Marks and Spencer 2010 Annual Report Download - page 63

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The Committee continued to retain the services of Hewitt New
Bridge Street as independent external advisors. It also seeks
internal support from the Executive Chairman, Group Secretary,
Director of Human Resources and Head of Employee Relations
and Reward. 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, and
Towers Watson.
What have been the key activities of the Remuneration
Committee during the year?
In line with its remit, the following key issues were discussed
by the Committee during the year:
approval of the 2009 Directors’ Remuneration report and review –
of the final outcome of AGM voting for the report;
r eview of all share plan performance measures against 2008/09 –
year end targets;
review and approval of all awards made under the Performance –
Share 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. In particular the Committee approved the
joining arrangements for Marc Bolland, the new CEO and the
leaving arrangements for Sir Stuart Rose;
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 of and approval of the total reward framework for directors –
and senior managers, including long-term and short-term
incentives and any associated performance measures;
review of tax efficiency of the reward framework; –
consideration of advisory bodies and institutional investors current –
guidelines on executive compensation;
annual review of all executive directors’ and senior managers’ –
base salaries and benefits;
ratification of any salary increases for executive directors and –
senior managers in line with Company principles;
assessment of the risk environment surrounding the Company’s –
current remuneration arrangements;
design and targets for the 2010/11 Annual Bonus Scheme; –
consideration of the targets to be applied to the 2010 –
Performance Share Plan awards;
review of Committee performance in 2009/10; and –
review of terms of reference. –
Operating & Financial review p16 
Governance 
Financial statements p78 
Senior remuneration framework
How is the senior remuneration framework aligned to
Company strategy?
A vital part of the Committee’s role is to ensure that the remuneration
of senior managers, including executive directors, is aligned to the
Company strategy described earlier in this Annual Report. The
Company must be able to attract and retain leaders who are
focused and encouraged to deliver these business priorities within
a framework that is also aligned with the interests of the Company’s
shareholders, for example through bonus deferral and shareholding
requirements. In addition, incentive plans need to be effective not
only in delivering financial results but also in driving behaviours that
uphold the Company’s high ethical standards and adequately take
account of risk, for example through individual objectives.
When setting the remuneration for directors, the Committee has
the discretion to take into account performance on environmental,
social and governance matters. Having reviewed the performance
targets for 2010/11, the Committee has again decided that these
should continue to be an integral part of individual objectives rather
than taken into specific account. All executive directors and senior
managers have individual objectives aligned to Plan A, the
Company’s ‘eco plan’. The Committee believes that current
structures already encourage and reward appropriate behaviours
and that the relevant operational controls relating to such matters
equally exist.
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 Company’s long-term –
incentive plan.
The Committee considers these components in total to ensure there
is the right balance between reward for short-term success and
long-term growth.