Marks and Spencer 2013 Annual Report Download - page 62

Governance Marks and Spencer Group plc Annual report and financial statements 2013 60
Remuneration report continued
What are the details of fixed remuneration?
Executive directors
Salary
In reviewing executive director salary levels for 2013, the
Committee took into account Company performance in 2012/13,
external market data and the salary review principles applied to
the rest of the organisation to ensure a consistent approach.
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.
John Dixon and Steve Rowe received salary increases on
appointment to their new roles in October 2012, John’s to
reflect the additional scope and responsibility and Steve’s to
reflect his promotion to executive director. Neither received a
further increase in January 2013. Steven Sharp, Alan Stewart
and Laura Wade-Gery received increases of 2% in January
2013 in line with the Company’s broader salary review policy.
The current annual salaries for executive directors are shown in
the Contract terms table on page 65. The next planned salary
review for all executive directors is in January 2014.
Benefits
With the exception of the CEO, executive directors receive a
25% salary supplement in lieu of membership of the Group
Pension Scheme. The CEO receives a salary supplement of
30%. Executive directors also receive life assurance provided
through a separate policy. In addition, each executive director
receives a car or car cash allowance and is offered the benefit
of a driver. Executive directors also receive employee product
discount in line with all other employees. The value of the
benefits and allowances for each director is shown within the
Directors’ emoluments table on page 68.
Chairman
The fee for the Chairman is determined by the Remuneration
Committee and reflects the commitment, demands and
responsibility of the role. The fee is paid monthly in cash
inclusive of all committee roles and is not performance-related
or pensionable. No increase has been awarded since the
Chairman’s appointment in 2010 and following the 2013 fee
review it was decided not to increase the fee at this time. The
Chairman is entitled to the use of a car and driver provided by
the Company. The Chairman also receives employee product
discount in line with other employees.
Non-executive directors
The fees for non-executive directors are determined by the
Chairman and executive directors. Fees are set at an
appropriate level to attract and retain individuals with the
necessary experience, knowledge and skills to ensure the
Board is able to carry out its duties effectively. The fees
recognise the scope of the role and time commitment required.
Fees are paid monthly in cash and are not performance-related
or pensionable. Non-executive directors receive employee
product discount in line with other employees. No other
benefits are provided.
Non-executive director fees were revised in 2010 and no further
increases were awarded in 2011 or 2012. Following the 2013
fee review it was decided not to increase the current fees.
The current fee structure is as follows:
Basic annual fee £70,0001
Committee Chairman £15,0002
Senior Independent Director £100,0001
1 Inclusive of all committee memberships.
2 Audit and Remuneration Committee only and in addition to the basic annual fee.
The annual fees for non-executive directors are shown in the
Contract terms table on page 65. The fees paid during the year
to each non-executive director are shown in the Directors’
emoluments table on page 68.
What are the details of the short-term and long-term
incentive schemes (variable remuneration)?
Annual Bonus Scheme: short-term incentive
Deferred Share Bonus Plan: long-term incentive
Structure for 2013/14
The Annual Bonus Scheme is reviewed annually and is
structured to drive profitability and individual performance
across the organisation. The bonus potential for executive
directors is up to 200% of salary for ‘maximum’ performance.
There is compulsory deferral into shares for all senior
managers. Shares vest after three years subject to continued
employment. For executive directors, the deferral into Company
shares equates to 50% of their bonus amount.
In line with best practice, malus provisions have been
introduced to all the Company’s senior share schemes; the
Deferred Share Bonus Plan, Performance Share Plan and
Executive Share Option Scheme. The provisions will take effect
for all awards granted from 2013 onwards. Under the terms of
the provisions, the Committee will have the discretion to
reduce, cancel or impose further conditions on awards in
circumstances it considers appropriate. Such circumstances
include, but are not limited to, a material misstatement of the
Company’s audited results. Further details of the Deferred
Share Bonus Plan can be found in note 13 to the financial
statements on page 96 of the Annual Report.
The Annual Bonus Scheme performance measures are
unchanged for 2013/14. The primary performance measure is
Underlying Group Profit Before Tax (Group PBT). 60% of the
annual bonus is determined by performance against
demanding profit targets set by the Committee at the start of
the year. 40% of the annual bonus is determined by
performance against individual objectives independent of
Group PBT.
The Committee believes this approach provides an appropriate
focus on annual profit targets whilst also ensuring that directors
focus on driving business changes that support the Company’s
medium-term strategy.
Group PBT targets
Group PBT targets have again been set taking into
consideration the Company’s own internal operating plan,
external forecasts for the retail sector and analysts’ profit
forecasts. This means that there will need to be significant
outperformance of the operating plan in order to achieve the
highest payment levels.