Marks and Spencer 2010 Annual Report Download - page 62

Marks and Spencer Group plc Annual report and financial statements 2010 Directors’ report 58
Our long-term philosophy is to attract and retain leaders who are
focused and encouraged to deliver business priorities within a
framework that is aligned with the interests of the Company’s
shareholders.
Our remuneration strategy continues to ensure that a significant
percentage of the package remains ‘at risk’. This approach has
informed the Committee’s considerations relating to Marc Bolland’s
remuneration on his appointment as the new Chief Executive,
to succeed Sir Stuart Rose.
The Committee agreed a salary and benefits package for
Marc which is consistent with the Company’s current remuneration
framework for executive directors. The salary is in line with existing
M&S remuneration policies and the external market, with the largest
part of the package ‘at risk’, as awards will only be received in the
event that the Annual Bonus Scheme pays out and if share grants,
made under the Company’s Performance Share Plan, hit challenging
targets throughout the next two to three years. The Committee
considers that payout at maximum levels under these schemes will
be as a result of significant outperformance by the business, with
substantial levels of return for investors. The Committee put in place
a recruitment package which fairly compensated Marc for his
awards that were forfeited with his previous employer and which the
Committee was fully satisfied would meet their performance targets
and pay out had Marc remained in their employ.
The Committee also agreed the remuneration for Stuart’s
transition to Chairman at the end of July 2010.
In 2009/10, the Company clearly outperformed the targets set
both in the internal operating plan and those expected by the City.
This level of performance resulted in a bonus being paid for the first
time in three years across the whole organisation. Given the
economic forecasts that prevailed at the start of this financial year,
these payments reflect significant performance both at an individual
and Company level.
The Committee has once again taken account of risk in its
annual review of senior remuneration. With all packages highly
geared towards share incentive schemes, the Committee believes
that the pay and benefits of the business leaders sufficiently takes
account of reward versus risk. For 2010/11, the targets for the
Company’s long-term incentive plan have been amended upward
to ensure that they remain challenging and at least as demanding as
the targets set in previous years.
During 2010/11, the Committee intends to review the senior
remuneration strategy in line with any changes to business priorities
as a result of Marc joining the Company, ensuring our remuneration
framework continues to motivate, reward and retain our senior
managers to deliver the business strategy.
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 on Corporate Governance 2008 and complies with the Listing
Rules of the Financial Services Authority and the relevant schedules
of the Companies Act 2006 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 14 July 2010.
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 2009/10 and continue to be members:
Period
Member From To
Steven Holliday
(Chairman since 8 September 2009)
15 July 2004 To date
Martha Lane Fox 1 June 2007 To date
Louise Patten
(Chairman until 8 September 2009)
1 February
2006
To date
Sir David Michels 26 May 2006 To date
Jan du Plessis 8 September
2009
To date
The Committee met 10 times during the year under review and
attendance at the meetings is shown in the attendance table on
page 53.
What is the remit of the Remuneration Committee?
The remit of the Committee covers the total remuneration of
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 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 –
executive directors and senior managers, including recruitment
and termination terms;
approving the design and targets for any annual incentive –
schemes that include 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. –
Remuneration report
Steven Holliday Chairman of the Remuneration Committee