Marks and Spencer 2008 Annual Report Download - page 50

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This Remuneration report has been prepared on behalf of the
Board by the Remuneration Committee. In all its activities, the
Remuneration Committee has adopted the principles of good
governance as set out in the Combined Code and complies
with the Listing Rules of the Financial Services Authority, the
relevant schedules of the Companies Act and the Directors’
Remuneration Report Regulations 2002. These regulations
require the Company’s auditors to report on the ‘Audited
information’ in the report and to state that this section has
been properly prepared in accordance with the regulations.
For this reason the report is divided into audited and unaudited
information. The Remuneration report is subject to shareholder
approval at the Annual General Meeting (AGM) on 9 July 2008.
Part 1: Unaudited information
Remuneration Committee
Who makes up the Remuneration Committee?
During 2007/08, the Committee comprised the following
non-executive directors:
• Louise Patten (Committee Chairman);
• Martha Lane Fox (appointed on 1 June 2007);
• Steven Holliday;
• Sir David Michels; and
• Jack Keenan (retired on 10 July 2007).
There were five meetings of the Committee during the year
under review and attendance at the meetings is detailed in
the Corporate governance statement on page 43.
What is the remit of the Remuneration Committee?
The Committee has a remit covering the total remuneration
of the executive directors of the Company, ensuring that the
most talented individuals are recruited, motivated to deliver
results and retained. The remit includes the following:
• setting the senior remuneration strategy and framework
for the top levels in the organisation;
• ensuring that executive directors and senior managers
are fairly rewarded for their individual performance and
contribution to the overall Company results;
• reviewing and approving the remuneration and terms and
conditions of employment, including any terminations, for
executive directors and senior managers;
• approving the design and targets for any annual incentive
schemes that include the executive directors and senior
managers;
• agreeing the design and targets, where applicable, of all
share incentive plans for approval by shareholders; and
• assessing the appropriateness and subsequently the
achievement of performance targets related to any
share incentive plan.
The Committee takes into account the financial and
commercial health of the organisation when considering
its approach to total remuneration. The Committee has
appointed Hewitt New Bridge Street as external advisors
and invites internal support from the Company Chairman,
Chief Executive, Group Secretary and Head of Senior
Remuneration. The Chairman and Chief Executive are
not present for any discussions that relate directly to
their own pay and benefit awards.
The Committee regularly reviews external data produced
through a number of surveys and bespoke benchmarking
data, including those published by Hewitt New Bridge Street,
Monks PwC, Towers Perrin and Watson Wyatt.
What is our remuneration framework?
The remuneration framework is simple and transparent, aligning
the reward of our executive directors and senior managers to
that of shareholders through a package highly geared towards
share incentive plans. The key components are:
• salary and benefits;
• Annual Bonus Scheme with a compulsory deferred share
element; and
• Performance Share Plan (PSP).
The following charts show the balance of the package split
between pay at risk and fixed pay for on-target and maximum
performance. The Committee considers that the balance of
fixed and variable pay is appropriate to the external market.
48 MARKS AND SPENCER GROUP PLC
Remuneration report
Expected value of future annual remuneration package for executive directors
‘On-target’ performance ‘Maximum’ performance
The value placed on long-term incentives comprises the expected cash value to executives after three years, discounted back to its present value, of (i) bonus compulsorily
deferred into shares and (ii) performance shares awarded under the Performance Share Plan.
1
2
3
4
1 Long-term incentives 46%
2 Salary 36%
3 Annual cash bonus 9%
4 Pension 9%
1
2
34
1 Long-term incentives 77%
2 Salary 10%
3 Annual cash bonus 10%
4 Pension 3%