Marks and Spencer 2003 Annual Report Download - page 19

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2 Recruitment of executive directors
During the year Vittorio Radice was recruited and appointed to the Board as an executive director on 3 March 2003 on the
following terms:
•salary of £425,000;
•guaranteed bonus of £290,000 as compensation for loss of bonus from his previous employer (included within bonus in
the emoluments table);
•shares to the value of £665,000 in compensation for the loss of outstanding Long Term Incentive Plans with his previous
employer. These shares will be released in three tranches, subject to continuing employment, in July of 2003, 2004
and 2005 (included within benefits in the emoluments table);
•supplement of 25% of total salary and a payment of £200,000 in compensation for the loss of pension benefits from his
previous employer (included within benefits in the emoluments table); and
•award of shares under the 2002 Executive Share Option Scheme with a market value at the date of employment of
four times base salary (see Long Term Incentive Schemes).
3 Directors’ pension information
The Marks & Spencer Pension Scheme
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 provided their date of permanent appointment was prior to
1 April 2002. The Scheme is non-contributory 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 12 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 p.a., 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.
Post-retirement increases for pension earned from 6 April 1997 are awarded on a statutory basis. Pension earned prior to
6 April 1997 is guaranteed to increase by the rise in inflation, up to a maximum of 3% per annum. Increases beyond this
figure will continue to be reviewed on a discretionary basis.
The Marks & Spencer Pension Scheme was closed to new members with effect from 31 March 2002. For employees joining
the Company on or after 1 April 2002, a new contributory Retirement Plan is available (after one year’s service), see page
18 for details.
Pension benefits
The Directors’ Remuneration Report Regulations 2002 require disclosure of defined benefit pension arrangements on a
different basis to that specified in the Listing Rules. Details of pension benefits earned by the executive directors during the
year ended 29 March 2003 are shown below on both bases:
Transfer value
Additional of additional
pension pension in Transfer Transfer Increase
Accrued Additional earned in excess of Accrued value of value of in transfer
entitlement pension the year in inflation (net entitlement pension at pension at value (net
at 30 March earned in excess of of director’sat 29 March Age at 30 March 29 March of director’s
2002 the year inflation contribution) 2003 29 March 2002 2003 contribution)
£000 £000 £0005£0005£000 2003 £000 £000 £000
Required under Listing Rules New under Directors’ Remuneration
(as in prior years) Report Regulations
Roger Holmes1,2 43317743 30 40 10
Justin King1,2 33211641 27 40 13
David Norgrove 86 18 16 213 104 55 1,191 1,348 157
Laurel Powers-Freeling112217345 7 22 15
Alison Reed 75 66 65 462 141 46 708 1,005 297
Alan McWalter1,2,3 54472949 54 119 65
1Roger Holmes, Alan McWalter, Justin King and Laurel Powers-Freeling are subject to the pension earnings ‘cap’ (£97,200 at 29 March 2003) which
is reviewed annually by the Government. As a result, they also receive a pension-related salary supplement (see section 1).
2The pensions for Roger Holmes, Alan McWalter and Justin King are based on a uniform accrual of two-thirds of the pension earnings ‘cap’ less
the pension which they have accrued from membership of previous employers’ pension schemes.