Tesco 2015 Annual Report Download - page 69

Provision Current service agreements
Notice period • 12 months’ notice by the Company and six months’ notice by the Executive Director
• For new appointments, the Committee reserves the right to vary this period to 24 months for the initial period
of appointment and for the notice period to then revert to 12 months after the initial 12 months of employment
Expiry date • Dave Lewis and Alan Stewart entered into service agreements with Tesco PLC on 19 July 2014 and 9 July 2014
respectively
• These are rolling service agreements with no fixed expiry date
Termination payments (does not apply if notice is provided,
as per the service agreement, or for termination by reason
of resignation or unacceptable performance or conduct)
• If the Company terminates a Director’s agreement without full notice or it is terminated by an Executive Director
in response to a serious contractual breach by the Company then the Executive has the right to a termination
payment to reflect the unexpired term of the notice
• Any termination payment in lieu of notice will be based on base salary and benefits only
• Benefits comprise car-related benefits, healthcare and health insurance and staff discount
• No account will be taken of pension when determining termination payments
• Termination payments will normally be subject to mitigation and paid in instalments to facilitate this
(other than for long-serving Executive Directors or in the event of a change of control of the Company
where the termination payment is made in full on departure)
• Where an Executive Director has less than eight years of continuous service then any termination payment
will normally be made in 13 equal four-weekly payments. Where an Executive Director has more than 15 years’
continuous service then the termination payment is made in full on departure. For periods of continuous service
between eight years and 15 years, termination payments will normally be split between initial payments and
phased payments
• Payment in full on termination on change of control arises if the Company terminates or gives notice within
12 months after a change of control
• Where an Executive Director retires from the business they will not normally receive a termination payment
• The Company’s obligation to continue making phased termination payments will cease when the Executive
Director commences alternative employment
• In the event of termination, an Executive Director may have an entitlement to compensation in respect
of statutory rights under employment protection legislation in the UK and potentially elsewhere
Other information • The Committee may determine that an Executive Director may remain eligible to receive a pro-rata bonus for
the financial year in respect of the period they remained in employment. The Committee will determine the level
of bonus taking into account time in employment and performance. Where an Executive leaves by reason of
death, disability or ill-health, they, or in the case of death their personal representatives, are entitled to a
pro-rata performance-based bonus for the year of leaving
• In the event that an Executive Director retires from the Company, they shall be entitled to retain their private
medical cover and annual medical examinations in retirement. Any Executive Directors appointed from
24February 2013 will not be entitled to this benefit
• Under the employment agreements, while in employment Executive Directors are also entitled to sick pay,
paid holiday, maternity and paternity leave
• Where appropriate, the Company will meet an Executive Director’s reasonable legal fees in connection with
the termination of his employment and/or the reasonable cost of outplacement services
The service agreements are available to shareholders to view at the Company’s registered office.
Share plan rules – leaver provisions
The treatment of outstanding share awards in the event that an Executive Director leaves is governed by the relevant share plan rules.
The following table summarises leaver provisions under the executive share plans. In specific circumstances, the Committee may exercise
its discretion to modify the policy outlined to the extent that the rules of the share plan allow such discretion. The Committee will not exercise
discretion to allow awards to vest where the participant is dismissed for gross misconduct.
Death Good leavers as determined by the Committee
in accordance with the plan rules
Leavers in other circumstances
(other than summary dismissal)
‘Good leavers’ are: injury, ill-health or disability, redundancy,
retirement, the entity which employs the Executive ceasing to be
part of the Group or any other reason determined by the Committee
taking into account the circumstances of departure and performance
Executive
Incentive
Plan 2014
(deferred
bonus shares)
• Unvested awards vest on death.
• Normally 12 months to exercise
(if options)
• Unvested awards vest at cessation (Committee discretion
to defer vesting to normal vesting date)
• Normally 12 months to exercise (if options)
• Awards normally lapse
Performance
Share Plan 2011
• Unvested awards normally vest
on death. The level of vesting is
determined by the Committee taking
into account performance and the time
elapsed between grant and death
• If awards are in the form of options,
the personal representatives of the
participant will normally have
12months from the date of death
to exercise or a longer period as
determined by the Committee
of up to 10 years from grant
• Awards granted in the 12 months prior to leaving normally lapse
(where more than one award has been made in the 12-month
period in respect of different financial years the most recent
award will lapse)
• If a participant leaves holding three unvested awards (in respect
of different financial years), the most recent granted award shall
normally lapse
• Other unvested awards normally continue until the normal vesting
date. The Committee will determine the level of vesting taking into
account performance
• If awards are in the form of options, participants normally have
12 months from vesting (or leaving for vested options) to exercise
or a longer period determined by the Committee of up to 10 years
from grant
• Unvested awards normally lapse unless
the Committee determines otherwise
• If awards are in the form of options,
participants normally have 12 months
from cessation to exercise vested options
or a longer period as determined by the
Committee of up to 10 years from grant
All-employee
share plans
• Leaver provisions under all-employee share plans are as determined in accordance with HMRC approved provisions
67Tesco PLC Annual Report and Financial Statements 2015
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