Marks and Spencer 2008 Annual Report Download - page 51

What are the pay and benefits received by the Board?
Chairman’s remuneration
The Chief Executive and other members of the Board determine
the Chairman’s salary. It reflects the level of commitment and
responsibility of the role. The fee has not increased since
1 April 2007 (£450,000, as reported in last year’s Remuneration
report). The Chairman used approximately 25% of his net fees to
purchase shares in the Company up to and including March 2008.
The Chairman does not receive any other benefits except
employee product discount and the provision of a driver and
fleet vehicle.
Non-executive directors’ remuneration
The fees for non-executive directors are determined by
the Chairman and executive directors and are paid in cash.
The levels are set to ensure the Company attracts individuals
with the necessary key skills and experience, recognising the
responsibility and time commitment required to complete
the roles. The fees are not
performance related and are not
pensionable. The fees comprise:
• Basic annual fee: £55,000
• Committee Chairman: £12,000*
• Committee membership: £6,000*
*Audit and Remuneration Committees only.
The emoluments table on page 53 reflects the fees paid
during the year to each non-executive director. There are
no other benefits except employee product discount.
Executive directors’ remuneration
Salaries and benefits are determined by the Remuneration
Committee. Basic salary is normally reviewed annually and any
increase awarded from 1 January. The Committee takes into
account a number of factors when reviewing these, including:
• salary levels in comparably-sized FTSE 100 companies and
major retailers;
• economic climate, market conditions and Company performance;
• the level of pay awards in the rest of the business; and
• the role and responsibility of the individual directors.
As part of the annual review process, in January 2008, Sir
Stuart Rose, Ian Dyson and Steven Sharp received an increase
based on the above factors. No further increases have been
made to Sir Stuart Rose or Steven Sharp as a result of the
Board changes announced in March 2008. However, Ian
Dyson received an additional increase due to his expanded
responsibilities as Group Finance and Operations Director,
effective 10 March 2008.
Kate Bostock and Steven Esom were both appointed to the
Board on 10 March 2008 and their current salaries are shown
together with all other executive directors in the Contract terms
table on page 51.
All the executive directors receive a 25% salary supplement
in lieu of pension. Life assurance for executive directors who
are not in the Group’s Pension Schemes is provided through
a separate policy and the value of this benefit is included in the
emoluments table, under Cash allowance and benefits on page 53.
Other benefits include a car or car allowance and driver and
are shown as part of the Cash allowance and benefits in the
emoluments table. Employee product discount is also received
but no specific value is placed on this all-employee benefit.
What are the current short-term and long-term incentive
schemes?
Annual Bonus Scheme – short-term incentive
Deferred Share Bonus Plan – long-term incentive
The Annual Bonus Scheme is reviewed each year and
designed to drive profitability and sales across the whole
organisation. The bonus potential for executive directors is
60% of salary for on-target performance and 250% of salary
for maximum performance. There is a compulsory deferral of
any bonus paid into shares for all senior managers. Further
details of the Deferred Share Bonus Plan can be found in
note 12 to the financial statements on page 75.
Bonus scheme outcome of 2007/08
The targets set for 2007/08 were extremely challenging in
a very difficult trading year for retailers. As a result, the very
stretching Corporate Profit Before Tax (PBT) target set at the
start of the year was not reached and therefore the executive
directors will not receive any bonus payment under this
scheme in 2008. Some senior managers and other employees
in Head Office and Retail will receive a bonus as they have
delivered local sales and profit targets in accordance with the
scheme rules.
Bonus scheme for 2008/09
The scheme remains in principle unchanged, with bonus
potentials still at 60% to 250% of salary for executive directors.
Sir Stuart Rose, Ian Dyson and Steven Sharp will continue
to be measured entirely on PBT targets. Kate Bostock and
Steven Esom will have bonus targets based 50% on PBT, with
the remaining 50% based on the achievement of profit and
sales in their respective business areas i.e. clothing and food.
Performance Share Plan (PSP) – Long-term incentive
This remains the primary long-term incentive for the ‘Top 100’
managers in the organisation. The plan normally allows for
awards up to 200% of salary, although up to 400% of salary
may be awarded to recognise exceptional performance or
to address key retention issues.
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