Marks and Spencer 2012 Annual Report Download - page 59

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Governance Marks and Spencer Group plc Annual report and financial statements 2012 57
Overview Strategic review Financial review Governance Financial statements and other information
Senior remuneration framework
How is the senior remuneration framework aligned
to Company strategy?
The Committee carried out a full and comprehensive review
of the senior remuneration framework in 2010/11 to ensure
that it was aligned to the Company strategy. The Company
must continue to be able to attract and retain leaders who
are focused and encouraged to deliver the business priorities
within a framework that continues to be aligned with the
interests of the Company’s shareholders, for example through
bonus deferral and shareholding requirements. In addition,
the Committee ensures that incentive plans are effective in
not only delivering the required financial results, but:
–are fully aligned to the business strategy;
–drive behaviours that uphold the Company’s high ethical
standards; and
–adequately take account of risk.
In 2010/11, we actively engaged with shareholders as part
of the consultation and continue to have dialogue with them
on this and the broader remuneration debate.
When reviewing this framework in 2012, 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 was appropriate and
did not require any changes.
In 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 2012/13, the Committee
has decided that these should continue to be an integral part
of individual objectives. All executive directors and senior
managers have individual objectives aligned not only to the
business strategy and operating plan but also to Plan A, the
Company’s environmental and ethical plan.
When reviewing executive directors’ remuneration, the
Committee considers a range of factors, including the
remuneration policy and arrangements throughout the
rest of the organisation. The remuneration framework for
directors below Board level is fully aligned to that of executive
directors, with the same long-term and short-term incentive
arrangements (including performance measures), other than
the size of awards and maximum potentials.
The following charts show the total remuneration package split between pay at risk and fixed pay for ‘on-target’
and ‘maximum’ performance:
The value attributed to long-term incentives in the above charts represents the expected net present value of bonus that
is compulsorily deferred into shares and awards made under the Performance Share Plan.
The charts exclude specific awards made in the context of recruitment that do not form part of the normal annual package.
Marc Bolland
‘On target’ performance
‘Maximum’ performance
Other executive directors
‘On target’ performance
‘Maximum’ performance
Pay at risk
70% Long-term incentive
13% Annual cash bonus
Fixed pay
13% Salary
4% Pension provision
Pay at risk
69% Long-term incentive
14% Annual cash bonus
Fixed pay
14% Salary
3% Pension provision
Pay at risk
41% Long-term incentive
17% Annual cash bonus
Fixed pay
34% Salary
8% Pension provision
Pay at risk
40% Long-term incentive
17% Annual cash bonus
Fixed pay
33% Salary
10% Pension provision
What is the expected value of proposed annual remuneration package for executive directors?