Marks and Spencer 2001 Annual Report Download - page 12

12 Marks and Spencer p.l.c.
2 Recruitment of directors
During the year, Roger Holmes was recruited and appointed to the Board as Managing Director, UK Retail. In order to secure early
release from his previous employer, he was recruited as an employee from 15 December to 31 December 2000, with salary and
benefits totalling £22,000 for this period (included within section 1). He was appointed as a director on 1 January 2001 on the
following terms:
• salary of £425,000 p.a.;
• payment of £100,000 as compensation for loss of bonus from his previous employer (included within benefits in section 1);
• compensation for loss of future benefits from his previous employer in the form of 282,326 ‘restricted shares’ purchased on
his behalf at a cost of £554,000. He is the beneficial owner of the shares but they will not be transferred to him until the
3rd anniversary of employment (included within benefits in section 1);
• interest free loan of £501,000 for a period of 17 days to facilitate the exercise of share options from his previous employer and
avoid further compensation payments under the terms of his engagement. This was repaid in full prior to taking up his
appointment to the Board on 1 January 2001 (see note 11 – Transactions with directors);
• supplement of 10% of the difference between the pension earnings cap and his base salary (see section 4 – Pensions) (included
within benefits in section 1);
• award of shares under 2000 Executive Share Option Scheme with a market value at the date of employment of four times base
salary (see section 6 – Long-term benefits).
3 Termination payments
Compensation for termination under directors’ service contracts includes 12 months’ salary and benefits and loss of pensionable
service as shown below.
Should a senior management bonus be payable for the financial year ending 31 March 2002, a pro-rata payment will be made
and shown in next year’s Annual Report.
Cost of
pension Total
Salary Benefits entitlement42001
£000 £000 £000 £000
Retired directors (with effect from)
Clara Freeman1(18 September 2000) 260 30 47 337
Guy McCracken3(18 September 2000) 390 30 287 707
Peter Salsbury2(18 September 2000) 560 49 n/a 609
Roger Aldridge (19 July 2000) 290 30 230 550
Barry Morris (19 July 2000) n/a 3 n/a 3
Joe Rowe3(19 July 2000) 290 27 219 536
Total 1,790 169 783 2,742
1Clara Freeman is not of pensionable age and does not currently draw a pension. As a result of legislative restrictions, the value of her pension contribution
does not reflect a full additional year.
2Peter Salsbury received no additional pension contribution as maximum pension entitlement had been reached.
3Guy McCracken chose not to receive his termination payment in cash, but requested the Company to pay an identical sum into the Pension Scheme, in order
to enhance his pension. Similarly, Joe Rowe chose to have £200,000 paid into the Pension Scheme and received the balance in cash. These enhancements
have not been included within the pension table in section 4 of this report as they have been funded by the individuals.
4The pension entitlement was paid directly into the Pension Scheme and is reflected in the pension table (see section 4, footnote 5).
4 Directors’ pension information
The executive directors, management and employees (except for staff employed by Marks & Spencer Outlet Ltd) all participate in the
Company’s defined benefit Pension Scheme. The Scheme is non-contributory, fully funded and the subject of an Independent Trust.
The normal retirement age under the Pension Scheme for senior management is 60 to harmonise with the Company contractual
retirement age. For all other employees the normal retirement age is 65 (previously 60) but for those employees who joined the
Scheme prior to 1 January 1996 their accrued rights were not affected by this change.
The Pension Scheme enables members to achieve the maximum pension of two-thirds of their salary in the twelve months
ending at normal retirement date after 30 years’ service. For employees (including senior management) who joined the Scheme prior
to 1 January 1996 no actuarial reduction is applied to pensions payable from the age of 58. Employees who joined the Scheme on
or after 1 January 1996 are subject to an actuarial reduction in their pension if payment starts prior to their normal retirement date.
In the case of earnings over £100,000 pa, the pensionable salary is usually based on an average of the earnings over the last
three years to retirement.
Pension commutation to enable participants to receive a lump sum on retirement is permitted within Inland Revenue limits.
For death before retirement, a capital sum equal to four times salary is payable, together with a spouse’s pension of two-thirds of
the member’s prospective pension at the age of 65 (60 for senior management). For death in retirement, a spouse’s pension is paid
equal to two-thirds of the member’s current pension. In the event of death after leaving service but prior to commencement of
pension, a spouse’s pension of two-thirds of the accrued preserved pension is payable. In all circumstances, children’s allowances
are also payable, usually up to the age of 16. Substantial protection is also offered in the event of serious ill health.
Remuneration report