Marks and Spencer 2009 Annual Report Download - page 67

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63
What have been the key activities of Remuneration
Committee during the year?
In line with its remit, the following key issues were addressed
by the Committee during the year:
– approval of the 2008 Directors’ Remuneration report and review
of the final outcome of AGM voting for the report;
– review of all share plan performance measures against 2007/08
year end targets. Agreement to the full vesting of the 2005
Performance Share Plan and Executive Share Option awards;
– agreement to bonus payments made in July 2008 for senior
managers below Board level;
– review and approval of all awards made under the Performance
Share Plan and Deferred Share Bonus Plan, taking into account
the total value of all awards made under these plans;
– review of and agreement to all executive director and senior
manager joining and leaving arrangements, covering all elements
of their reward package;
– review of director shareholding guidelines and achievement of
these for each executive director;
– half year review of Performance Share Plan awards against target,
including ratification of vesting levels for ‘good leavers’ from the
Company;
– review and approval of the total reward framework for directors
and senior managers, including long-term and short-term
incentives and any associated performance measures;
– consideration of advisory bodies and institutional investors
guidelines on executive compensation for 2009;
– annual review of executive directors’ and senior managers’ base
salaries and benefits;
– ratification of any salary increases for senior managers in line with
Company principles;
– design and targets for the 2009/10 Annual Bonus Scheme;
– consideration of the targets to be applied to the 2009 Performance
Share Plan; and
– review of Committee performance in 2008/09.
Senior remuneration framework
How is the senior remuneration framework aligned
to Company strategy?
Alignment of senior remuneration to Company strategy is
fundamental to the role of the Committee. The Company’s overall
plan and objectives are explained earlier in the Annual Report and it
is the Committee’s role to ensure that our remuneration framework
motivates senior managers to deliver these objectives. The Company
must be able to recruit and retain leaders who are focused and
driven to deliver these business priorities. Incentive plans need to be
effective not only in producing financial results but should also drive
behaviours that uphold the Company’s high ethical standards, for
example through individual objectives.
The Committee has the discretion to take into account
performance on environmental, social and governance matters when
setting the remuneration of the Executive Chairman and executive
directors. However, the Committee has decided not to take these
into specific account in setting performance targets for 2009/10 in
the belief that the structures in place already encourage and reward
appropriate behaviours and that relevant operational controls relating
to such matters currently exist. These matters are an integral part of
individual objectives.
What are the key elements of remuneration
for executive directors?
The key elements of remuneration are:
– salary and benefits;
– Annual Bonus Scheme with compulsory deferred shares; and
– Performance Share Plan (PSP).
The Committee considers these components in total to ensure there
is the correct balance between reward for short-term success and
long-term growth.