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66
MARKS AND SPENCER GROUP PLC
DIRECTORS’ REPORT: GOVERNANCE
“Lorem ipsum dolor sit am
consectetur adipist enim ad m
culpa qui o cia deserunt mollit
est laborum.”
The Performance Share Plan (PSP) is the
primary long-term incentive for executive
directors and senior managers.
The Committee believes that long-term
share awards help retain and reward
executives for the delivery of long-term
business goals.
Following the remuneration review
undertaken during the year, the Committee
determined that the current Plan supports
the delivery of the long-term business
strategy. Minor amendments to
the per formance measures and targets
however were felt necessary to better align
with the delivery of the operating plan.
These amendments will apply for awards
made in 2015/16.
As the current Plan was approved by
shareholders ten years ago, approval for a
replacement Plan is being sought at the 2015
AGM. The key rules of the Plan are set out in
the separate Notice of Meeting with further
det ai ls provid ed on p age 67 of thi s re po rt.
Proposed changes under the replacement
PSP are in line with the remuneration policy
approved by sha rehol de rs o n 8 J uly 2014
with the addition of clawback provisions as
outlined on page 60, the introduction of
which does not require a change to the
remuneration policy.
PSP AWARDS MADE IN 2014/15 (audited)
In June 2014, executive directors were
awarded nil-cost options/conditional shares
of 250% of sal ary. These awards vest subject
to performance measured against EPS,
ROCE and Revenue, each measured
independently. Performance is measured
over the three-year period to the end of the
2016/17 financial year. To the extent to which
performance is met, awards will vest on
23 June 2017. Further details of PSP awards
made in 2014/15 are detailed below.
See Figure 15.
REMUNERATION REPORT
CONTINUED
FIGURE 15: PSP AWARDS MADE IN 2014/15
Basis of award
Face value of award1
£000 End of performance period2
Marc Bolland 250% of salary 2,437 01/04/2017
Patrick Bousquet-Chavanne 250% of salary 1,312 01/04/2017
John Dixon 250% of salary 1,500 01/04/2017
Steve Rowe 250% of salary 1,312 01/04/2017
Laura Wade-Gery 250% of salary 1,380 01/04/2017
1. The face v alue of awards is ca l cu l ated as the number of ni l- cost options/condition a l shares awa rde d multipl ied by the aver a ge mid-market share price on the fi ve dealing days prior to the
date of grant. For this year, the share price was calculated as being £4.37, being the average share price between 16 June 2014 and 20 June 2014. Further details of these awards are shown
in the table on pages 70 and 71.
2. For threshold performance, 20% of the shares awarded will vest.
FIGURE 16: PSP AWARDS VESTING IN 2014/15 (audited)
For directors in receipt of PSP awards
granted in 2012, the awards will vest on
1 June 2015, (5December 2015 for
Patrick Bousquet-Chavanne) based on
three-year performance over the period
to 28March2015. Performance has been
assessed and it has been determined
that 4.7% of the award will vest.
Details of performance against the specific
targets set are set out in the table below.
Performance target
Cumulative
EPS2ROCE (%)
Revenue (£ 2014/15)
UK3Multi-channel4International5
50% of award 20% of award 10% of award 10% of award 10% of award Total vesting6
Threshold performance targets1110p 15.0% £8,900m £800m £1,300m
Maximum performance targets1130p 18.5% £9,600m £1,000m £1,700m
Actual performance achieved 99.7p 15.2% £8,470m £776m £1,065m
Percentage of maximum achieved 0.0% 4.7% 0.0% 0.0% 0.0% 4.7%
1. 20% of an award vests for threshold performance with full vesting for achieving or exceeding maximum performance. Vesting is a straight line between these two points.
2. Actual performance achieved has been re-stated to Pre-IAS 19 values, to allow a like-for-like measurement against targets.
3. Excluding Multi-channel.
4. Net of VAT/gross of returns.
5. Excluding Multi-channel/including Republic of Ireland.
6. Details of the number of shares awarded to each director in 2012 are shown in the table on pages 70 and 71. As described above, 4.7% of these awards will vest.
The estimated value of these awards, including the dividend equivalents, are set out in the single fi g u re table on page 62.
PERFORMANCE SHARE PLAN
EXECUTIVE DIRECTORS’ REMUNERATION CONTINUED