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64
MARKS AND SPENCER GROUP PLC
DIRECTORS’ REPORT: GOVERNANCE
REMUNERATION REPORT
CONTINUED
ANNUAL BONUS SCHEME
ANNUAL BONUS SCHEME FOR 2014/15 (audited)
For 2014/15, directors had the opportunity
to earn an award of up to 200% of salary, with
half of any award being payable in deferred
shares. Performance measures used to
determine the entitlement to any payment
were set against challenging profi tability
targets and individual objectives.
Profi tability targets formed 60% of any
bonus award with the remaining 40%
payable for the achievement of stretching
measures relevant to each director’s
individual business accountabilities. For
those executive directors with business
unit responsibility, profi tability measures
were equally split between Group PBT
and profi t measures for their business
unit. As a result of his additional
International responsibilities, from July
2014, Patrick Bousquet-Chavanne’s
corporate element was calibrated to include
International operating profi t from this time.
For Marc Bolland, profi tability was wholly
measured against Group achievement. Each
director also had three individual objectives,
together accounting for 40% of the total
bonus. These objectives were set against
their key areas of focus and accountability
which refl ect the primary drivers of short
and medium-term strategic success of the
Company. See Figure 12.
Plan A (our environmental and ethical plan)
is an integral driver of the way we do
business; success against Plan A targets
underpinned the entire 2014/15 bonus
scheme. The Committee assessed
performance for each executive director
against all corporate and individual
measures. The Committee was also satisfi ed
that each director continued to ensure that
Plan A remained a major focus of the ways
of working at M&S and that the subsequent
performance supported this.
See Plan A Report for more detail.
M&S is committed to transparent
remuneration reporting within the context
of operating in a highly competitive
market. As disclosed in the 2013/14 Report,
and following feedback from shareholders
after the publication of last year’s report,
the Committee has reviewed its disclosure
regarding annual bonus targets. The
Committee will continue to assess the
extent to which specifi c targets are
commercially sensitive, determining to
disclose wherever possible.
Figure 13 below illustrates each director’s
achievement against corporate profi tability
and individual targets for the 2014/15
Scheme. As described in last year’s report,
in order to ensure the a ordability of the
Scheme, no bonus payment may be made
without fi rst achieving a threshold level of
PBT. Underlying PBT outturn for the fi nancial
year was £661.2m which was above the
target set to trigger payments under both
elements of the Scheme. As a result of
performance, directors’ payments were
between 18% and 62% of maximum bonus
opportunity. Business unit profi tability
targets, not being disclosed elsewhere
in the Annual Report, are deemed too
commercially sensitive to disclose. An
indication of achievement against the
respective targets is shown instead in
Figure 13 below.
Performance assessment key Below Threshold Threshold > Target Target > Stretch Stretch or above
FIGURE 13: ANNUAL BONUS SCHEME 2014/15
EXECUTIVE DIRECTORS’ REMUNERATION CONTINUED
FIGURE 12: EXAMPLES OF INDIVIDUAL OBJECTIVES 2014/15
Marc Bolland Organisational
development
M&S.com
performance
Patrick Bousquet-Chavanne New platform
publishing house
International Lingerie
& Beauty stores
John Dixon GM sales GM gross margin
Steve Rowe Food sales Food proposition
development
Laura Wade-Gery M&S.com market share New distribution
centre service delivery
PROFITABILITY TARGETS INDIVIDUAL OBJECTIVES TOTAL PAYMENT
GROUP PBT BUSINESS UNIT PROFIT
Performance Achievement
%
salary £000
Target & performance Achievement Performance Achievement
DIRECTOR Min Max Actual %
bonus %
salary %
bonus %
salary %
bonus %
salary
Marc Bolland £650m £732m £661m 12. 4% 24.8% – – – 18.2% 36.3% 61.1% 596
Patrick Bousquet-Chavanne £650m £732m £661m 7.7% 15.4% 0.0% 0.0% 13.4% 26 .9% 42.3% 222
John Dixon £650m £732m £661m 6.2% 12.4% 1.9% 3.8% 10.0% 20.0% 36.2% 217
Steve Rowe £650m £732m £661m 6.2% 12.4% 30.0% 60.0% 26.0% 52.0% 124.4% 653
Laura Wade-Gery £650m £732m £661m 6.2% 12.4% 0.0% 0.0% 13.6% 27.3% 39.7% 219
Plan A underpin targeted objectives