Marks and Spencer 2012 Annual Report Download - page 56

Remuneration report
Remuneration committee
Steven Holliday
Governance Marks and Spencer Group plc Annual report and financial statements 2012 54
As Chairman of the Remuneration Committee, I am acutely
aware of the increased focus on executive pay over the past
12 months. This year we have once again focused on being
transparent, providing clear reporting on past pay and future
policy and potentials.
The Government announced proposals to improve the
transparency of reporting in this area and to give greater
shareholder power over future pay policy. We believe that
linking pay to company performance and the associated
dialogue with shareholders is fundamental to the remit of
any Remuneration Committee. The Committee therefore
carefully considered the proposals and responded to the
consultation paper from the Department for Business,
Innovation & Skills on Executive Remuneration and for that
on Narrative Reporting. We have also met with investors,
representative bodies, government and governance
organisations to discuss wider remuneration issues.
Whilst the final regulations have yet to be determined, we
believe that the Company already addresses many of the
proposals. Last year’s Remuneration report was highly
commended by PwC under the ‘Building Public Trust Awards
for FTSE Executive Remuneration Reporting’.
We believe that the Remuneration Committee provides a
strong and independent challenge on remuneration. At M&S
this was particularly demonstrated with the design of the
revised remuneration framework set out in last year’s report,
which clearly links reward to Company strategy. Our long-
term philosophy for remuneration remains 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 practice
therefore is to ensure our remuneration provides the
appropriate incentives to reward performance that protects
the long-term interests of our stakeholders, and which will
enable us to develop an internationally competitive business,
led by top class professionals.
When reviewing the appropriateness of the remuneration
framework this year, the Committee considered the incentive
arrangements introduced in 2011 not only in the context of
the business strategy but also against current external
guidelines for executive remuneration. As a result of this
review, the Committee agreed that the current framework
remained appropriate and did not require any changes.
Despite difficult trading in a year of global economic
turbulence, the Committee was satisfied that significant
progress was made towards delivery of the key
strategic priorities.
Steven Holliday
Chairman of the Remuneration Committee
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 UK Corporate Governance Code 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 in Schedule 8 to The Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008. 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 10 July 2012.
Remuneration Committee
What is the remit of the Remuneration Committee?
The role of the Committee is to recommend to the Board
the senior remuneration strategy and framework, giving due
regard to the financial and commercial health of the Company
and to ensure the directors and senior management are fairly
rewarded for their individual contribution to the Company’s
overall performance.
The full terms of reference for the Committee can be found
on the Company’s website at marksandspencer.com/
thecompany, 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;
–reviewing the effectiveness of the senior remuneration
policy with regard to its impact and compatibility with
the policy and arrangements throughout the rest of
the organisation;
–determining the terms of employment and remuneration
for executive directors and senior managers, including
recruitment and termination terms;
–approving the design, targets and payments made for any
annual incentive schemes that include executive directors
and senior managers;
–agreeing the design, targets and annual awards made for
all share incentive plans requiring shareholder approval; and
–assessing the appropriateness and subsequent
achievement of the performance targets relating to any
share incentive plan.
In undertaking these responsibilities, the Committee seeks
independent external advice as necessary. To this end the
Committee continued to retain the services of Deloitte LLP.
The Committee also seeks internal support from the Chairman,
Group Secretary, Director of Human Resources and Head of
Employee Relations and Reward, all of whom may 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 Aon Hewitt (acting through the
brand of New Bridge Street), KPMG, Monks PwC and
Towers Watson.