Marks and Spencer 2013 Annual Report Download - page 57

Governance Marks and Spencer Group plc Annual report and financial statements 2013 55
Overview Strategic review Financial review Governance Financial statements and other information
Governance Marks and Spencer Group plc Annual report and financial statements 2013 55
Remuneration report
Remuneration Committee
Key elements of this report
1) Senior remuneration framework: page 58
2) Summary of objectives and bonus 2012/13: page 62
3) Executive directors’ ‘single figure’ of remuneration for the
year ended 30 March 2013: page 64
“ We have a
straightforward and
transparent approach to
executive remuneration.”
Steven Holliday
Chairman of the Remuneration
Committee
On behalf of the Board, I am pleased to introduce our 2013
Remuneration Report, for which we will be seeking your
approval at our AGM in July 2013. The report is designed to
provide you with information demonstrating the link between
the Company’s strategy, performance and the remuneration
outcomes for our executive directors.
The subject of executive remuneration continues to be an
area of focus for shareholders and the wider public and the
Remuneration Committee is aware of the sensitivities regarding
executive pay at a time of continued economic challenge and
uncertainty. The Committee continues to meet regularly with
investors, representative bodies and Government organisations
and listens carefully to their feedback. Linking pay to company
performance and shareholder consultation is fundamental to
the remit of the Committee and we believe that we provide a
strong and independent direction on remuneration policy.
We are supportive of the Government’s drive to increase
the transparency of executive remuneration reporting and
to provide shareholders with greater influence over future
policy. The Committee has considered these proposals and
responded to the Department for Business, Innovation & Skills
(BIS) consultation on revised directors’ remuneration report
disclosures. Whilst the new regulations are yet to be finalised,
this 2013 Remuneration Report already meets a significant
number of the existing proposals, in particular with regard to
simplification, transparency, separation of past pay and future
policy and in providing remuneration scenarios and a ‘single
figure’ of remuneration on page 64.
The Company’s long-term remuneration strategy remains
to attract and retain leaders and ensure they are focused
on delivering business priorities within a framework aligned
with shareholder interests. We believe that our remuneration
policy provides appropriate incentives to reward performance
that protects the long-term interests of our stakeholders
and helps to develop an internationally successful business.
The Committee also has a particularly strong focus on the
remuneration for employees below Board level when
determining remuneration for executive directors.
The Company has a straightforward and transparent approach
to executive remuneration which is comprised of base salary,
benefits, cash and shares awarded under an annual incentive
scheme and shares awarded under a long-term incentive
scheme. Three elements of our executive remuneration
framework are performance-related and two are subject to a
three year deferral or performance period in order to encourage
executive directors to remain with the Company and align their
interests with those of shareholders. Executive directors are
also required to hold a minimum number of shares in the
Company within five years of their appointment.
The focus on performance has been further emphasised
by the introduction in 2013 of malus provisions within all the
Company’s senior share schemes. Under the terms of the
provisions, the Committee has discretion to reduce, cancel
or impose further conditions on unvested awards in
circumstances it considers appropriate, including for example,
a material misstatement of the Company’s audited results.
The Committee has reviewed the base salary levels for
executive directors in 2013 and agreed annual increases of
2% which were in line with the salary budget applying to the
broader employee population. Marc Bolland has, at his own
request, not received a salary increase since his appointment
in 2010. He again proposed not to receive any increase in
2013, which the Committee agreed.
With regard to bonus payments, the Committee carefully
considered performance during the year and the progress
made against our longer-term objectives and believes that the
bonus payments for executive directors are appropriate when
also reviewed within the context of a challenging year for the
business and wider retail sector. In addition, awards made
in 2010 under the Performance Share Plan, the Company’s
long-term incentive scheme, were assessed at the end of
the three year performance period. The threshold target was
not achieved and so all awards held by executive directors
will lapse.
The Committee has also reviewed the calibration of target
ranges for the Performance Share Plan to ensure they reflect
the Company’s focus over the next three years. As a result,
for awards granted in 2013, the EPS basis of measurement
is annualised growth in EPS. The target requires double digit
annual growth for maximum payout, which the Committee
believes would represent exceptional performance for
shareholders in the current environment.
The Committee considers that the existing senior remuneration
framework introduced in 2011 remains appropriate for the
current business priorities and external environment. Despite
another difficult trading year, the Committee believes significant
progress has been made towards the delivery of the Company’s
key strategic priorities and this is reflected in the level of
remuneration for executive directors in 2012/13.
Steven Holliday
Chairman of the Remuneration Committee