Source: http://annualreport2013.marksandspencer.com/governance/remuneration-report/unaudited/index.html
Timestamp: 2018-05-22 22:57:56
Document Index: 505247067

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Unaudited Remuneration | Marks & Spencer Annual Report 2013
What is the remit of the Remuneration Committee?
The role of the Remuneration Committee is to make recommendations regarding the senior remuneration strategy and framework to the Board to ensure the executive directors and senior management are appropriately rewarded for their contribution to the Company’s performance, taking into account the financial and commercial position of the Company.
The full terms of reference for the Committee can be found on the Company’s website at marksandspencer.com. The key responsibilities are summarised below:
setting a senior remuneration strategy that ensures the most talented leaders are recruited, retained and motivated to deliver results;
reviewing the effectiveness of the senior remuneration policy with regard to its impact;
considering the appropriateness of the senior remuneration policy when reviewed against the policy and arrangements throughout the rest of the organisation;
determining the terms of employment and remuneration for executive directors and senior managers including recruitment and termination arrangements;
approving the design, targets and payments for all annual incentive schemes that include executive directors and senior managers;
agreeing the design, targets and annual awards made for all share incentive plans requiring shareholder approval; and
assessing the appropriateness and subsequent achievement of performance targets relating to any share incentive plan.
In carrying out these responsibilities, the Committee seeks independent external advice as necessary and continued to retain the services of Deloitte LLP during the year. The Committee appointed Deloitte as independent advisors in 2010 following a competitive tender process. Deloitte provide independent commentary on matters under consideration by the Committee and updates on legislative requirements, best practice and market practice. The Committee is comfortable that the Deloitte engagement partner and team provide objective and independent remuneration advice to the Committee and do not have any connections with Marks and Spencer Group plc that may impair their independence. In addition to providing advice on executive remuneration, Deloitte has provided tax, consultancy and internal audit advice to the Group in the financial year.
Deloitte is a founding member of the Remuneration Consultants Group and voluntarily operates under the code of conduct in relation to executive remuneration consulting in the UK. The code of conduct can be found at www.remunerationconsultantsgroup.com.
The Committee also seeks internal support from the Chairman, Group Secretary, Director of Human Resources and Head of Reward as required. All may attend the Committee meetings by invitation but are not present for any discussions that relate directly to their own remuneration.
The Committee also regularly reviews external survey and bespoke benchmarking data including that published by Aon Hewitt (through the New Bridge Street consultancy), KPMG, PwC and Towers Watson.
How does the Committee engage with shareholders?
The Remuneration Committee is committed to an open and transparent dialogue with shareholders on the issue of executive remuneration. During the last comprehensive review of the framework in 2010/11, the Committee actively engaged widely with key shareholders and shareholder representative bodies, and the views expressed in consultation were taken into account in shaping the current framework. When reviewing the senior remuneration framework each year, the Committee continues to take into account the views and guidance expressed by shareholders and shareholder bodies. The Remuneration Committee Chairman is available to answer questions at the AGM and the answers to specific questions are posted on the Company website.
What was the level of support for the 2011/12 Directors’ Remuneration Report?
At the Annual General Meeting on 10 July 2012, 96.26% of shareholders voted in favour of approving the Directors’ Remuneration Report for 2011/12, which the Committee believes illustrates the strong level of shareholder support for the senior remuneration framework:
Effectiveness of the Remuneration Committee
Who’s on our Committee?
The following independent non-executive directors were members of the Committee during 2012/13:
Percentage of meetings attended
Steven Holliday (Committee Chairman) 15 July 2004 7 7 100%
Vindi Banga1 1 Sept 2011 7 6 86%
Miranda Curtis2 1 Feb 2012 7 5 71%
du Plessis 8 Sept 2009 7 7 100%
A = Maximum number of meetings the director could have attended
B = Number of meetings the director actually attended
Vindi Banga was unable to attend the Committee meeting on 20 April 2012 due to prior business commitments with Clayton Dubilier & Rice.
Miranda Curtis was unable to attend the Committee meetings on 2 May 2012 due to personal reasons and on 13 March 2013 due to prior business commitments with Liberty Global Inc.
What has the Committee done during the year?
In line with its remit, the following key matters were considered by the Committee during the year:
approval of the Directors’ Remuneration Report for 2011/12 and review of the AGM voting outcome for the report;
annual review of all executive directors’ and senior managers’ base salaries and benefits in line with Company policy and approval of any salary increases;
review of achievement of Annual Bonus Scheme profit against target;
review of achievement of executive directors’ individual objectives for 2012/13;
review of the design and targets for the 2013/14 Annual Bonus Scheme including the approval of individual objectives for executive directors;
review and approval of all awards made under the Performance Share Plan taking into account the total value of all awards made under this plan;
half year and year end review of all share plan performance against targets;
approval of the vesting level for the 2010 Performance Share Plan awards;
consideration of the performance measures and targets to be applied to the 2013 Performance Share Plan awards;
clear articulation of the Committee’s reasoning and consideration for vesting and payment levels to executive directors;
review of director shareholding guidelines and achievement of these for each executive director;
significant consideration of institutional investors’ current guidelines on executive compensation;
assessment of the external environment surrounding the Company’s current remuneration arrangements;
consideration of external market developments and best practice in remuneration;
review of Committee performance in 2012/13; and
review of Committee terms of reference.
responded to the Department of Business, Innovation & Skills (BIS) consultation on revised directors’ remuneration report disclosures;
consideration of the impact of the Scottish Limited Partnership (SLP) change in accounting treatment on the 2012/13 Annual Bonus Scheme targets and Performance Share Plan targets;
review of and agreement to amendments to share plan rules to support the Company’s international strategy;
review of and agreement to remuneration packages for new executive directors and new senior managers; and
consideration and introduction of a ‘malus’ clause within the Company’s share plan rules.
What is the action plan for 2013/14?
As a result of a full review of the Committee’s performance and effectiveness, the following actions have been agreed for 2013/14:
stakeholder engagement and the remuneration debate;
company-wide remuneration offering and balance to the rest of the organisation;
clarity of remuneration disclosures;
ongoing remuneration training of Committee members; and
Committee succession and handover.
Senior remuneration framework
What are the key elements of remuneration for executive directors?
The table below summarises the key remuneration elements for executive directors:
2013/14 policy
Base pay Reviewed against:
salary levels in appropriate comparator companies e.g. major retailers; FTSE 25 – 75
Company performance, market conditions and economic climate
role, responsibility and performance of the individual director
level of pay awards in the rest of the business
Benefits – including pension salary supplement; life assurance; car/car allowance; employee discount
provided on a market-competitive basis
aligned to the remuneration framework for all employees
Group PBT with an individual element linked to delivery of key strategic objectives
stretching targets to achieve maximum payment
drives profitability and strategic change across the organisation
aligned to the bonus structure for all employees
aligned to shareholder interests through annual financial performance and delivery of business strategy
compulsory part-deferral of annual bonus into shares
shares vest after three years subject to continued employment
links individual reward with long-term Company performance
aligned to shareholder interests through long-term financial performance and delivery of business strategy
malus provision including material misstatement introduced for 2013/14
primary long-term incentive plan
targets based on annualised Earnings Per Share (EPS) growth, Return on Capital Employed (ROCE) and revenue growth across the UK, International and Multi-channel businesses
How is the senior remuneration framework aligned to Company strategy?
A comprehensive review of the senior remuneration framework was carried out in 2010/11 to ensure that it was aligned to the Company strategy. The Committee actively engaged with shareholders and continues to consult regularly on the broader remuneration debate.
The Committee reviewed this framework in 2013 and considered the existing incentive arrangements in the context of both the business strategy and current external guidelines for executive remuneration. Following this review, the Committee concluded that the current framework continues to ensure that the Company is able to attract and retain leaders who are focused and motivated to deliver the business priorities and remains aligned to shareholder interests.
The Committee reviews the total remuneration of each executive director against that of executives from comparator companies to ensure that total remuneration levels are competitive. The balance between fixed and variable remuneration elements is carefully considered.
Incentive plans take account of risk and drive behaviours in line with the Company’s high ethical standards. All executive directors and senior managers have individual objectives aligned to the business strategy, operating plan and Plan A – the Company’s environmental and ethical plan.
The Committee also considers a range of internal factors, including the remuneration policy and arrangements throughout the rest of the organisation. The remuneration framework for executive directors is aligned to that of senior managers, with the same short-term and long-term incentive arrangements including performance measures, other than the size of awards and maximum potentials.
What are the indicative values of the remuneration packages for each executive director?
The charts below provide an indication of what could be received by each of the executive directors under the remuneration policy for 2013/14. A substantial proportion of the remuneration packages are performance-related and therefore this is illustrated for three different performance scenarios (Fixed, Target, Maximum) described in more detail below. These charts are illustrative as the actual value which will ultimately be received will depend on business performance in the year 2013/14 (for the Annual Bonus Scheme) and in the three year period to 2015/16 (for the Performance Share Plan (PSP)), as well as share price performance to the date of the vesting of the Deferred Share Bonus Plan and PSP awards in 2016.
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Includes all elements of fixed remuneration:
base salary (for 2013, as shown in the Directors' emoluments table in the Audited section);
pension benefits (using the salary supplement policy below and, for applicable individuals, also inclusive of a value reflecting deferred participation in the Company's defined benefit arrangements); and
benefits (using the value for 2012/13 included in the single figure table below).
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Annual Bonus Scheme. Represents the potential value of the annual bonus for 2013/14. Half of any bonus would be deferred into shares for three years and this is included in the value shown. No share price growth is assumed.
Performance Share Plan. Represents the potential value of the PSP to be awarded in 2013, which would vest in 2016 subject to the EPS, Revenue and ROCE targets (disclosed in the section below on Performance Share Plan structure for 2013/14). No share price growth is assumed.
Fixed remuneration only. No vesting under the Annual Bonus Scheme and Performance Share Plan.
Includes the following assumptions for the vesting of the incentive components of the package:
Annual Bonus Scheme: 50% of maximum
Performance Share Plan: 20% of maximum
Annual Bonus Scheme: 100% of maximum
Performance Share Plan: 100% of maximum
What are the details of fixed remuneration?
In reviewing executive director salary levels for 2013, the Committee took into account Company performance in 2012/13, external market data and the salary review principles applied to the rest of the organisation to ensure a consistent approach.
Marc Bolland has, at his own request, not received a salary increase since his appointment in 2010. He again proposed not to receive any increase in 2013, which the Committee agreed. John Dixon and Steve Rowe received salary increases on appointment to their new roles in October 2012, John’s to reflect the additional scope and responsibility and Steve’s to reflect his promotion to executive director. Neither received a further increase in January 2013. Steven Sharp, Alan Stewart and Laura Wade-Gery received increases of 2% in January 2013 in line with the Company’s broader salary review policy. The current annual salaries for executive directors are shown in the Contract terms table further below. The next planned salary review for all executive directors is in January 2014.
With the exception of the CEO, executive directors receive a 25% salary supplement in lieu of membership of the Group Pension Scheme. The CEO receives a salary supplement of 30%. Executive directors also receive life assurance provided through a separate policy. In addition, each executive director receives a car or car cash allowance and is offered the benefit of a driver. Executive directors also receive employee product discount in line with all other employees. The value of the benefits and allowances for each director is shown within the Directors’ emoluments table within the audited section of the Remuneration report.
The fee for the Chairman is determined by the Remuneration Committee and reflects the commitment, demands and responsibility of the role. The fee is paid monthly in cash inclusive of all committee roles and is not performance-related or pensionable. No increase has been awarded since the Chairman’s appointment in 2010 and following the 2013 fee review it was decided not to increase the fee at this time. The Chairman is entitled to the use of a car and driver provided by the Company. The Chairman also receives employee product discount in line with other employees.
The fees for non-executive directors are determined by the Chairman and executive directors. Fees are set at an appropriate level to attract and retain individuals with the necessary experience, knowledge and skills to ensure the Board is able to carry out its duties effectively. The fees recognise the scope of the role and time commitment required. Fees are paid monthly in cash and are not performance-related or pensionable. Non-executive directors receive employee product discount in line with other employees. No other benefits are provided.
Non-executive director fees were revised in 2010 and no further increases were awarded in 2011 or 2012. Following the 2013 fee review it was decided not to increase the current fees.
The current fee structure is as follows:
Basic annual fee £70,0001
Committee Chairman £15,0002
Senior Independent Director £100,0001
Inclusive of all committee memberships
Audit and Remuneration Committee only and in addition to the basic annual fee
The annual fees for non-executive directors are shown in the Contract terms table further below. The fees paid during the year to each non-executive director are shown in the Directors’ emoluments table within the audited section of the Remuneration report.
What are the details of the short-term and long-term incentive schemes (variable remuneration)?
Annual Bonus Scheme: short-term incentive Deferred Share Bonus Plan: long-term incentive Structure for 2013/14
The Annual Bonus Scheme is reviewed annually and is structured to drive profitability and individual performance across the organisation. The bonus potential for executive directors is up to 200% of salary for ‘maximum’ performance. There is compulsory deferral into shares for all senior managers. Shares vest after three years subject to continued employment. For executive directors, the deferral into Company shares equates to 50% of their bonus amount.
In line with best practice, malus provisions have been introduced to all the Company’s senior share schemes; the Deferred Share Bonus Plan, Performance Share Plan and Executive Share Option Scheme. The provisions will take effect for all awards granted from 2013 onwards. Under the terms of the provisions, the Committee will have the discretion to reduce, cancel or impose further conditions on awards in circumstances it considers appropriate. Such circumstances include, but are not limited to, a material misstatement of the Company’s audited results. Further details of the Deferred Share Bonus Plan can be found in note 13 to the Financial Statements (PDF 0.5MB).
The Annual Bonus Scheme performance measures are unchanged for 2013/14. The primary performance measure is Underlying Group Profit Before Tax (Group PBT). 60% of the annual bonus is determined by performance against demanding profit targets set by the Committee at the start of the year. 40% of the annual bonus is determined by performance against individual objectives independent of Group PBT.
The Committee believes this approach provides an appropriate focus on annual profit targets whilst also ensuring that directors focus on driving business changes that support the Company’s medium-term strategy.
Group PBT targets
Group PBT targets have again been set taking into consideration the Company’s own internal operating plan, external forecasts for the retail sector and analysts’ profit forecasts. This means that there will need to be significant outperformance of the operating plan in order to achieve the highest payment levels.
2013/14 individual objectives will continue to be aligned to the Company’s strategic plan and the specific programmes that support it.
Challenging and quantifiable individual objectives are set which are subject to rigorous review by the Committee, both at the start of the year when set and the end of the year when assessments of performance are undertaken and at any time during the year should there be a change in director accountabilities.
Each executive director will be assessed on targets set in relation to four clearly defined business objectives. Two objectives will be ‘collective’ so that all directors are focused on these common goals encouraging collaboration across the senior management group. Within these, each director will have specific actions or targets. The two ‘collective’ objectives will continue to be:
delivery against UK operating plan cost targets; and
progress against Plan A goals.
The remaining two individual objectives will relate to specific programmes relevant to each executive director’s business area or to key operating challenges. These include objectives that are focused on continuing to drive Multi-channel and International growth, availability, innovation and brand recognition.
The Committee has agreed quantifiable performance metrics for each objective. ‘Threshold’ and ‘stretch’ targets must be achieved to demonstrate value-added performance.
No individual objective element of the bonus can be earned unless a ‘threshold’ level of Group PBT has been achieved, subject to the Committee’s overall assessment of the performance of the business during the period. This maintains the important principle that below a defined level of performance, no bonus will be earned. The Group PBT ‘threshold’ for this purpose is set below the entry point for Group PBT performance, which is aligned to the bonus policy for the rest of the organisation.
Performance Share Plan structure for 2013/14
The Performance Share Plan (PSP) continues to be the primary long-term incentive for executive directors and senior managers in the Company. The maximum award opportunity is 300% of salary, however, the Committee’s intention is that awards will normally be referenced to 250% of salary. A malus provision will take effect for all awards granted from 2013 as described within the Annual Bonus Scheme structure for 2013/14 above.
The Committee reviewed the PSP performance measures and their alignment to business strategy in 2013 and concluded that the balance of EPS, Revenue and ROCE continues to appropriately reflect the key drivers of shareholder value. For 2012 awards, the EPS measure was based on cumulative underlying basic EPS over the three year performance period. For 2013 awards, the EPS measure is annualised growth in underlying basic EPS which the Committee believes is a more appropriate method of assessing company performance over the next three years.
Performance Share Plan Awards 2013/14
For awards made in 2013/14, the performance metrics and targets are as follows:
Earnings Per Share (EPS) Rewards focus on bottom-line performance Based on annualised underlying basic EPS growth over three-year performance period
Return on Capital Employed (ROCE) Rewards efficient use of capital Based on average ROCE % over three year performance period against pre-determined targets
Revenue Rewards top line growth in line with business strategy Based on strategic growth targets:
10% on UK
10% on International
10% on Multi-channel
Revenue (FY16 – £)
% Vesting1
Annualised EPS growth (%)
Multi-channel3
Weighting (% of total award) 50% 20% 10% 10% 10%
‘Threshold’ performance 20% 5% 15.0% £8,900m £900m £1,400m
‘Maximum’ performance 100% 12% 18.5% £9,600m £1,100m £1,800m
% Vesting is a straight line between 'threshold' and 'maximum' performance.
Excluding Multi-channel.
Net of VAT / gross of returns.
Excluding Multi-channel / including Republic of Ireland.
Executive Share Option Scheme: long-term incentive
The Executive Share Option Scheme was adopted at the 2005 AGM but there is currently no intention to use the scheme on a regular basis. No grants were awarded under the Scheme for 2012/13. The Committee will continue to review the use of the scheme and retain the flexibility to grant awards if appropriate. A malus provision will take effect for any awards granted from 2013.
All-Employee Share Schemes: long-term incentive
Sharesave, the Company’s Save As You Earn (SAYE) scheme, was approved by shareholders at the 2007 AGM for a ten year period. Executive directors can participate in the scheme which is open to all employees.
What were the outcomes in 2012/13 for the short-term and long-term incentive schemes?
Annual Bonus Scheme outcome for 2012/13
In 2012/13, 60% of the executive directors’ bonus was based on Group PBT performance with the remaining 40% based on the achievement of individual objectives, independent of Group PBT (and subject to achieving the ‘threshold’ Group PBT target).
Summary of bonus objectives
Financial measure Group PBT Group PBT Group PBT Group PBT Group PBT Group PBT
Collective objectives Total UK operating costs Total UK operating costs Total UK operating costs Total UK operating costs Total UK operating costs Total UK operating costs
Collective objectives GM & Food operating costs Food operating costs Marketing operating costs Finance, IT and Logistics operating costs Multi-channel operating costs
Plan A objectives Individual Plan A objectives Individual Plan A objectives Individual Plan A objectives Individual Plan A objectives Individual Plan A objectives Individual Plan A objectives
Examples of achievement against business area objectives Increased online and International GM and Food sales Increased food innovation and focused on value Continued food innovation and focused on value Improved in-store presentation Enhanced reporting for information and planning Increased UK online sales and customer satisfaction
Examples of achievement against business area objectives Restructured Executive Board and strengthened senior leadership team Restructured GM senior leadership team Increased International Food sales Developed marketing strategy to increase online awareness Improved supply chain and delivered new distribution centre Launched new International websites
Examples of achievement against business area objectives Launched M&S Bank Delivered new multi-channel platform key milestones
Group PBT objective (60% of total)
Group PBT targets were set by the Committee at the start of the year with reference to the Company’s own internal operating plan, external forecasts for the retail sector and analysts’ profit forecasts. Targets were designed to be stretching in order to increase motivation and focus and drive desired behaviours.
Following the conclusion of dialogue with the Financial Reporting Review Panel (FRRP), the Company changed the terms of the Scottish Limited Partnership (SLP) as detailed on page 95 of the Financial Statements (PDF 0.5MB). As a result of the revised operating plan, the 2012/13 Annual Bonus Scheme targets were recalibrated and the Committee agreed revised PBT targets.
The underlying Group PBT performance was £665.2m which was above the minimum target set by the Remuneration Committee. As a result, the percentage of salary for the Group PBT objective was 33% for all executive directors.
Individual objectives (40% of total)
Each executive director had four individual objectives for 2012/13, each accounting for 10% of the total bonus.
‘Collective’ individual objectives (20% of total)
Two objectives were ‘collective’ i.e. individual targets set for each director under shared objectives so that all directors focused on common goals encouraging collaboration across the senior management team. The Committee reviewed the performance of each executive director against the quantifiable performance targets that were set at the start of the year.
Delivery against UK operating plan cost targets:
As set out in the Financial Review, we managed the businesses prudently in a challenging market.
Based on the Committee’s assessment of performance against the individual targets under this objective, payouts to executive directors were in the range 7.5% – 9% of maximum bonus opportunity for this element of the bonus, equating to 15% to 18% of salary.
Delivery against Plan A commitments:
As detailed in our review of Plan A, we continued our progress against our 2015 Plan A targets.
Based on the Committee’s assessment of performance against the individual targets under this objective, payouts to executive directors were in the range 4% – 9% of maximum bonus opportunity for this element of the bonus, equating to 8% – 18% of salary.
Business area individual objectives (20% of total)
The remaining two objectives related to specific programmes relevant to each executive director’s business area for which they have primary responsibility.
Performance against these objectives was reviewed by the Committee against quantifiable individual performance metrics that were established for each director.
Based on the Committee’s assessment of performance against these individual targets, payouts to executive directors were in the range 8.5% – 13% of maximum bonus opportunity for this element of the bonus, equating to 17% – 26% of salary.
Summary of bonus earned for 2012/13
The Committee believes that the level of bonus payout appropriately reflects the significant progress made in 2012/13 towards the achievement of the Company’s long-term strategic goals. The Committee, having carefully considered performance during the year, further believes that the bonus payments made are appropriate in the context of a challenging year for the business and the wider retail sector.
The table below summarises the bonus payments for each executive director for 2012/13:
Summary of bonus earned in 2012/131
Group PBT Target
’Collective’ objectives
Business area objectives
% of salary % of salary £000 % of maximum bonus potential
Maximum bonus potential 120% 40% 40% 200% - -
Actual bonus earned - - - - -
Marc Bolland 33% 26% 26% 85% 829 42.5%
John Dixon 33% 34% 24% 91% 546 45.5%
Steve Rowe2 33% 34% 17% 84% 221 42.0%
Steven Sharp 33% 25% 19% 77% 531 38.5%
Alan Stewart 33% 28% 24% 85% 492 42.5%
Laura Wade-Gery 33% 26% 26% 85% 469 42.5%
Kate Bostock was not entitled to recieve any bonus for 2012/13.
The bonus amount for Steve Rowe reflects his period of service as an Executive Director
Performance Share Plan outcome for 2012/13
2010 Award Final Measurement
The underlying basic EPS figure for 2012/13 was 32.7p which was below the ‘threshold’ targets of RPI + 3% for awards of up to 200% of salary and RPI + 4% for awards of between 200% and 400% of salary. As a result, there was no vesting of awards made in 2010 and these will lapse in full.
The targets for 2010 awards are shown in the table below:
Average annual EPS growth in excess of inflation (RPI)
20% vesting
EPS for start of scheme1
2010 (for awards up to 200% of salary) 3% 9% 30.0p
(or awards between 200% and 400% of salary) 4% 12% 30.0p
The EPS for the start of the 2010 scheme is based on the 52 week result, ensuring a like-for-like measure.
The targets for outstanding 2011 and 2012 awards are shown in the table below:
2011 and 2012 Awards
Revenue (£)5
‘Threshold’ performance 20% 110p 17% £9,200m £700m £1,100m
‘Maximum’ performance 100% 130p 18.5% £9,900m £1,000m £1,400m
‘Threshold’ performance 20% 110p 15.0% £8,900m £800m £1,300m
‘Maximum’ performance 100% 130p 18.5% £9,600m £1,000m £1,700m
Net of VAT/gross of returns.
Excluding Multi-channel/including Republic of Ireland.
FY 2014 for 2011 award and FY 2015 for 2012 award.
The above targets to do not take into consideration changes in accounting treatments adopted by the Group after the award date. The impact of these changes will be taken into consideration when performance is assessed at the end of the three year performance period.
‘Single figure’ of remuneration 2012/13
The Committee notes that BIS intends to introduce the requirement for disclosure of a ‘single figure’ of remuneration received in the year. There are some technical challenges in arriving at a single value, particularly concerning the timing and value of awards which may not be aligned with the financial year end. However, it is hoped that the introduction of this figure in this year’s Report will help shareholders’ understanding and demonstrate the Committee’s commitment to transparent reporting.
The directors’ ‘single figure’ of remuneration for 2012/13
Salary/fees £000
Benefits £000
Pension benefits £000
Total fixed pay £000
Bonus1 £000
PSP vested2 £000
Total variable pay £000
Total 2013 £000
Robert Swannell 450 20 - 470 - - - 470
Marc Bolland 975 45 293 1,313 829 0 829 2,142
John Dixon 581 43 148 772 546 0 546 1,318
Steve Rowe3 263 29 69 361 221 0 221 582
Steven Sharp 679 36 170 885 531 0 531 1,416
Alan Stewart 570 33 143 746 492 0 492 1,238
Laura Wade-Gery 544 24 136 704 469 0 469 1,173
Vindi Banga 70 - - 70 - - - 70
Miranda Curtis 70 - - 70 - - - 70
Jeremy Darroch 85 - - 85 - - - 85
Martha Lane Fox 70 - - 70 - - - 70
Andy Halford3 18 - - 18 - - - 18
Steven Holliday 85 - - 85 - - - 85
du Plessis 100 - - 100 - - - 100
Directors retiring from the Board during the year
Kate Bostock3 306 33 76 415 0 0 0 415
The annual bonus was based on performance against PBT and individual targets for 2012/13 (see bonus detail above). Half of this amount will be deferred into Company shares for a period of three years.
The PSP was awarded in 2010 and was based on EPS performance targets in the three year period to 30 March 2013, in accordance with the table on the 2010 awards above. As the ‘threshold’ target was not met, this award will lapse in full.
The total amounts for Steve Rowe and Kate Bostock reflect the fact that they were executive directors for six months of 2012/13. The total amounts for Andy Halford reflect three months for 2012/13.
Board appointments and contracts
The contract terms and current annual salaries/fees for all members of the Board are set out in the table below:
Contract terms and current annual salaries/fees for all current members of the Board
Notice period/unexpired term
Basic salary/fee £000
Committee chair/SID fee £000
Current annual salary/fee £000
Total 2012 £000
Robert Swannell 23/08/2010 6 mths / 6 mths 450 - 450 450 -
Marc Bolland 01/05/2010 12 mths / 6 mths 975 - 975 975 -
John Dixon 09/09/2009 12 mths / 6 mths 600 600 562 38
Steve Rowe 01/10/2012 12 mths / 6 mths 525 - 525 - -
Steven Sharp 08/11/2005 12 mths / 6 mths 689 - 689 675 14
Alan Stewart 28/10/2010 12 mths / 6 mths 579 - 579 567 12
Laura Wade-Gery 04/07/2011 12 mths / 6 mths 552 - 552 541 11
Vindi Banga 01/09/2011 3 mths / 3 mths 70 - 70 70 -
Miranda Curtis 01/02/2012 3 mths / 3 mths 70 - 70 70 -
Jeremy Darroch 01/02/2006 3 mths / 3 mths 70 15 85 85 -
Martha Lane Fox 01/06/2007 3 mths / 3 mths 70 - 70 70 -
Andy Halford 01/01/2013 3 mths / 3 mths 70 - 70 - -
Steven Holliday 15/07/2004 3 mths / 3 mths 70 15 85 85 -
du Plessis 01/11/2008 3 mths / 3 mths 100 - 100 100 -
What are the current service contracts and terms of employment for directors?
All executive directors and senior managers have service contracts that can be terminated by the Company giving 12 months’ notice and the employee giving six months’ notice.
The Company retains the right to terminate the contract of any executive director summarily, in accordance with the terms of their service agreement, on payment of a sum equal to the contractual notice entitlement of 12 months’ salary and specified benefits. In line with best practice, the Company reserves the right on termination to make phased payments which are paid in monthly instalments and subject to mitigation. Entitlement to participate in share schemes ceases on termination.
The Chairman has an agreement for service which requires six months’ notice by either party.
Non-executive directors have an agreement for service for an initial three-year term which can be terminated by either party giving three months’ notice.
What were the changes to the Board during the year?
Directors appointed to the Board
John Dixon was appointed Executive Director, General Merchandise on 1 October 2012 on a salary of £600,000. John was originally appointed to the Board as Executive Director, Food on 9 September 2009. His remuneration package is consistent with the structure for all executive directors and the full terms are disclosed in this report.
Steve Rowe was appointed Executive Director, Food on 1 October 2012 on a salary of £525,000. His remuneration package is consistent with the structure for all executive directors and the full terms are disclosed in this report.
Andy Halford was appointed to the Board of Marks and Spencer Group plc as a non-executive director on 1 January 2013. He is a member of the Audit and Nomination Committees. He receives a basic fee of £70,000 in line with the structure set out above.
Directors retiring from the Board
Kate Bostock, Executive Director, General Merchandise retired from the Board and ceased to be an employee of the Company on 1 October 2012. She received salary and benefits up to her leaving date and received no further payments on leaving other than an amount in respect of accrued but untaken holiday entitlement. The Remuneration Committee exercised its discretion and no payments were made under either the 2011/12 or the 2012/13 Annual Bonus Scheme.
The status of her outstanding long-term incentive awards is shown in the table within the Audited section of the Remuneration Report. In accordance with the terms of the Performance Share Plan, Kate was entitled to all vested options granted in 2009 under the Performance Share Plan (which vested in June 2012), but all other outstanding awards made under this Plan lapsed on leaving. With regard to outstanding awards made under the Deferred Share Bonus Plan, the Remuneration Committee exercised its discretion and on leaving she received the full entitlement of options granted in 2010 and the award made in 2011 was pro-rated for time held from date of grant to her leaving date. No award was made in 2012 under the Deferred Share Bonus Plan.
What will be the changes to the Board in 2013/14?
Directors joining the Board
Patrick Bousquet-Chavanne will join the Board as Executive Director, Marketing & Business Development on 10 July 2013. He will receive an annual salary of £525,000 and is entitled to receive benefits and participate in the executive incentive schemes in line with the framework for other executive directors.
Steven Sharp, Executive Director, Marketing will retire from the Board following the Annual General Meeting on 9 July 2013 and will continue to work in the business as Creative Director until 28 February 2014 when he will leave the Company. As a result, Steven will be paid in line with his contractual arrangements. He will not receive any lump sum payment in lieu of notice, but will be entitled to receive a payment under the Annual Bonus Scheme, pro-rated for the months worked in 2013/14. Steven will not receive any award to be made in 2013 under the Company’s Performance Share Plan. In line with the Plan rules, he will be entitled to all outstanding share awards made under the Company’s long-term incentive schemes. For unvested awards made under the Performance Share Plan, the number of shares he will receive will be determined by achievement against the measures and targets at the end of the respective performance period.
Jeremy Darroch has served as a non-executive director and Chairman of the Audit Committee since February 2006. He has decided to step down and retires from the Board on 19 June 2013.
What are the executive directors’ external board appointments?
The Company recognises that executive directors may be invited to become non-executive directors of other companies and that these appointments can broaden their knowledge and experience to the benefit of the Company. The individual director retains any fee. External board appointments for the 2013/14 financial year are shown below:
Fee £000
Marc Bolland Manpower Inc 1241
Steven Sharp Adnams plc 28
Marc Bolland’s fee is paid in cash and stock units and in US dollars. For the purposes of this table the values were converted to sterling using the £:$ spot rate as at 30 March 2013 for stock units and the average rolling £:$ rate during the year for cash payments.
What are the directors’ interests in the Company?
The beneficial interests of the directors and connected persons in the shares of the Company are shown in the table below. Options granted under the Company share schemes are detailed in part 2 of this report. Further information regarding employee share option schemes is given in note 13 to the Financial Statements (PDF 0.5MB) of the Annual Report.
There have been no changes in the directors’ interests in shares or options granted by the Company and its subsidiaries between the end of the financial year and 22 May 2013. No director had an interest in any of the Company’s subsidiaries at the beginning or end of the year.
Ordinary shares as at 1 April 2012 or at date of appointment
Ordinary shares as at 30 March 2013
Robert Swannell 100,000 100,000
Marc Bolland 147,430 147,430
John Dixon 156,295 156,407
Steve Rowe 177,423 185,926
Steven Sharp 397,044 399,560
Alan Stewart 10,000 10,000
Laura Wade-Gery 55,055 55,055
Miranda Curtis 5,500 5,500
Vindi Banga 2,000 2,000
Jeremy Darroch 2,000 2,000
Martha Lane Fox 20,100 20,100
Andy Halford - 3,000
Steven Holliday 2,500 2,500
Jan du Plessis 20,000 20,000
What is the shareholding policy for executive directors?
All executive directors are required to hold shares equivalent in value to a minimum percentage of their salary (200% for the CEO and 100% for all other executive directors) within a five year period from their date of appointment. The relevant salary is at the date of appointment and the market value is measured at the current date. Holdings in the shares of the Company including the net value of all unexercised awards under the Deferred Share Bonus Plan and Restricted Share Plan as at 30 March 2013 are shown below:
Marc Bolland 2 / 11 months 200 177
John Dixon 3 / 7 months 100 280
Steve Rowe – / 6 months 100 198
Steven Sharp 7 / 5 months 100 589
Alan Stewart 2 / 5 months 100 72
Laura Wade-Gery 1 / 9 months 100 183
What is the current dilution of share capital by employee share plans?
Awards granted under the Company’s Save As You Earn scheme and the Executive Share Option scheme are met by the issue of new shares when the options are exercised.
All other share plans are met by market purchase. The Company monitors the number of shares issued under these schemes and their impact on dilution limits. The Company’s usage of shares compared to the dilution limits set by the Association of British Insurers (ABI) in respect of all share plans (10% in any rolling ten year period) and executive share plans (5% in any rolling ten year period) as at 30 March 2013 was as follows:
All share plans
The graph below illustrates the Company’s performance against the FTSE 100 over the past five years: