Marks and Spencer 2015 Annual Report Download - page 60

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MARKS AND SPENCER GROUP PLC
DIRECTORS’ REPORT: GOVERNANCE
REMUNERATION POLICY
CONTINUED
The Company’s policy toward exit payments
allows for a variety of circumstances
whereby a director may leave the business.
In some cases, where deemed suitable, the
Committee reserves the right to determine
exit payments, where the director leaves
by mutual agreement. In all circumstances,
the Committee does not intend to ‘reward
failure’ and will make decisions based on the
individual circumstances. The Committee’s
objective is that any such agreements are
determined on an individual basis and are
in the best interests of the Company and
shareholders at that time, and reflect the
director’s contractual and other legal rights.
CORPORATE EVENTS
In the event of a change of control or
winding-up of the Company, unvested share
awards will normally vest on the date that
the Board notifies participants of such an
event. The number of shares which may
vest under awards in these circumstances
will be subject to any relevant performance
conditions and, in the case of PSP awards,
unless the Committee determines
otherwise, time prorating.
In the event of a demerger, special dividend
or other event which, in the opinion of the
Committee a ects the price of shares, the
Committee may allow some or all of an
award to vest.
MALUS PROVISIONS
All share awards granted in 2013 onwards
are subject to malus provisions. These
provisions allow the Committee, in its
absolute discretion, to determine at any
time prior to the vesting of an award to
reduce the number of shares, cancel an
award or impose further conditions on
an award in circumstances which the
Committee considers such action to be
appropriate. Such circumstances may
include, but not be limited to, a material
misstatement of the Company’s
audited results.
CONSIDERATION OF WIDER
WORKFORCE PAY
The Committee monitors and reviews the
e ectiveness of the senior remuneration
policy and has regard to its impact and
compatibility with remuneration policies
in the wider workforce.
The Committee is provided throughout
the year with information detailing pay in
the wider workforce which gives additional
context for the Committee to make
informed decisions. The Director of
Human Resources advises the Committee
of the approach which will be adopted
with the forthcoming UK pay review and
the Committee then considers the
executive directors’ pay review in line
with these arrangements.
The Director of Human Resources consults
on all executive director bonus objectives
and advises the Committee on how, and the
extent to which, these may be cascaded
throughout the Company. In approving
the budget for the annual bonus, the
Committee reviews all bonus costs for
the Company against the operating plan.
The Committee also reviews and approves
any PSP awards made to executive directors
and directors below the Board prior to
their grant.
The Committee also receives updates on a
variety of employee engagement initiatives
which form part of our normal employee
engagement practices. The annual ‘Your
Say’ employee sur vey asks employees
about the fairness and reasonableness of
employee pay and benefits. Any comments
made through this survey or through
our network of elected employee
representatives via our Business
Involvement Groups are taken into account.
The Head of Reward & Global Mobility
annually provides these employee
representatives with an explanation of the
Company’s reward principles and director
pay arrangements during the year, and is
available to answer questions at this time.
TERMINATION
POLICY
Salary, benefits
and pension
benefits
Annual Bonus
Scheme
Long-term
incentive
awards
Repatriation
Legal
expenses and
outplacement
Payment will be made up to the termination date in line with relevant contr actu al notice periods.
There is no contractual entitlement to annual bonus. Should a director be under notice or not in active service at either the
relevant year end or on the date of payment, awards (including any outstanding unvested deferred bonus shares) may lapse.
The Committee may use its discretion as described below to make a bonus award, which is normally prorated for time and based
on performance assessed at the end of the bonus period.
Where a director ceases to be an officer or employee of the Group before the end of the relevant period, the treatment of outstanding
awards is deter mine d in accordance with the pl an ru les.
In some circumstances, where a director leaves due to retirement, injury, ill-health, death or the sale of the director’s employing
company or business out of the Group, or any other reason at the discretion of the Committee and in accordance with the plan rules,
DSBP awards normally vest in full on cessation; PSP and ESOS awa rds which have been held for at least 12 months normally vest
when the level of performance has been assessed and agreed at the end of the three-year performance period. The Committee
may determine these awards vest upon cessation as permitted in the plan rules. In either circumstance, any relevant performance
conditions would still apply to the PSP and ESOS awards and, unless the Committee determines otherwise, would be time prorated.
Where a director has been recruited to the Company from overseas, the Company may pay for repatriation.
The Company may reimburse for reasonable legal fees in the event a director leaves by mutual consent. It may also pay for
professional outplacement services in these circumstances.
FIGURE 4: KEY PROVISIONS UPON CONTRACT TERMINATION
EXECUTIVE DIRECTORS’ REMUNERATION POLICY CONTINUED
Element