Tesco 2014 Annual Report Download - page 62

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CEO
100%
£1.6m
35% 22%
31%
34%
37%
£4.6m
41%
£7.7m
Fixed pay
Threshold Target Maximum
8
7
6
5
4
3
2
1
0
Annual bonus Long-term incentive
(£million)
Minimum • No bonus payout
• No vesting under the Performance Share Plan
On target performance • 50% annual bonus payout
• 50% vesting under the Performance Share Plan
Maximum performance • 100% annual bonus payout
• 100% Performance Share Plan vesting
No share price growth or the payment of dividend equivalents
has been assumed. Potential benefits under all-employee share
schemes have not been included.
Fixed pay is based on current values as set out in the table below.
Salary Benefits Pension Total fixed pay
From 1 July
2013
Value for
2013/14
Value for
2013/14
CEO
(Philip
Clarke)
£1,145k £107k £391k £1,643k
Remuneration outcomes in different performance
scenarios
Tesco remuneration arrangements have been designed to ensure
that a significant proportion of pay is dependent on the delivery of
short-term and long-term goals that are aligned with our short-term
and long-term strategic objectives and the creation of shareholder
value. The Committee considers the level of remuneration that
may payout in different performance scenarios to ensure that this
is considered appropriate in the context of the performance
delivered and the value added for shareholders. The charts below
show hypothetical values of the remuneration package for Executive
Directors under three assumed performance scenarios:
Maximum award opportunities (% of salary)
CEO
Annual bonus 250%
PSP 275%
Remuneration policy for new hires
The Committee would generally seek to align the remuneration
package offered to new executives with our remuneration policy
outlined in the table above. When determining appropriate
remuneration arrangements the Committee will take into account
all relevant factors including the experience and calibre of the
candidate, the candidate’s current reward opportunity, and the
jurisdiction the candidate was recruited from.
In respect of an Executive Director’s appointment the Committee
may offer variable remuneration arrangements that it considers
appropriate and necessary to recruit and retain the individual
(subject to the maximum variable limit outlined below).
Variable remuneration awarded in respect of an Executive Director’s
appointment shall be limited to the current aggregate annual and
PSP award policy of 600% of base salary. This limit includes awards
granted under the normal policy outlined above but excluding any
awards made to compensate the Executive Director for awards
forfeited from their previous employer.
The Committee may make awards when appointing an Executive
Director to ‘buy out’ remuneration terms forfeited on leaving a
previous employer. In doing so the Committee will take account
of relevant factors including any performance conditions attached
to these awards, the form in which they were granted (e.g. cash
or shares) and the time over which they would have vested.
The Committee’s key principle is that generally buy-out awards
will be made on a comparable basis to those forfeited.
To facilitate buy-out awards outlined above, in the event of
recruitment, the Committee may grant awards to a new Executive
Director under the Listing Rule 9.4.2 which allows for the granting
of awards, to facilitate, in unusual circumstances, the recruitment
of an Executive Director, or under other relevant company
incentive plans.
In the event that an internal candidate was promoted to the Board
legacy terms and conditions would normally be honoured, including
pension entitlements and any outstanding incentive awards.
In the event of the appointment of a new Chairman or Non-executive
Director remuneration arrangements will normally reflect the policy
outlined on page 61 for Chairmen and Non-executive Directors.
Executive Director service contracts and policy on
Executive Directors leaving Tesco
When determining leaving arrangements for an Executive Director
the Committee takes into account any contractual agreements
including the provisions of any incentive arrangements, typical
market practice and the performance and conduct of the individual.
The following table summarises our policy in relation to Executive
Director service contracts and payments in the event of loss of office.
Other information
Governance Financial statementsStrategic report
Tesco PLC Annual Report and Financial Statements 2014 59