Marks and Spencer 2007 Annual Report Download - page 47

Chairman’s Remuneration
The remuneration for the Chairman is determined by the Chief
Executive and the other members of the Board. The level of
remuneration for the Chairman reflects the commitment and
responsibilities of this role and is set having regard to market
practice. The fee is reviewed annually and is increased to
£450,000 from 1 April 2007. The Chairman has committed to
use 25% of his net fees to purchase shares in the Company
on a quarterly basis.
Non-executive directors’ remuneration
The remuneration for the non-executive directors is determined
by the Chairman and executive directors and is designed both
to recognise the responsibilities of non-executive directors and
to attract individuals with the necessary skills and experience
to contribute to the future growth of the Company. The non-
executive directors are paid a basic fee with additional fees
payable for Committee membership and to the chair of the
Committees. These fees are neither performance related nor
pensionable. Non-executive directors do not participate in
any of the Company’s share schemes nor the Annual Bonus
Scheme. The fees shown in the emoluments table reflect
the fees paid during the year. The basic fee increases from
£50,000 to £55,000 per annum, the additional fees for acting
as Committee Chairman increases from £10,000 to £12,000 and
for Committee membership from £5,000 to £6,000 per annum.
These new fee levels are effective from 1 April 2007. The annual
fees for each individual are shown in the contract terms table
on page 47.
Executive directors’ remuneration
Salaries and benefits
Salaries for executive directors are reviewed annually and
any change to salary is normally effective from 1 January. The
Remuneration Committee takes into consideration a range of
factors when reviewing salaries such as Company performance,
level of salaries for large retailers and for other major FTSE 100
companies, market conditions, the level of increase awarded to
employees throughout the business and the responsibilities and
skills of individual directors. Current annual salaries for executive
directors are set out in the contract terms table page 47.
Stuart Rose, Ian Dyson and Steven Sharp received payments
of 25% of total salary in lieu of pension and are not members
of the Marks & Spencer Pension Scheme. Life Assurance for
these individuals is provided through a separate policy and the
value of these benefits is shown in the emoluments table, under
cash allowance and benefits on page 48.
For executive directors, where applicable, the provision of
a car or car allowance, fuel and chauffeur is included in the
emoluments table as part of cash allowance and benefits.
Annual Bonus Scheme
The Annual Bonus Scheme is designed to focus and reward
executives for specific operational improvements which will drive
the Company’s performance. The 2006/07 bonus for directors
was at 60% of salary for on-target performance rising to a
maximum of 250% for exceeding targets.
The targets for the Company are determined annually by the
Remuneration Committee and incorporate a mixture of
corporate profit before tax and business unit and retail sales and
profit as appropriate. For 2006/07, the targets for the executive
directors were entirely based on the delivery of corporate profit
before tax. The Committee assesses the achievement of targets
for all executive directors and senior management prior to any
bonus awards being made.
This year, the corporate profit before tax targets have been
delivered in full and represent a significant improvement both
on the reported profits for 2005/06 and against market
expectations at the beginning of the financial year. As a result,
maximum awards under the scheme of 250% of salary have
been made to Stuart Rose, Ian Dyson and Steven Sharp.
From the 2006/07 bonus payment, the executive directors are
required to defer 60% of any bonus paid into shares which will
be held for three years. The value of any dividends accrued
either in the form of dividend equivalents or through a Dividend
Reinvestment Plan will be paid at the end of the period. The
emoluments table and notes on page 48 give the level of cash
payments and the value of deferred shares to be awarded at the
beginning of June 2007, which will be based on the average
share price over the preceding five trading days.
For 2007/08, the bonus scheme remains unchanged for
executive directors i.e. 60% of salary for on-target performance
rising to a maximum of 250% for exceeding targets, with 60%
paid in deferred shares. The performance measure will continue
to be corporate profit before tax.
Long-term Incentive Schemes
Performance Share Plan
The Performance Share Plan is the primary form of long-term
incentive for the top 100 management. Under the plan,
annual awards of up to 200% of salary may be offered, based
on performance and potential, up to a maximum of 400%
in exceptional circumstances, including those for recruitment
and retention.
Awards in excess of 200% of salary, up to a maximum of 400%
were made to a small number of senior management this year
including the executive directors. The Committee considers
that it is necessary to make further awards in excess of 200% of
salary in 2007/08 to a few key individuals, including directors, in
order to ensure that the incentives provided by the Company
are sufficient to retain them over the coming years and to
reward them appropriately for achieving excellent results.
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