Marks and Spencer 2012 Annual Report Download - page 63

Governance Marks and Spencer Group plc Annual report and financial statements 2012 61
Overview Strategic review Financial review Governance Financial statements and other information
Group PBT objective (60% of total)
As in previous years, Group PBT targets were set by the
Committee at the start of the year by reference to the
Company’s own internal operating plan, external forecasts
for the retail sector and analysts’ profit forecasts. For there
to be any payment under the Group PBT measure in 2011/12,
there was a requirement not only for year-on-year Group PBT
growth but also outperformance of the operating plan. The
underlying Group PBT performance of £705.9m did not meet
the ‘minimum’ target, resulting in no bonus payment under
the Group PBT element.
Individual objectives (40% of total)
Each executive director had four individual objectives for
2011/12 which directly referenced the long-term strategy
of the business, each accounting for 10% of the total bonus.
‘Collective’ individual objectives (20% of total)
Of the individual objectives, two were ‘collective’ i.e. individual
targets for each director under shared objectives, so that all
directors focused on common goals, encouraging
collaboration across the senior management team.
The performance of each of the directors has been
reviewed by the Committee against the quantifiable individual
performance targets which were established and agreed at
the start of the year.
– Delivery against UK operating plan cost targets:
As set out on page 35, overall performance in this area
was strong, with operating plan cost increases within the
range of internal projections. Based on the Committee’s
assessment of performance against the individual targets
under this objective, payouts to directors were in the range
8% – 10% of maximum bonus opportunity, equating to
16% – 20% of salary.
– Progression in implementing Plan A commitments:
As discussed on page 30, the Company has continued to
make good progress against our Plan A goal of becoming
the world’s most sustainable major retailer. Based on the
Committee’s assessment of performance against the
individual targets under this objective, payouts to directors
were in the range 5% – 10% of maximum bonus
opportunity, equating to 10% – 20% of salary.
Business area individual objectives (20% of total)
The remaining two objectives related to specific workstreams
relevant to the director’s business area for which they have
primary responsibility. Performance against these objectives
was reviewed by the Committee against quantifiable
individual performance metrics that were established for each
director at the start of the year. Based on the performance
against these targets, the Committee determined payouts
to directors in the range 7.5% – 16.5% of maximum bonus
opportunity, equating to 15% – 33% of salary. The Committee
believes that this level of payout suitably reflects the
significant achievement during the year towards the execution
of the Company’s key strategic long-term goals.
Summary of bonus earned for 2011/12
As outlined in last year’s report, and in keeping with the
principle that has applied for a number of years, no individual
objective component of the bonus would have been payable
unless a ‘threshold’ level of Group PBT was achieved. Given
the importance of the individual objectives to the success of
the business, the Group PBT ‘threshold’ for this purpose
was set below the entry point for the Group PBT performance
target range and was achieved. In addition, the Committee
also considered the overall performance of the business
during the year across a series of measures and believes that
the bonus payments made for the achievement of objectives
are appropriate in light of this performance in the context of a
challenging year for our business and the wider retail sector.
This approach was applied to the rest of the organisation,
allowing for all eligible employees to receive a bonus.
The table below summarises the bonus payments for each
director for 2011/12:
Summary of bonus earned for 2011/12
Group PBT target
‘Collective’
objectives
Business area
objectives Total bonus earned
% of salary % of salary £000
Maximum bonus potential 120% 40% 40% 200% –
Actual bonus earned
Marc Bolland 0% 35% 33% 68% 663
Kate Bostock 0% 39% 15% 54% 328
John Dixon 0% 40% 32% 72% 405
Steven Sharp 0% 36% 24% 60% 405
Alan Stewart 0% 36% 25% 61% 346
Laura Wade-Gery10% 30% 30% 60% 243
1) Total bonus earned based on nine months worked in 2011/12.