Marks and Spencer 2015 Annual Report Download - page 67

OUR PERFORMANCEFINANCIAL STATEMENTS GOVERNANCE OUR BUSINESS
65
ANNUAL REPORT AND FINANCIAL STATEMENTS 2015
ANNUAL BONUS SCHEME FOR 2015/16
The Annual Bonus Scheme has been
structured to drive profi tability and
individual performance with performance
being measured against Underlying Group
Profit Before Tax (PBT), business area profi t
and individual objectives. During the year
the Remuneration Committee undertook
a thorough review of the bonus scheme.
It concluded that a similar approach would
continue to remain appropriate with only
minor changes to the 2015/16 Scheme
being required to ensure that the Scheme
continues to drive behaviours and
performance needed in line with the
priorities for the future success of
the business.
Maximum bonus opportunity will remain
unchanged at 200% of salary. Up to 60% of
an award is payable for achieving stretching
one-year corporate fi nancial targets and
up to 40% of an award is measured against
individual performance.
The achievement of profi tability targets
remains essential to M&S’s success and so
30% of any bonus award will be dependent
upon achievement of Group PBT targets.
The remaining 30% of the corporate
element of the Scheme will be set against
free cash fl ow targets for the CEO and CFO
and against business unit profi tability
targets for the remaining executive
directors. Changes made to the Scheme
for 2015/16 provide for even greater
alignment between the remuneration
framework and the wider strategic priorities
of M&S. The inclusion of free cash fl ow for
the CEO and CFO recognises the increased
importance of cash generation in the
business post the period of heav y
transformative capital investment.
Individual performance will continue to be
measured independently of any financial
targets. Individual objectives will be based
on three strategic priorities specifi c to each
director’s business area. These measures are
set against quantifi able targets which the
Committee deems to be important in the
delivery of short and medium-term goals
which will also provide a robust foundation
for the long-term sustainable success of
the business. In setting the individual
objectives for the forthcoming year, the
Committee has been mindful of ensuring
an overarching balance with fi nancial
targets as well as customer and employee-
focused metrics.
No individual objective element of the
bonus can be earned unless a ‘threshold’
level of PBT has been achieved, subject to
the Committee’s overall assessment of the
Company’s performance during the period.
This maintains the important principle
that below a defined level of financial
performance, no bonus will be earned.
The table below shows further details of
the structure of this Scheme and provides
examples of the individual objectives which
each director will be measured against.
As with last year’s Scheme, the Committee
will judge overall performance against
our ecological, ethical and behavioural
achievements to ensure consistency with
M&S’s values. Success towards Plan A
targets and the M&S values which all
employees, including executive directors,
are required to uphold will underpin the
entire Scheme. Achievement against these
will be assessed by the Committee at the
end of the fi nancial year. The Committee,
inits absolute discretion may use its
judgement to adjust overall payments
accordingly. See Figure 14.
DEFERRED SHARE BONUS PLAN
(audited)
Currently 50% of any bonus award is
compulsorily deferred into nil-cost options/
conditional shares. These deferred awards
vest after three years subject to continued
employment as well as malus and, for
awards made from 2015/16 onwards,
clawback provisions. As no bonus was
payable last year, no deferred shares were
awarded during 2014/15.
FIGURE 14: ANNUAL BONUS SCHEME TARGETS 2015/16
EXECUTIVE DIRECTORS’ REMUNERATION CONTINUED
PROFITABILITY TARGETS INDIVIDUAL OBJECTIVES
GROUP
PBT
FREE
CASH
FLOW1
BUSINESS
UNIT
PROFIT
DIRECTOR %
bonus % bonus % bonus % bonus Examples of measures
Marc Bolland 30% 30% – 40% GM gross margin People
Patrick Bousquet-Chavanne 30% – 30% 40% Customer engagement
strategy
International LFL sales
John Dixon 30% – 30% 40% GM UK LFL sales GM4 programme
Steve Rowe 30% – 30% 40% Food UK sales Quality and innovation
ofFood proposition
Laura Wade-Gery 30% – 30% 40% New distribution centre
stability
Customer journey
Helen Weir 30% 30% – 40% Operating costs End-to-end supply chain
Plan A and cultural values underpin
1. Pre dividend and post returns.