20495_Debenhams_AR_151104

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DIRECTORS’ REMUNERATION REPORT DENNIS MILLARD CHAIRMAN, REMUNERATION COMMITTEE “THE COMMITTEE CONTINUES TO BELIEVE THAT EXECUTIVE REMUNERATION ARRANGEMENTS ARE STRUCTURED TO SUPPORT THE DELIVERY OF OUR STRATEGIC PRIORITIES” 56 Debenhams plc Annual Report & Accounts 2015
DEAR SHAREHOLDER On behalf of the Remuneration Committee (“the Committee”), I am pleased to present our remuneration report for the 2015 financial year. Last year we put our policy report to a shareholder vote for the first time. We were delighted with the level of support received, with 99% of votes being cast in favour. We are not proposing to make any changes to our directors’ remuneration policy this year and we continue to be bound by the policy approved at last year’s Annual General Meeting. In this remuneration report we have reproduced the policy report in full for ease of reference. The annual report on remuneration included in the second part of this report sets out details of how this policy was implemented in FY2015 and how it is intended to operate in FY2016. This report will be subject to the usual advisory shareholder vote at the Annual General Meeting on 14 January 2016. Our performance in FY2015 This year we have made further progress against our strategic priorities and have delivered results in line with market expectations. The retail marketplace is still highly competitive and the profit before tax target set for the annual bonus was not achieved. No bonus was therefore paid to executive directors in respect of FY2015. Performance Share Plan (“PSP”) awards granted in FY2013 were based 75% on EPS growth and 25% on average return on capital employed (“ROCE”) relative to the cost of capital. The EPS element of the award has not triggered vesting. However, ROCE exceeded the cost of capital by 3.2%. Therefore, 17% of the awards will vest in November 2015. Renewal of share plans The Company’s current share plans were adopted in FY2006 and are all due to expire in FY2016. These include the PSP, the Deferred Bonus Matching Plan and the Executive Share Option Plan. It is proposed that only the PSP be renewed and shareholders will be asked to approve the adoption of the new share plan rules at the Annual General Meeting on 14 January 2016. The key terms of the plan remain unchanged, subject to some minor amendments to reflect current best practice drafting, and as such our remuneration policy also remains unaffected by the renewal of the plan. A summary of the rules can be found in our shareholder circular for the forthcoming Annual General Meeting. Reward changes for FY2016 In line with the revised UK Corporate Governance Code, for 2016 we are introducing clawback provisions for executive directors and the senior leadership team across all our incentives. In addition, the malus provisions that already apply to our annual bonus and to the PSP have been extended to allow for malus to be applied in a wider range of circumstances. In last year’s report we explained that we had moved the annual salary review date for the executive directors forward from September to April. With effect from 1 April 2015, they each received a pay increase of 1.5% and that increase took no account of the movement of the review date. This increase was similar to increases awarded to other employees in the Group. The annual bonus criterion of underlying PBT remains unchanged for FY2016. Similarly, the PSP performance measures introduced last year, namely underlying EPS growth (70%) and strategic measures (30%), remain unchanged with the vesting of the strategic measures subject to meeting a ROCE underpin. The EPS targets remain at 3% per annum (25% vesting) to 10% per annum (100% vesting). The strategic measures remain as: • Gross margin improvement • Online EBITDA growth • UK GTV • International EBITDA growth No changes have been made to the usual annual bonus opportunity. As regards PSP Michael Sharp will be awarded a PSP award of 50% of base salary. Matt Smith and Suzanne Harlow will each be awarded a PSP award of 125% of base salary as they are both essential to the continued smooth operation of the business during the Chief Executive succession process. The Committee continues to believe that executive remuneration arrangements are structured to support the delivery of our strategic priorities and no further changes are proposed at this time. We will continue to keep the structure of remuneration arrangements under review. As mentioned within this annual report, having served more than nine years on the board of Debenhams plc I will be standing down as chairman of the Remuneration Committee effective from the next Annual General Meeting and I’d like to take this opportunity to welcome Martina King as the new chair of the Remuneration Committee. Martina’s appointment as chair will be subject to shareholders approving her re-election at the Annual General Meeting. DENNIS MILLARD CHAIRMAN, REMUNERATION COMMITTEE Governance40-85 Debenhams plc Annual Report & Accounts 2015 57
Page 1 and 2:
ANNUAL REPORT & ACCOUNTS 2015
Page 3 and 4:
OUR BUSINESS MODEL We aim to create
Page 5 and 6:
FINANCIAL HIGHLIGHTS Gross transact
Page 7 and 8:
oard has reviewed its dividend poli
Page 9 and 10: “WE HAVE BUILT A STRONG PLATFORM
Page 11 and 12: MARKET CONTEXT An independent view
Page 13 and 14: Increasing availability and choice
Page 15 and 16: In 2014/15 we set out a strategic p
Page 17 and 18: Our ambition is to grow our multi-c
Page 19 and 20: Our stores remain central to our cu
Page 21 and 22: Debenhams operates both its own and
Page 23 and 24: IT investment in FY2015 £60m Produ
Page 25 and 26: In addition to this, an extensive r
Page 27 and 28: Risk Impact Examples of mitigation
Page 33 and 34: Strategic KPIs Delivering a compell
Page 35 and 36: Figure 1: Financial summary Gross t
Page 37 and 38: Figure 3: Cash flow, uses of cash a
Page 39 and 40: Business share by country (%) China
Page 41 and 42: Engagement survey The results of th
Page 43 and 44: We will continue to capture more em
Page 45 and 46: DEAR SHAREHOLDER On behalf of the b
Page 47 and 48: NIGEL NORTHRIDGE Role: Chairman of
Page 49 and 50: Executive Committee Michael Sharp C
Page 51 and 52: All employees gender diversity Male
Page 53 and 54: directors, the board and its commit
Page 55 and 56: effective from 31 July 2015. Having
Page 57 and 58: MEMBERSHIP OF THE AUDIT COMMITTEE T
Page 59: Financial Officer or the Company Se
Page 63 and 64: LINK BETWEEN REMUNERATION AND STRAT
Page 65 and 66: What is the maximum potential value
Page 67 and 68: What is the maximum potential value
Page 69 and 70: REMUNERATION OUTCOMES IN DIFFERENT
Page 71 and 72: The remuneration package for a newl
Page 73 and 74: REMUNERATION POLICY TABLE FOR NON-E
Page 75 and 76: THE ANNUAL REPORT ON REMUNERATION T
Page 77 and 78: DIRECTORS’ SHAREHOLDINGS AND SHAR
Page 79 and 80: HISTORICAL CHIEF EXECUTIVE PAY The
Page 81 and 82: In line with FY2015, awards will be
Page 83 and 84: The total interests of the Chairman
Page 85 and 86: During the year, the Committee unde
Page 87 and 88: een made under them. The Company al
Page 89 and 90: STATEMENT OF DIRECTORS’ RESPONSIB
Page 91 and 92: The scope of our audit and our area
Page 93 and 94: Area of focus How our audit address
Page 95 and 96: Other required reporting Consistenc
Page 97 and 98: CONSOLIDATED INCOME STATEMENT For t
Page 99 and 100: CONSOLIDATED BALANCE SHEET As at 29
Page 101 and 102: CONSOLIDATED CASH FLOW STATEMENT Fo
Page 103 and 104: Supplier income recognition The Gro
Page 105 and 106: Deferred tax is provided on tempora
Page 107 and 108: The fair values of quoted investmen
Page 109 and 110: 3 Segmental reporting IFRS 8 “Ope
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Retirement benefits The Group’s d
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9 Finance costs 10 Taxation Analysi
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Changes to the UK corporation tax r
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Intangible assets includes within p
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Capitalised finance costs Finance c
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20 Bank overdraft and borrowings 29
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Borrowing facilities The Group has
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iii) Foreign exchange risk The Grou
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The Group routinely monitors its ca
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The following table shows the Group
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The inflation assumption is based o
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The table below illustrates the est
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25 Other non-current liabilities Pr
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28 Share-based payments The total c
Page 139 and 140:
) Executive Share Option Plan The E
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31 Analysis of changes in net debt
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FIVE YEAR RECORD BALANCE SHEETS Ass
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Responsibilities for the financial
Page 147 and 148:
NOTES TO THE COMPANY FINANCIAL STAT
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Share capital Ordinary shares are c
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6 Debtors Amounts owed by Group und
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12 Called up share capital 29 Augus
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STORE LIST UK Aberdeen Altrincham A
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ADDITIONAL INFORMATION Registered o
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