Tesco 2014 Annual Report Download - page 44

Download and view the complete annual report

Please find page 44 of the 2014 Tesco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 147

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147

In this section
p41 Introduction from Stuart Chambers,
Chairman of the Remuneration Committee Subject to an
advisory vote at
the 2014 AGM
p42 Annual remuneration report
p56 Directors’ remuneration policy Subject to a
binding vote at
the 2014 AGM
Dear Shareholders
New remuneration reporting framework
The new remuneration reporting regulations came into force on
1 October 2013 and apply to Tesco for the 2013/14 financial year.
To reflect this, the Committee has restructured the Directors’
Remuneration Report for 2013/14 and split it into two parts.
The Policy Report will be submitted to shareholders for a binding
vote for the first time at the 2014 AGM and the policy will be
effective from that date. The Annual Remuneration Report will
also be submitted to shareholders for an advisory vote at the
same meeting. The Committee hopes that the new form of
report is clear and informative and would welcome feedback
from shareholders.
Incentive payouts for 2013/14
In 2013/14 we shifted our focus from addressing existing business
issues to driving our strategy for future growth. The progress we
have made to date in Building a Better Tesco has strengthened
our business’s foundations, positioning the Company to create
value for our shareholders. Our store refresh programme continues,
where we are updating our stores to make them more contemporary,
improving the shopping environment and making them more
compelling for our customers. We are now accelerating our growth
in new channels and investing in sharper prices, improved quality,
stronger ranges and better service. The area where change has been
most significant however is in the acceleration of the development
of our multichannel strategy, evolving our offering as the way
customers shop evolves.
Management have been working hard to deliver this business
transformation, making difficult decisions today to position Tesco
to be the leading retailer of tomorrow. This strategy is starting to
yield results: Group internet sales increased by 15% and we are
getting better feedback from customers and colleagues across
the Group.
Stuart Chambers
Chairman of the Remuneration Committee
Despite strong progress against strategic objectives during the year
and the exceptional effort management have put in to achieve this,
the bonus profit underpin was not met and therefore the Executive
Directors will not receive a bonus in respect of 2013/14.
Performance Share Plan awards granted in 2011 will lapse in July
2014 as challenging three-year EPS and ROCE targets were not met.
Reward changes for 2014/15
No changes are being made to our reward framework in 2014/15.
Board changes
Laurie McIlwee resigned as CFO and as an Executive Director
of Tesco PLC on 4 April 2014. Laurie remains an employee of
Tesco and, for a period of six months from 4 April 2014, will be
employed as CFO Emeritus performing transition activities and
supporting handover with colleagues as we recruit a replacement
CFO. Details of Laurie’s leaving arrangements are set out on
page 51.
Review of remuneration arrangements for 2015/16
and beyond
The world of retail is evolving rapidly as customers embrace
technology to help them shop in different ways, and Tesco is
changing to make the most of the opportunities this presents.
To ensure that we continue to operate a remuneration framework
which reflects this rapidly changing market, is fully aligned with our
strategy and provides competitive rewards to management for the
creation of shareholder value, the Committee plans to undertake
a review of executive remuneration during 2014/15. We will consult
with shareholders in relation to any changes we would propose to
make, and it is anticipated that we will bring a revised remuneration
approach to shareholders at the 2015 AGM.
Stuart Chambers
Chairman of the Remuneration Committee
Other information
Governance Financial statementsStrategic report
Tesco PLC Annual Report and Financial Statements 2014 41
Directors’ remuneration report
Remuneration Committee Chairman’s introduction