Marks and Spencer 2005 Annual Report Download - page 21

MARKS AND SPENCER GROUP PLC 19
Senior management restructure
A restructure of the Board was undertaken at the end of May
2004 which resulted in the appointment of Stuart Rose as Chief
Executive and Charles Wilson as executive director on 31 May
2004. Luc Vandevelde and Roger Holmes left the Company at
that time. There has been further restructuring which has resulted
in Vittorio Radice, Mark McKeon, Maurice Helfgott and Laurel
Powers-Freeling leaving the Company. Alison Reed left the
Company at the end of April 2005. Ian Dyson has been appointed
Group Finance Director with effect from 27 June 2005 with a
12-month rolling contract. His annual salary will be £420,000 and
no remuneration was received in the year 2004/05.
Dame Stella Rimington and Brian Baldock left the Company on
14 July 2004 and Barbara Cassani left on 30 April 2004. Anthony
Habgood and Steven Holliday were appointed as non-executive
directors with effect from 15 July 2004.
Shareholding policy
A requirement was introduced in 2002 that the executive directors,
within five years of 1 June 2002 or within five years of appointment
(whichever is the later), should hold shares whose market value at
that time is equivalent to or greater than their then current gross
annual base salary. It is intended to increase this holding for the
Chief Executive to shares whose market value at that time is
equivalent to or greater than twice his then current gross annual
base salary. The Remuneration Committee is satisfied that under
these rules, all current executive directors will have sufficient
holdings in the Company to be able to comply with this
requirement in the appropriate timescale.
The Marks & Spencer Pension Scheme
Executive directors and all employees with a permanent
appointment date prior to 1 April 2002 are eligible to participate
in the Company’s Defined Benefit Pension Scheme. The Scheme
is non-contributory and the subject of an Independent Trust. Final
pension is based on basic salary. The normal retirement age under
the Pension Scheme for senior management is 60 to harmonise
with the Company contractual retirement age. Alison Reed was
the only executive director who was a member of this Scheme at
2 April 2005.
The Pension Scheme enables members to achieve the maximum
pension of two-thirds of their pensionable salary in the 12 months
ending at normal retirement date after 30 years’ service. For
employees 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 per annum, 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 pensions 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.
The Marks & Spencer Defined Benefit Pension Scheme was
closed to new members with effect from 31 March 2002.
The Marks & Spencer Retirement Plan
Executive directors, along with other employees joining the
Company on or after 1 April 2002 are, on completion of one year’s
service, invited to join the contributory Retirement Plan. The Plan is
a defined contribution arrangement, where employees may choose
to contribute between 3-15% of their salary. Member contributions
of 3-6% are matched by Company contributions of 6-12%. The
employee is free to choose from a range of investment vehicles,
where the total contribution will be invested. During the first year of
membership, employees can contribute 3-15% of their salary and
receive 6-24% from the Company to enable the employee to be
compensated for the waiting period.
During the one-year waiting period before joining the Plan,
employees will be covered for death in service by a capital
payment of twice salary, increasing to four times salary from the
date of joining the Plan, subject to the statutory earnings cap. No
current executive director is a member of the Retirement Plan.
The Company is considering its response to the impact of the
change in pensions legislation which will take effect in April 2006.
In making our final decision, we will take account of our
remuneration principles and market practice in addition to
investors’ views that companies should not compensate individuals
for changes in personal taxation.
External appointments
The Company recognises that executive directors may be invited
to become non-executive directors of other companies and that
such appointments can broaden their knowledge and experience,
to the benefit of the Company. The individual director retains the
fees. The following current executive directors served as non-
executive directors elsewhere during the year and received fees as
follows: Stuart Rose (Land Securities plc – £39,500, NSB Retail
Systems plc – £14,850) and Alison Reed (British Airways plc –
£36,800, HSBC Bank plc – £10,800).
Service contracts
All members of senior management have service contracts.
These contracts can be terminated by the Company providing
12 months’ notice. Exceptions may exist where new recruits have
been granted longer notice periods for the initial period of their
employment.