Marks and Spencer 2013 Annual Report Download - page 60

Governance Marks and Spencer Group plc Annual report and financial statements 2013 58
Remuneration report continued
Senior remuneration framework
What are the key elements of remuneration for executive directors?
The table below summarises the key remuneration elements for executive directors:
Fixed remuneration 2013/14 policy
Base pay Reviewed against:
–salary levels in appropriate comparator companies e.g. major retailers; FTSE 25 – 75
–Company performance, market conditions and economic climate
–role, responsibility and performance of the individual director
–level of pay awards in the rest of the business
Benefits – including pension salary
supplement; life assurance; car/car
allowance; employee discount
– provided on a market-competitive basis
– aligned to the remuneration framework for all employees
Variable remuneration 2013/14 policy
Annual Bonus Scheme –Group PBT with an individual element linked to delivery of key strategic objectives
–stretching targets to achieve maximum payment
– drives profitability and strategic change across the organisation
– aligned to the bonus structure for all employees
– aligned to shareholder interests through annual financial performance and delivery of
business strategy
Deferred Share Bonus Plan –compulsory part-deferral of annual bonus into shares
–shares vest after three years subject to continued employment
–links individual reward with long-term Company performance
–aligned to shareholder interests through long-term financial performance and delivery of
business strategy
–malus provision including material misstatement introduced for 2013/14
Performance Share Plan –primary long-term incentive plan
–targets based on annualised Earnings Per Share (EPS) growth, Return on Capital Employed
(ROCE) and revenue growth across the UK, International and Multi-channel businesses
–links individual reward with long-term Company performance
–aligned to shareholder interests through long-term financial performance and delivery of
business strategy
–malus provision including material misstatement introduced for 2013/14
How is the senior remuneration framework aligned to
Company strategy?
A comprehensive review of the senior remuneration framework
was carried out in 2010/11 to ensure that it was aligned to the
Company strategy. The Committee actively engaged with
shareholders and continues to consult regularly on the broader
remuneration debate.
The Committee reviewed this framework in 2013 and
considered the existing incentive arrangements in the context
of both the business strategy and current external guidelines
for executive remuneration. Following this review, the
Committee concluded that the current framework continues to
ensure that the Company is able to attract and retain leaders
who are focused and motivated to deliver the business
priorities and remains aligned to shareholder interests.
The Committee reviews the total remuneration of each
executive director against that of executives from comparator
companies to ensure that total remuneration levels are
competitive. The balance between fixed and variable
remuneration elements is carefully considered.
Incentive plans take account of risk and drive behaviours in line
with the Company’s high ethical standards. All executive
directors and senior managers have individual objectives
aligned to the business strategy, operating plan and Plan A
– the Company’s environmental and ethical plan.
The Committee also considers a range of internal factors,
including the remuneration policy and arrangements
throughout the rest of the organisation. The remuneration
framework for executive directors is aligned to that of senior
managers, with the same short-term and long-term incentive
arrangements including performance measures, other than the
size of awards and maximum potentials.