Annual report and financial statements 2011 - Analist.nl
Annual report and financial statements 2011 - Analist.nl
Annual report and financial statements 2011 - Analist.nl
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52<br />
Governance<br />
Remuneration<br />
<strong>report</strong><br />
Remuneration Committee<br />
Steven Holliday<br />
There have been some significant changes at Marks & Spencer<br />
during the <strong>financial</strong> year which are reviewed in this <strong>report</strong>. Marc<br />
Boll<strong>and</strong>’s appointment as Chief Executive Officer has led to a<br />
full strategic review of the Company’s business plan, with the<br />
evolution of our corporate strategy communicated to investors<br />
as part of our market update in November.<br />
In last year’s <strong>report</strong>, the Remuneration Committee outlined its<br />
intention to review the Company’s remuneration framework to<br />
ensure it remains fully aligned with business priorities. The clarity<br />
we now have around the strategy, <strong>and</strong> the medium to long-term<br />
objectives Marc has established for the business, has enabled the<br />
Committee to design a framework that reflects this updated<br />
business plan.<br />
In addition, the review has also allowed us to respond to a number<br />
of views that our investors have expressed in relation to historic<br />
remuneration arrangements <strong>and</strong> practices. We have engaged in<br />
dialogue with a number of our key institutional investors in the<br />
development of these proposals, <strong>and</strong> we are grateful for their<br />
constructive engagement throughout this process.<br />
In summary the long term remuneration framework has been<br />
developed to underpin the key business objectives of:<br />
– focus on UK business: enhancing our br<strong>and</strong>, Clothing, Home,<br />
Food <strong>and</strong> stores;<br />
– focus on our UK space <strong>and</strong> like-for-like growth;<br />
– building our multi-channel capabilities to create best in class<br />
operations; <strong>and</strong><br />
– becoming a more international company with a global outlook<br />
<strong>and</strong> international capabilities.<br />
As a Committee, our long-term philosophy for remuneration<br />
remains to attract <strong>and</strong> retain leaders who are focused <strong>and</strong><br />
encouraged to deliver business priorities within a framework that<br />
is aligned with the interests of the Company’s shareholders.<br />
Our proposals seek to rebalance the package in the following<br />
fundamental ways, with each discussed in greater detail in the<br />
body of this <strong>report</strong>:<br />
<strong>Annual</strong> Bonus Plan:<br />
– reduce the maximum annual incentive opportunity from 250%<br />
to 200% of salary, decreasing the emphasis on short term in<br />
favour of medium to long-term performance;<br />
– maintain compulsory bonus deferral, with directors deferring<br />
50% of any bonus due into Marks & Spencer shares for three<br />
years; <strong>and</strong><br />
– rebalance the focus on <strong>financial</strong> <strong>and</strong> strategic goals in the<br />
annual bonus, with 60% of bonus based on underlying Group<br />
Profit Before Tax (PBT), <strong>and</strong> the remaining 40% determined<br />
by performance against strategic measures which will be<br />
quantifiable, challenging, <strong>and</strong> subject to rigorous annual review.<br />
Two strategic measures will be collective so that all directors are<br />
focused on common goals, with the remaining measures<br />
relevant to each director’s specific business area.<br />
Long Term Incentive Plan (LTIP):<br />
– remove the exceptional award limit of 400% of salary <strong>and</strong><br />
establish the maximum individual award opportunity at a<br />
reduced level of 300% of salary. The Committee’s intention is<br />
for award levels to be conventionally referenced to 250% of<br />
salary. This change, taken together with the change to the<br />
annual bonus opportunity, will give a greater weighting in the<br />
package towards long-term performance <strong>and</strong> value creation<br />
for shareholders; <strong>and</strong><br />
– move away from the use of adjusted (underlying basic) earnings<br />
per share (EPS) as the sole metric for LTIP awards, reflecting<br />
the strategic priorities we have for the business. LTIP awards in<br />
<strong>2011</strong>/12 will drive performance based on the following key<br />
metrics: cumulative EPS performance (50% of the total award),<br />
Revenue (30% based equally on performance in three business<br />
segments: the UK, Multi-channel <strong>and</strong> International) <strong>and</strong> Return<br />
on Capital Employed (20%).<br />
As previously indicated, these proposals have been finalised after<br />
a thorough consultation <strong>and</strong> taking into account the feedback we<br />
received from our key institutional investors <strong>and</strong> shareholder<br />
representative bodies.<br />
The Committee believes that we have developed an incentive<br />
structure that will clearly support <strong>and</strong> motivate the team in a way<br />
that is aligned with the business strategy to deliver quality<br />
long-term growth for the business, <strong>and</strong> we will be seeking<br />
shareholder approval for these amendments to the LTIP at the<br />
<strong>2011</strong> AGM.<br />
Steven Holliday, Chairman of the Remuneration Committee<br />
This Remuneration <strong>report</strong> has been prepared on behalf of the<br />
Board by the Remuneration Committee. The Committee adopts<br />
the principles of good governance as set out in the UK Corporate<br />
Governance Code (published June 2010) <strong>and</strong> complies with the<br />
Listing Rules of the Financial Services Authority <strong>and</strong> the relevant<br />
schedules of the Companies Act 2006 <strong>and</strong> the Directors’<br />
Remuneration Report Regulations in Schedule 8 to The Large <strong>and</strong><br />
Medium-sized Companies <strong>and</strong> Groups (Accounts <strong>and</strong> Reports)<br />
Regulations 2008. These regulations require the Company’s<br />
auditors to <strong>report</strong> on the ‘Audited Information’ in the <strong>report</strong> <strong>and</strong> to<br />
state that this section has been properly prepared in accordance<br />
with these regulations. For this reason, the <strong>report</strong> is divided into<br />
audited <strong>and</strong> unaudited information, <strong>and</strong> is subject to shareholder<br />
approval at the <strong>Annual</strong> General Meeting (AGM) on 13 July <strong>2011</strong>.<br />
Marks <strong>and</strong> Spencer Group plc <strong>Annual</strong> <strong>report</strong> <strong>and</strong> <strong>financial</strong> <strong>statements</strong> <strong>2011</strong>