Marks and Spencer 2015 Annual Report Download - page 57

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OUR PERFORMANCEFINANCIAL STATEMENTS GOVERNANCE OUR BUSINESS
55
ANNUAL REPORT AND FINANCIAL STATEMENTS 2015
Pension benefits
To attract and retain
high calibre executives
through a commitment
to responsible, secure
retirement funding in line
with our Company values.
Annual Bonus Scheme including Deferred
Share Bonus Plan (DSBP)
To drive annual profitability, strategic change and individual
performance in line with our business plan.
To recognise and reward individual contributions to the way
we do business.
The deferral into shares provides alignment with shareholders’
long-term interests following the successful delivery of
short-term targets.
Performance Share Plan
(PSP)
Measured against the key financial drivers
of our business pl an to deliver sustainable
value creation.
To encourage long-term shareholding to
retain directors, and provide greater alignment
with shareholders’ interests.
> Directors may participate
in the Your M&S
Pension Saving Plan (a
defined contribution
arrangement) or receive
a c ash supplement in l ieu
of pension contributions
into this scheme.
> Directors who are
members of the Marks
& Spencer UK Pension
Scheme (a defined
benefit arrangement,
closed to new entrants)
will accrue benefits
under that scheme.
> Directors are eligible to participate in this non-contractual,
discretionary Scheme.
> Payments are made subject to the satisfaction of predetermined
targets set at the start of the year, as approved by the Committee.
> Not less than 50% of any bonus earned is paid in deferred shares
under the DSBP, with the remainder payable in cash.
> Deferred shares vest after a period of three years subject to
continued service, but no further performance conditions.
> Malus provisions, good leaver and change of control provisions
apply to the deferred shares (see page 58).
> The value of any dividends during the deferred period will be
payable (see the explanatory notes on page 56).
> The Committee retains the right to exercise discretion, both
upwards and downwards, to ensure that the level of award payable
is appropriate and fair in the context of the director’s individual
performance and the Company’s overall performance. Where
exercised, the rationale for this discretion will be fully disclosed to
shareholders in the subsequent Annual Report.
> All employees are eligible to participate in a bonus scheme
measured against Group financial/local targets and/or individual
performance. For the most senior managers, part of the bonus
earned is paid in deferred shares under the DSBP.
> The Company’s principal long-term incentive
scheme, first approved by shareholders
in 2005.
> Directors are eligible to participate in this
non-contractual, discretionary Plan.
> Directors may receive an annual award
which vests after three years subject to
predetermined performance conditions.
> Malus provisions, good leaver and change of
control provisions apply (see page 58).
> The value of any dividends during the vesting
period will be payable (see the explanatory
notes on page 56).
> A significant proportion of the most senior
managers may be invited to participate in
the PSP, on similar terms as the executive
directors.
> A maximum of 25% of
salary for executive
directors or 30% of salary
for the CEO.
> A maximum annual potential of up to 200% of salary. > The maximum value of shares (at grant) which
can be made under an award to an individual
in respect of a fi nancial year is 30 0% of sal ar y.
> Performance is measured over a three-year
period against a balanced scorecard of
fi nancial measures which currently include
Revenue, Earnings Per Share (EPS) and Return
on Capital Employed (ROCE) chosen as those
measures which support and drive top-line
and bottom-line performance in line with
business strategy.
> The measures are currently weighted
towards EPS.
> The threshold level of vesting is 20% of the
maximum.
> For performance between threshold and
maximum, awards vest on a straight-line
basis.
N/A > Quantifi able one-year performance measures and targets are
set by the Committee around fi nancial and individual objectives
linked with the sustainable delivery of our business plan.
> Financial performance measures comprise at least 50% of awards
and may include, but not be limited to, Underlying Group Profi t
Before Tax (PBT).
> Typically, no payment for individual objectives can be earned
unless a ‘threshold’ level of PBT has been achieved. This threshold
level is set by the Committee taking into account the previous
year’s performance and the business operating plan for the
current year.
> For threshold performance, up to 40% of maximum bonus
potential may be payable for the achievement of individual
objectives.