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62 Marks and Spencer Group plc Annual report and financial statements 2009 Directors’ report
Remuneration report
This Remuneration report has been prepared on behalf of the
Board by the Remuneration Committee. The Committee adopts 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 Acts 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 these regulations. For this reason, the report
is divided into audited and unaudited information, and is subject
to shareholder approval at the Annual General Meeting (AGM) on
8 July 2009.
Part 1: Unaudited Information
Remuneration Committee
Who are the members of the Remuneration Committee?
The following independent non-executive directors were members
of the Committee during 2008/09 and continue to be members:
Period
Member From To
Louise Patten (Chairman since
1 January 2007) 1 February 2006 To date
Martha Lane Fox 1 June 2007 To date
Steven Holliday 15 July 2004 To date
Sir David Michels 26 May 2006 To date
The Committee met four times during the year under review and
attendance at the meetings is shown in the attendance table on
page 60.
What is the remit of the Remuneration Committee?
The remit of the Committee covers the total remuneration of the
Executive Chairman, executive directors and other senior managers.
The full terms of reference for the Committee can be found on the
Company’s website, with the key responsibilities summarised as
follows:
– setting a senior remuneration strategy that ensures the most
talented leaders are recruited, retained and motivated to
deliver results;
– ensuring that the remuneration for the Executive Chairman,
executive directors and senior managers reflects both their
individual performance and their contribution to the overall
Company results;
– determining the terms of employment and remuneration for the
Executive Chairman, executive directors and senior managers,
including recruitment and termination terms;
– approving the design and targets for any annual incentive schemes
that include the Executive Chairman, executive directors and senior
managers;
– agreeing the design and targets, where applicable, of all share
incentive plans requiring shareholder approval;
– assessing the appropriateness and subsequent achievement of
the performance targets related to any share incentive plans; and
– selecting and appointing the external advisors to the Committee.
The Committee continued to retain the services of Hewitt New
Bridge Street as external advisors. It also seeks internal support
from the Executive Chairman, Group Secretary, Director of Human
Resources and Head of Senior Remuneration. They attend the
Committee meetings by invitation but are not present for any
discussions that relate directly to their own remuneration.
The Committee also regularly reviews external data produced
through several surveys and bespoke benchmarking data, including
those published by Hewitt New Bridge Street, Monks PwC, Towers
Perrin and Watson Wyatt.
The significant change in the economy has impacted not only on the performance of the
Company, but also the decisions taken by the Remuneration Committee during the year.
Based on the Company’s performance in 2008/09 and current market conditions, no
salary increases or annual bonus payments were awarded to executive directors during
the year. Looking ahead, we will continue to ensure ‘pay for performance’ is central in all our
decisions. For maximum bonus to be earned in 2009/10, executive directors will have to achieve
an additional ‘stretch’ target, which is above that for the rest of the Company, and is approximately
40% greater than the operating plan target. Furthermore, at least 90% of the operating plan target
must be achieved before any bonus payment against individual objectives is made. This, together
with the challenging Performance Share Plan targets, means that the senior remuneration strategy
remains highly geared towards share incentive plans, continuing to align executive directors’ reward
to that of shareholders.
Louise Patten Chairman of the Remuneration Committee