Annual report and financial statements 2011 - Analist.nl

58
Governance
Remuneration
report
continued
Performance Share Plan (PSP) – long-term incentive
The Performance Share Plan will continue to be the primary
long-term incentive for executive directors and senior managers
in the Company. As described in the introduction to this report,
shareholder approval is being sought at the AGM for a number
of changes as part of the review of our Senior remuneration
framework:
– the exceptional award limit of 400% of salary is being removed,
and the maximum individual award opportunity will be established
at a reduced level of 300% of salary. The Committee’s intention
is for award levels to be conventionally referenced to 250% of
salary. This change, taken together with the reduction to the
annual bonus opportunity, is value neutral but will give a greater
weighting in the package towards long-term performance and
value creation for shareholders; and
– we have historically focused entirely on point-to-point EPS
growth. Going forward, performance will be assessed against
metrics directly relating to the strategic priorities that have been
established for the business and communicated to the market.
PSP awards in 2011/12 will drive performance based on the key
metrics set out in the tables below.
Each element of performance will be assessed independently.
‘Threshold’ performance against any metric will lead to 20%
vesting of that element of the award. Awards will vest on a
straight-line basis for performance between ‘threshold’ and
‘maximum’ performance. The Committee intends to keep the
performance measures, and their relative weightings under
review, and will ensure that appropriately stretching targets are
set for each new performance cycle.
Performance Share Plan metrics for 2011/12
Performance metric
Weighting
(% of total award) Commercial rationale Basis of measurement
EPS 50% Ensure focus on bottom-line
performance
ROCE 20% Rewards efficient use of
capital
Revenue 30% Encourage top-line growth
in line with new strategy
Based on cumulative adjusted (underlying basic)
EPS over the three-year performance period
Vesting based on average ROCE (%) over
the three-year performance period against
pre-determined targets
Based on strategic growth targets provided
in the market update:
– 10% on UK;
– 10% on Multi-channel; and
– 10% on International
Performance Share Plan awards for 2011/12
For awards made in 2011/12, the performance targets that will apply in respect of each metric are:
Cumulative EPS (p)
ROCE
(%)
Revenue (FY14 – £m)
UK 1 Multi channel 2 International 3
Weighting (% of total award) 50% 20% 10% 10% 10%
‘Threshold’ performance 110p 17% £9,200m £700m £1,100m
‘Maximum’ performance 130p 18.5% £9,900m £1,000m £1,400m
1 Excluding Multi-channel.
2 Net of VAT/gross of returns.
3 Excluding Multi-channel/including Republic of Ireland.
Marks and Spencer Group plc Annual report and financial statements 2011