Marks and Spencer 2001 Annual Report Download - page 14

14 Marks and Spencer p.l.c.
6 Long-term benefits
The Company operates two types of share option schemes:
(i) a Save As You Earn (SAYE) Share Option Scheme approved by shareholders in 1981 and renewed by shareholders in 1987 and 1997.
The Scheme is open to all UK employees, including executive directors, who have completed one year’s service and who open
an approved savings contract. Inland Revenue rules limit the maximum 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 exercised until a minimum of three years has elapsed.
(ii) an Executive Share Option Scheme, approved by shareholders in 2000, which is open to all senior management. The Company
has operated this type of scheme for over 20 years, following shareholder approval for the first scheme in 1977 and subsequent
schemes in 1984, 1987 and 1997.
The 2000 Scheme is an annual grant scheme, with a maximum annual award of 150% of base salary, except for grants made in
2000 when, to launch the scheme, the limit was 200% of base salary. The Remuneration Committee has imposed performance
criteria for the exercise of all options granted since 1996. The performance targets for the 2000 Scheme are:
• earnings per share growth of at least inflation plus an average of 3% per annum for 50% of each grant, measured from a fixed
base of 14.5p; and
• earnings per share growth of inflation plus an average of 4% per annum for the other 50% of each grant, measured from a fixed
base of 16.5p.
Participants who hold options under the 1984 and 1987 Schemes will continue to be bound by their Maximum Option Value
(MOV) of four times earnings, and may only exercise options up to this value, after which any outstanding options lapse. Following
the introduction of the 2000 Scheme, the Remuneration Committee has decided that MOV will no longer increase with earnings.
Since the 1996 Finance Act, grants of Inland Revenue Approved Options have been limited to £30,000. Grants in excess of this
limit, under the 2000 Scheme, will be unapproved options, 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.
Options held under the 1984 and 1987 Schemes continue to be bound by their MOV and can be exercised subject to the option
period. For options held under the 1997 and 2000 Schemes, options 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 MOV
(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.
No director exercised Executive Share Options or SAYE contracts in the year under review.
The market price of the shares at the end of the financial year was 266.0p; the highest and lowest share prices during the
financial year were 280.5p and 170.0p respectively.
At 1 April At 31 March
2000 Granted Exercised/ 2001 Option Exercise
or date of during lapsed during or date of price price
appointment the year the year retirement (pence) (pence) Option period
Luc Vandevelde
Not exercisable 3,984,674 – – 3,984,674 261.0 Mar 2003 – Mar 2010
Robert Colvill
Exercisable 213,751 – – 211,158 325.01May 1994 – May 2005
Not exercisable 128,333 – – 114,504 457.01May 1998 – May 2005
Lapsed – – 16,422
SAYE 2,087 – – –
SAYE lapsed – – 2,087
Roger Holmes
Not exercisable – 871,794 – 871,794 195.0 Dec 2003 – Dec 2010
Alan McWalter
Not exercisable 721,310 – – 721,310 305.0 Jan 2003 – Jan 2010
David Norgrove
Exercisable 80,480 – – 80,480 420.01May 1994 – June 2005
Not exercisable 179,565 – – 402,819 337.01May 1999 – Sept 2010
Granted – 223,254 – –215.0 Sept 2003 – Sept 2010
SAYE 8,602 – – 11,085 263.01Jan 2002 – June 2004
SAYE granted – 2,483 – –156.0
Remuneration report