun 05
557.0 Jun 03 – Jun 08
229.0 407.5
(1) W eighted average price.
(2) SAYEgrant or exercise.
REMUN ERATIO N REPO RT
ANNUAL REPORT AND FIN ANCIAL STATEMENTS 1999