Tesco 2012 Annual Report Download - page 73

Share ownership guidelines
Guidelines
Four times base salary for
theCEO
Three times base salary for
other Executive Directors
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with interests of shareholders
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end of typical market practice for
similar sized companies
The Remuneration Committee believes that a significant shareholding
by Executive Directors aligns their interests with shareholders and
demonstrates their ongoing commitment to the business.
Policy for calculating shareholding
 Shares included – Shares held in plans which are not subject
to forfeiture will be included (on a net basis) for the purposes of
calculating Executive Directors’ shareholdings, as will shares held
by an executive’s spouse. Vested but unexercised market value
share options are not included in the calculation.
 Five years for new appointees to build shareholdings – New
appointees will typically be expected to achieve this minimum level
ofshareholding within five years of appointment.
 PSP participation may be subject to maintaining holding – Full
participation in the long-term Performance Share Plan will generally
be conditional upon maintaining the minimum shareholding.
 Holding of 50% of vesting awards until requirement met – Most
executives already meet the shareholding requirement but those who
do not will generally be required to hold, and not dispose of, at least
50% of the net number of shares which vest under incentive
arrangements until they meet this requirement.
Shares held by Executive Directors at 25 February 2012
The chart below illustrates the value of Executive Directors’
shareholdings, based on the three-month average share price to
25February 2012 of 359p per share compared to the shareholding
guideline. The shareholding guideline has been shown based on the full
requirement of four times salary for the CEO and three times salary for
other directors. When the shareholding guidelines were increased last
year, Executives were given a period of five years to meet this enhanced
requirement and therefore should meet the requirement by June 2016.
£ million
Ordinary shares
EIP shares
Richard Brasher
Philip Clarke
Andrew Higginson
Tim Mason
Laurie Mcllwee
Lucy Neville-Rolfe
David Potts
Shareholding requirement
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Share dealing policy
Tesco has a share dealing policy in place for Executive Directors and for
members of the Executive Committee. This policy prevents Executive
Directors and Executive Committee members and their connected
persons dealing in shares at times when this would be prohibited by
theModel Code. At all other times, Executive Directors and Executive
Committee members must seek advance clearance from the Chairman
before dealing in shares on their own behalf or in respect of their
connected persons.
Service agreements
Key provisions
Provision Current service contracts Policy for new appointments
Notice period  '(cedj^iÊdej_Y[Xoj^[9ecfWdoWdZi_ncedj^iÊdej_Y[Xoj^[;n[Ykj_l[$
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period to 24 months for the initial period of appointment and for the
notice period to then revert to 12 months. No Executive currently has
anotice period of greater than 12 months.
Expiry date  Hebb_d]i[hl_Y[YedjhWYj$
 De\_n[Z[nf_hoZWj[$
Termination payments
(Does not apply if notice as
per the service agreement is
provided or for termination
by reason of resignation or
unacceptable performance
or conduct)
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and the average annual bonus paid for the last two years.
 Termination payments
inlieu of notice based on
basic salary and
benefitsonly.
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ininstalments to facilitate this (other than for long serving Executives).
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payment will be reduced accordingly.
The Committee has taken into account the feedback received from shareholders and shareholder representative bodies regarding best practice in
relation to the inclusion of bonuses in Directors’ termination arrangements. To ensure full alignment with best practice, the Committee has decided
that the policy for new executives joining the Board will be to restrict termination payments in lieu of notice to a sum based on salary and benefits
only. This was reflected in the new service contract for Philip Clarke on his appointment to CEO.
The service agreements are available to shareholders to view on request from the Company Secretary.
Tesco PLC Annual Report and Financial Statements 2012 69
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