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Annual Report & Financial Statements 2022 85
GOVERNANCE
INTRODUCTION
On behalf of the Board, I am pleased to present our 2021/22 Remuneration Report.
The Remuneration Report provides a comprehensive picture of the structure and scale of our remuneration framework and its alignment with the business strategy and the rest of the workforce. It also details decisions made by the Committee as a result of business performance for this year and the intended arrangements for 2022/23, including the appointment of Stuart Machin as Chief Executive Officer (CEO) and Katie Bickerstaffe as Co-Chief Executive Officer.
CONTEXT OF BUSINESS PERFORMANCE
As anticipated in last year’s report, the Committee focused much of its activities
REMUNERATION
OVERVIEW
REMUNERATION
THE COMMITTEE ENSURES THE
PAY FRAMEWORK APPROPRIATELY
RECOGNISES AND REWARDS HARD
WORK AND FINANCIAL PERFORMANCE
Andrew Fisher, Chair of the Remuneration Committee
In this section
REMUNERATION
Remuneration overview p Remuneration in context p Summary Remuneration Policy p
ANNUAL REPORT ON REMUNERATION Remuneration structure p Total single figure remuneration p Salary and benefits p Annual Bonus Scheme p Performance Share Plan p Directors’ share interests p Changes to Board membership p Non-executive directors’ remuneration p Remuneration Committee remit p
during the year, on ensuring M&S’ pay frameworks and practices support M&S’ fundamental values of fairness where colleagues across the business are appropriately recognised and rewarded for hard work and financial results. The Committee ensures that any payments made do not “reward failure” or poor performance; and targets set are challenging yet motivational. Any discussion involving executive director incentive payments considers the appropriateness of the payment in the context of the shareholder experience, the general health of the business as well as pay outcomes experienced by colleagues across the business. Based on the strong financial performance of M&S during the year, with PBT of £522.9m, the maximum payment opportunity under the corporate financial performance element of the Annual Bonus Scheme (ABS) was triggered (see page 97). This will be the first bonus payment made to colleagues or executives since 2017. This above- maximum profit performance was delivered through a mix of strong Food sales growth, an improving margin mix and the performance of the new Ocado and Costa channels, together with 3.8% sales growth in Clothing & Home, significant improvements in the online offer and fulfilment together with improved profitability, cash conversion and net debt. Further detail on these and other aspects of the business’s performance over the last year is explained earlier in this annual report. As explained later in this Remuneration Report (see page 97 and 100), the Committee was mindful of this performance when discussing and approving incentive outcomes, especially when considering the uncertainty of performance caused by global macro events.
BOARD CHANGES
On 10 March we announced that after nearly 40 years of loyal service to M&S, Steve Rowe would be stepping down from his role as the CEO on 25 May, a role he has held for the last six years. He will cease full-time employment with the business at the conclusion of the Annual General Meeting (AGM) on 5 July. In view of his wisdom and formidable knowledge of the business, Steve has agreed to remain as an adviser to the new leadership for up to 12 months. I would like to take this opportunity to extend my personal thanks to Steve for his unwavering dedication and commitment to M&S, its colleagues and the Board. When setting Steve’s exit arrangements, the Remuneration Policy provided an effective and clear framework, while also providing appropriate levels of flexibility for the application of discretion by the Remuneration Committee. Final pay arrangements for Steve are outlined on page 104 of this report. During his tenure, Steve oversaw far- reaching changes in organisational structure and management, leaving behind a very strong leadership team. As a result of robust succession planning, the Board was delighted to be able to select Steve’s successors from within the existing leadership team, which not only demonstrates strong internal talent development but also provides for stability and continuity as we move to the next stage of our transformation journey. I warmly welcome Stuart Machin and Katie Bickerstaffe to the Board as CEO and Co-Chief Executive Officer respectively with effect from 25 May 2022, and I look forward to working more closely with both of them in their new roles. As detailed on page 61, both Stuart and Katie are outstanding leaders with very strong track records and experience of leading businesses through
86 Marks and Spencer Group plc
REMUNERATION
transformative change. The Board is confident in their ability to take M&S through the next stage of transformation. The Board is also cognisant that our leadership structure is unusual so it has ensured clear accountability of roles between Stuart and Katie. Stuart has responsibility for day-to-day leadership of the business and the Executive Committee. He continues to have oversight of our Food business, as well as Operations, Property, Store Development and Technology, and has taken on responsibility for HR and Corporate Communications. Upon appointment, Stuart will receive an annual salary of £800,000. Katie has responsibility for Clothing & Home, MS2, International and Financial Services. She also has a particular focus on driving the global omni-channel, data and digital future of the business. Upon appointment, Katie will receive an annual salary of £750,000, reflecting her different work pattern. Both Stuart and Katie continue to be entitled to pension arrangements on the same terms as all colleagues and will be eligible to participate in the ABS and Performance Share Plan (PSP) on the same basis as all executive directors. There was careful deliberation when setting the pay arrangements for Stuart and Katie, during which a number of factors were taken into consideration, including their different
work patterns, their experience and skill and the responsibilities of each, as well as external market factors. In addition to his finance responsibilities, Eoin Tonge has taken on an enhanced role in leading the future development of the business strategy and oversight of Plan A, becoming our Group CFO & Chief Strategy Officer with effect from 25 May 2022. We believe the accountabilities of his new role go significantly beyond those normally associated with the CFO position. In light of this, Eoin’s salary will increase to £660,000 from 25 May in recognition of his increased responsibilities, inclusive of any salary review for 2022/23. Future Board salaries are confirmed on page 96, and further details of the contractual provisions for executive directors will be summarised in the Directors’ Remuneration Report in next year’s Annual Report & Financial Statements.
SINGLE FIGURE AND INCENTIVE SCHEME OUTCOMES
As shown in the table on page 95, the total single figure for the executive directors is higher than prior year. This can be wholly attributed to the outcome of the ABS as no bonus was paid last year. As in previous years, the 2021/22 ABS remained focused on restoring the
business to profitable growth with performance focused on Group Profit Before Tax before adjusting items (PBT) (70%) and individual measures set against key areas of delivery of the transformation (30%). Individual performance was measured independently of PBT performance, but no individual element could be earned until a threshold level of PBT was achieved. It was with cautious optimism that we welcomed the 2021/22 financial results, recognising this as an indication of not only strong underlying performance in a very challenging climate, but also the impact of the successful transformation to date. The PBT outturn of £522.9m was above the maximum financial target, meaning the financial element of the bonus was achieved in full and the individual measures could pay out to the extent that executive directors achieved between target and stretch performance against their stretching personal objectives. The Committee carefully reviewed the achievement of the individual objectives set at the beginning of the year to align with the strategic priorities to fulfil its remit and enable transparent disclosure to shareholders. Full disclosure can be seen on page 97, but the Committee noted in particular the step change in Clothing &
REMUNERATION OVERVIEW
CONTINUED
STRATEGIC ALIGNMENT OF REMUNERATION FRAMEWORK WITH KPIS
KPI/Strategic priority As measured by
Performance Share Plan (PSP)
Annual Bonus Scheme (ABS) KPI See KPIs on p
Adjusted earnings per share (EPS) Financial results Return on capital employed (ROCE) Group PBT before adjusting items (PBT) Strategic priority See Strategic priorities on p
M&S Food high-performing business and market share growth
Achievement against objectives
Ocado transitioning to strong capacity growth post pandemic reversion Clothing & Home on track for a more profitable model capable of growth Building store rotation pipeline driving exit from legacy stores Absorbing Brexit related costs, but embryonic global strategy encouraging
2021/22 performance
ADJUSTED EARNINGS PER SHARE
21.7p Adjusted EPS in 2021/22 was 21.7p. This was below the 22.7p threshold required for any vesting under this element of the 2019 PSP award.
RETURN ON CAPITAL EMPLOYED
8.7% Average three-year ROCE performance was 8.7%. This was below the required 10.2% threshold for any vesting under this element of the 2019 PSP award.
GROUP PBT BEFORE ADJUSTING ITEMS
£522.9m Group PBT was above the “maximum” target for bonus payments to be made under the 2021/22 ABS.
88 Marks and Spencer Group plc
REMUNERATION
REMUNERATION OVERVIEW
CONTINUED
The maximum opportunity will remain at 200% of base salary.
The Committee continues to ensure that the remuneration framework for executives is aligned with shareholder interests. Following careful debate, it has been agreed that the 2022 PSP will maintain measures applied to the 2021 PSP awards, being 30% adjusted EPS, 30% ROCE, 20% relative total shareholder return (TSR) and 20% strategic measures. Targets have been set to be stretching yet motivating and are detailed in full on pages 100 and 101.
While no change has been proposed to the structure and measures of the 2022 PSP, this belies the significant and detailed conversation and analysis that took place around the appropriateness of the introduction of environmental, social and governance (ESG) measures and targets into the PSP. There is no doubt that M&S takes its ESG responsibility seriously. Our sustainability commitments sit at the heart of our business operations and inform decisions at all levels and across all departments (see page 70 for our ESG Committee Review). M&S was an early pioneer of championing sustainability and continues to hold a leading position in this field. One of the ways we believe we can improve our work in this area is to focus on communication with consumers to engage them on this important topic, and to be sure we improve awareness of the work we do. As such, when the Committee considered the introduction of a more traditional carbon metric in the pay framework, it determined that a measure which charts an improvement in customer sentiment would be more aligned to the strategy for the business. To track this credibly and robustly, a base case for current sentiment must first be established. This forthcoming year the Committee will review the base measurement line throughout the year with the intention of introducing a metric to show improvement from that baseline for 2023.
Having reduced award levels in 2020 to acknowledge the shareholder experience of Covid-19 and to mitigate against windfall gains, share price recovery led the Committee to decide that for the 2021 PSP award it was appropriate to return PSP award percentages to 250% of salary. Mindful of the need to incentivise executives and ensure that they remain aligned with the long-term interests of shareholders, we intend to once again grant PSP awards of 250% of salary in June
- The Committee retains the right to
review award levels in the event of significant share price movement prior to the date of grant. Furthermore, it should be noted that when this award reaches the point of vesting, careful consideration will not only be applied to achievement against the relevant performance conditions, but also to ensure the vesting values are reflective of the shareholder experience across the term of the plan. Should the Committee believe this not to be the case, it retains its right to apply discretion to the final outturn.
WIDER WORKFORCE PAY ARRANGEMENTS The Committee continued to receive, and indeed welcome, regular and varied updates during the year relating to M&S’ pay arrangements. In addition to those already outlined in the Committee’s remit, available on the M&S website, discussions included hourly pay for store colleagues and career progression through the organisation. The Committee was also informed of the outcome of the company- wide Total Reward Review that took place in the prior year. More than 14, colleagues gave us their views and suggestions on pay arrangements at M&S. As a result of this feedback in 2021/22, we saw the implementation of Virtual GP, which allowed colleagues unlimited 24/ access to a GP, Check4Cancer, which provides free screenings to all colleagues for high-risk cancers, and salary finance options to help consolidate debt, save and protect through income protection insurance. To bring M&S in line with market practice, and in direct response to colleague feedback as a result of the company-wide Total Reward Review, from 1 April 2022 the Company has introduced a 5% payment in lieu of pension allowance for colleagues impacted by either the Annual or Lifetime Allowance limits. The Committee recognises this provision aligns with market practice. To maintain alignment between executive directors and colleagues in the wider population, it is intended to introduce a similar arrangement into the new Remuneration Policy which will be brought for shareholder approval at the 2023 AGM.
The Committee welcomes continued collaboration with the Business Involvement Group (BIG). At Committee meetings we receive direct feedback on colleagues’ views from the National Chair of BIG and in turn the Head of Executive Reward and Pay Governance attends National BIG Committee meetings to share and discuss the executive pay framework and its relationship with the wider workforce. Such dialogue forms the basis of a trusted and valued collaborative working partnership and ensures a close link between the pay philosophies at the most senior levels and those for the wider population. To demonstrate the importance the Committee gives to the alignment of executive pay with the wider workforce, in the 2021 Remuneration Report we expanded our disclosures on such pay arrangements. We are pleased to continue this approach in this year’s report; see pages 89 and 90. Given the economic environment in which we are operating currently, it is unsurprising that significant time was taken in discussing the appropriate approach to the annual pay review. As is to be expected, this topic generated a robust debate, and we believe the end result of salary increases ranging from 3% for our senior population to 4%-6.5% for the wider workforce balances the need for financial restraint with support for our colleagues given the increases to cost of living being experienced by all. Further details can be found on pages 89 and 96.
LOOKING AHEAD
We look ahead to what will be a new and dynamic chapter in the M&S story. This will be the final year under the current remuneration framework, and at the 2023 AGM we will be seeking your support and approval for a new Remuneration Policy. During the coming year, the Committee will be working to ensure any new Remuneration Policy is valid and effective in driving and supporting the business strategy while remaining appropriate when considering the overall M&S remuneration framework and the external regulatory environment. I would like to thank our shareholders for their continued support during the year. I will be available at the AGM on the 5 July 2022 to answer any questions in relation to this Remuneration Report. Andrew Fisher
Annual Report & Financial Statements 2022 89
GOVERNANCE
CONSIDERATION OF
COLLEAGUE PAY
The Committee monitors and reviews the effectiveness of the executive reward policy and its impact and compatibility with remuneration policies in the wider workforce. Throughout the year, the Committee reviews the frameworks and budgets for key components of colleague pay arrangements, together with the broader structure of Group bonus provisions, which ensures appropriate alignment with senior pay arrangements. The Committee is provided throughout the year with information detailing pay in the wider workforce, which gives it the additional context needed to make informed decisions. The Head of Executive Reward & Pay Governance advises the Committee on the approach to be adopted in the forthcoming UK pay review, and the Committee then considers the executive directors’ pay in line with these arrangements. In approving the budget for the annual bonus, the Committee reviews all bonus costs for the Company against the operating plan. The Committee also reviews and approves any PSP awards made to executive directors and directors below the Board prior to their grant. The Committee receives updates on a variety of colleague engagement initiatives. Alongside our annual survey, bi-annual pulse and quarterly focused surveys provide dynamic and relevant colleague feedback. The pulse surveys have helped us to better understand, and take action on, the things which matter most to our colleagues. These have focused on topics such as Inclusion & Diversity, Wellbeing and overall colleague engagement. Colleagues are encouraged to raise questions at the periodic all-colleague announcements led by the CEO. All questions raised are answered, and
comments made during the year through surveys or our network of elected colleague representatives via BIG are considered. The Head of Executive Reward & Pay Governance typically provides an annual update to these colleague representatives with an explanation of the executive directors’ pay arrangements during the year, and these representatives in turn are able to ask questions on the arrangements and their fit with the other reward policies at this time.
CONSIDERATION OF STAKEHOLDER VIEWS The Committee is dedicated to an open and transparent dialogue with shareholders on the issue of executive remuneration. Where appropriate, the Committee will actively engage with shareholders and shareholder representative bodies, seeking views which are considered when making any decisions about changes to the directors’ Remuneration Policy. The Committee seeks the views of the largest shareholders individually, and others through shareholder representative bodies, when considering making any significant changes to the Remuneration Policy. This may be done annually or on an ad hoc basis, dependent upon the issue. This year, the Committee consulted on the proposed strategic measures and targets to be applied to the PSP. The Committee, led by the Chair, annually engages in a process of investor consultation, which is typically in written format, but has included face-to-face meetings, telephone or video calls. The Committee Chair is available to answer questions at the AGM, and the answers to specific questions are posted on our website. As part of our reporting approach, an annual shareholder meeting is normally held and views on a variety of topics, including executive pay, are taken into account.
PERCENTAGE CHANGE IN CEO’S REMUNERATION The table below sets out the change in the CEO’s remuneration (i.e. salary, taxable benefits and annual bonus) compared with the change in the average non-executive director and our
UK-based colleagues’ pay. This group has been chosen as the majority of our workforce are based in the UK. Further details of the non-executive director pay changes are shown on page 104.
% change 2020/21 – 2021/ Base salary/fees Benefits Annual bonus CEO (Steve Rowe) 1% -20%% 100% Average non-executive director 1% 0% – UK colleagues (average per FTE) 4% 0% 100%
REMUNERATION
IN CONTEXT
Share ownership across our colleagues
M&S is a proud advocate of employee share ownership. The Board believes this supports colleagues not only to share in M&S’ success but also to behave as owners of our business, aligned with our shareholders’ interests. Across our UK and Irish colleagues, M&S has a significant number of participants in all employee share schemes; colleagues hold over 101m save as you earn options in our ShareSave scheme and over 2, colleagues hold shares in our share incentive plan ShareBuy.
Direct engagement with our colleagues
Since 2018, the Chair of BIG, our colleague representative body, has been invited to attend a Remuneration Committee meeting each year to engage and contribute on a full range of topics and activities. During the year, representatives from BIG have been engaged on a number of pay-related topics, beyond the executive level, including providing feedback on, and agreeing with, the ShareSave communication materials and funding options of our share schemes. They also discussed the operation of a tax-advantaged ShareSave in Ireland, which has been paused while alternative options are investigated due to the absence of an approved savings carrier. The collaborative relationship we have with BIG strongly reflects our belief in the key role that colleague voice plays in ensuring the Committee has greater visibility of the things that really matter to our colleagues. This also gives the Committee the opportunity to explain and discuss our pay practices and how executive pay aligns with pay across the wider workforce. In addition, the Head of Executive Reward & Pay Governance provides updates to the Committee as appropriate on pay and people-related issues during the year.
Pay budgets
Under the remit of the Remuneration Committee, total budgeted salary expenditure across M&S for salary review is noted, as are bonus and share scheme budgets, ensuring principles for reward allocation are aligned across the full workforce, inclusive of senior leaders.
The average pay increase for our UK Store Customer Assistants and Team Support Managers awarded in April 2022 was 5.3%. Effective July 2022, salary increases ranging from 3% for our senior population to 4%-6.5% for the wider salaried workforce have been awarded.
COLLEAGUE ENGAGEMENT
Annual Report & Financial Statements 2022 91
GOVERNANCE
SUMMARY EXECUTIVE DIRECTORS’ REMUNERATION POLICY (AS APPROVED ON 3 JULY 2020)
This report sets out a summary of M&S’ policy on remuneration for executive and non-executive directors. The full Policy was approved by shareholders at the AGM on 3 July 2020 and can be found on our website at marksandspencer.com/thecompany. The Policy took effect from this date and is designed to attract, retain and motivate our leaders within a framework designed to promote the long-term success of M&S and aligned with our shareholders’ interests.
FIGURE 1: EXECUTIVE DIRECTORS’ REMUNERATION POLICY TABLE
ELEMENT OPERATION OPPORTUNITY
Base salary Salaries are payable in cash and are reviewed annually by the Committee considering a number of factors, including external market data, historic increases given to the individual and salary review principles applied to the rest of the organisation.
Normally in line with those in the wider workforce, although no maximum is set.
Benefits In line with our policies, directors are eligible to receive benefits which may include: a car or cash allowance and a driver, life assurance and relocation and tax equalisation allowances in line with our mobility policies. As with all colleagues, directors are also offered other benefits, including colleague discount, salary sacrifice schemes and participation in all-employee share schemes.
There is no set maximum; however, any provision will be commensurate with local markets and for all-employee share schemes is in line with local statutory limits. Pension benefits
Directors may participate in the Your M&S Pension Saving Plan (a defined contribution arrangement), on the same terms as all other colleagues. The defined benefit pension scheme is closed to new members. Directors who are members of this scheme will continue to accrue benefits as a deferred member.
Currently a maximum employer contribution of 12% of salary where the employee contributes 6% of salary. From 3 July 2020, pension cash supplements were removed for future directors. ABS including Deferred Share Bonus Plan (DSBP)
Directors are eligible to participate in this non-contractual, discretionary scheme. Performance is measured against one-year financial and individual performance targets linked with the delivery of the business plan. At least half of awards are measured against financial measures, which typically include Group PBT before adjusting items (PBT). Corporate and individual elements may be earned independently, but no part of the individual objectives may be earned unless a threshold level of PBT has been achieved, after which up to 40% of the maximum may be payable for the achievement of individual objectives. Not less than 50% of any bonus earned is paid in shares which are deferred for three years. The Committee retains the right to exercise discretion, both upwards and downwards, to ensure that the level of award payable is appropriate. Malus provisions apply to the deferred share awards. Cash bonus payments are subject to two-year clawback provisions. Clawback would be triggered in specified events such as, but not limited to, a material misstatement of the Company’s audited results, an error in calculation of the award, gross misconduct, or events or behaviour that have a detrimental impact on the reputation of any member of the Group.
Total maximum annual potential of up to 200% of salary for each director.
PSP Directors are eligible to participate in the PSP. This is a non-contractual, discretionary plan and is M&S’ main long-term incentive scheme. Performance may be measured against appropriate financial, non-financial and/or strategic measures. Financial measures must comprise at least 50% of awards. Malus and clawback provisions apply to these awards. Clawback triggers include, but are not limited to, a material misstatement of the Company’s audited results, an error in calculation of the award, gross misconduct or events or behaviour that has a detrimental impact on the reputation of any member of the Group. Awards are subject to a further two-year holding period after the vesting date.
The maximum value of shares at grant is capped at 300% in respect of a financial year.
Shareholding requirement
Directors are required to hold shares equivalent in value to a minimum percentage of their salary within a five-year period from their appointment date. Directors are required to continue to hold their shareholding requirement, or, if their level of shareholding is below the requirement, their actual shareholding, for two years after leaving M&S.
For the CEO, this requirement is 250% of salary. For all other executive directors, the requirement is 200%.
SUMMARY
REMUNERATION POLICY
92 Marks and Spencer Group plc
REMUNERATION
SUMMARY REMUNERATION POLICY
CONTINUED
FIGURE 2: RECRUITMENT POLICY & SERVICE CONTRACTS
The table below summarises the Company’s policy on the recruitment of new executive directors. Similar considerations may also apply where a director is promoted to the Board.
In addition, the Committee has discretion to include any other remuneration component or award which it feels is appropriate, considering the specific circumstances of the individual, subject to the limit on variable remuneration set out below. The rationale for any such component would be appropriately disclosed.
ELEMENT APPROACH
Service contract
- All executive directors have rolling contracts for service which may be terminated by M&S giving 12 months’ notice and the individual giving six months’ notice.
Base salary –^ Salaries are set by the Committee, taking into consideration a number of factors, including the current pay for other executive directors, the experience, skill and current pay level of the individual and external market forces.
Benefits –^ The Committee will offer a benefits package in line with our benefits policy for executive directors.
Pension benefits
- Maximum contribution in line with our policy for future executive directors (currently up to 12% of salary).
ABS –^ Eligible to take part in the ABS with a maximum bonus of 200% of salary in line with our policy for executive directors.
PSP –^ A maximum award of up to 300% of salary in line with our policy.
Buy-out awards
- The Committee may offer compensatory payments or buy-out awards, dependent on the individual circumstances of recruitment, determined on a case-by-case basis.
- The specifics of any buy-out awards would be dependent on the individual circumstances of recruitment. The Committee’s intention would be that the expected value awarded is no greater than the expected value forfeited by the individual.
FIGURE 3: TERMINATION POLICY
The Company may choose to terminate the contract of any executive director in line with the terms of their service agreement, either by means of a payment in lieu of notice or through a series of phased payments subject to mitigation. Service agreements may be terminated without notice and, in certain circumstances such as gross misconduct, without payments.
The table below summarises our Termination Policy for executive directors under their service agreements and the incentive plan rules.
ELEMENT APPROACH
Base salary, benefits and pension benefits
- Payment made up to the termination date in line with contractual notice periods.
ABS –^ There is no contractual entitlement to payments under the ABS. If the director is under notice or not in active service at either the relevant year end or on the date of payment, awards (and any unvested deferred bonus shares) may lapse. The Committee may use its discretion to make a bonus award.
Long-term incentive awards
- The treatment of outstanding awards is determined in accordance with the plan rules.
Repatriation –^ M&S may pay for repatriation where a director has been recruited from overseas.
Legal expenses & outplacement
- Where a director leaves by mutual consent, M&S may reimburse reasonable legal fees and pay for professional outplacement services.
The full Policy sets out further detail on the treatment of the executive directors’ pay arrangements, including the treatment of share schemes in the event of a change of control or winding up of the Company.
94 Marks and Spencer Group plc
FIGURE 5: NON-EXECUTIVE DIRECTORS’ REMUNERATION POLICY
The table below sets out our Policy for the operation of non-executive director fees and benefits at the Company. The Policy was approved in July 2020 and may operate for up to three years.
ELEMENT OPERATION AND OPPORTUNITY
Chairman’s fees
- Fees are reviewed annually and are determined by the Remuneration Committee.
- Total fee comprises the non-executive director basic fee and the additional fee for undertaking the role.
- The maximum aggregate non-executive director basic fee, including the Chairman’s basic fee, is £750,000 p.a, as set out in our Articles of Association. Non-executive director’s basic fee
- Fees are reviewed annually and are determined by the Chairman and executive directors.
- The maximum aggregate non-executive director basic fee, including the Chairman’s basic fee, is £750,000 p.a, as set out in our Articles of Association.
Additional fees
Additional fees are paid for undertaking the extra responsibilities of:
- Board Chairman.
- Senior Independent Director.
- Committee Chair. Benefits –^ In line with our other colleagues, the Chairman and non-executive directors are entitled to receive colleague discounts.
- The Company may reimburse the Chairman and non-executive directors for reasonable expenses in performing their duties and may settle any tax incurred in relation to these.
- The Chairman may also be entitled to the use of a car and driver. Share ownership
- All non-executive directors, including the Chairman, are required to build and maintain a shareholding of at least 2,000 shares upon joining M&S.
- This shareholding must be held for the period of their tenure.
REMUNERATION FRAMEWORK FOR THE REST OF THE ORGANISATION
M&S’ philosophy is to provide a fair and consistent approach to pay. Remuneration is determined by level and is broadly aligned with those of the executive directors.
Base salaries are reviewed annually and reflect the local labour market.
All UK colleagues are eligible to participate in the Your M&S Pension Saving Plan on the same terms as the executive directors. Colleagues affected by the HMRC Annual and/or Lifetime Allowance limits, can now choose to opt out of the pension and receive a cash payment in lieu of this. In addition, all UK colleagues are provided with life insurance and colleague discounts, and may choose to participate in the Company’s all-employee share schemes and salary-sacrifice arrangements.
A significant number of colleagues are eligible to be considered to participate in an ABS which is partially determined by Group PBT performance. Part of the bonus is deferred into shares for three years. Around 170 of M&S’ top senior executives may be invited to participate in the PSP, and will then be measured against the same performance conditions as executive directors. Award levels granted are determined to be aligned with market practice and reflect an individual’s level of seniority as well as their performance and potential within the business.
REMUNERATION
SUMMARY REMUNERATION POLICY
CONTINUED
Annual Report & Financial Statements 2022 95
GOVERNANCE
REMUNERATION
REPORT
Fixed pay Annual bonus PSP Total pay for 2021/
Each year, the Remuneration Committee assesses the current senior remuneration framework to determine whether the existing incentive arrangements remain appropriately challenging in the context of the business strategy, fulfil current external guidelines and are aligned with a range of internal factors, including the pay arrangements and policies throughout the rest of the organisation. In its discussions, the Remuneration Committee aims to ensure not only that
the framework is strategically aligned to the delivery of business priorities, but also that payments made during the year fairly reflect the performance of the business and individuals. A significant proportion of the performance measures used in the incentive schemes are integrated with M&S’ KPIs and strategic priorities detailed in the Strategic Report, as illustrated on pages 35 and 6 respectively.
The diagram below (Figure 6) details the achievement of each executive director under the Company’s incentive schemes as a result of short- and long- term performance to the end of the reported financial year and summarises the main elements of the senior remuneration framework. Further details of payments made during the year are set out in the table below (Figure 7) and later in this report.
FIGURE 7: TOTAL SINGLE FIGURE REMUNERATION (AUDITED)
Director Year
Salary £
Benefits £
Total bonus £
Total PSP vested £
Pensions benefits £
Total RSP granted £
Total pay £
Total fixed pay £
Total variable pay £
Steve Rowe 2021/22 841 53 1,601 0 135 0 2,630 1,029 1,
2020/21 834 31 0 0 203 0 1,068 1,068 0
Eoin Tonge
The increase in Steve’s benefits is a result of the resumed use of his driver, which was paused during periods of lockdown in 2020/21, and the upgrade of the car used to a lower CO2 emitting vehicle. Whilst the change in vehicle is better for the environment, it does have a higher market value which increased the level of tax payable by Steve. No additional benefit was received by Steve.
Eoin Tonge received an award under the Restricted Share Plan (RSP) to compensate him, on a fair value basis, for share awards granted under his prior employer’s share schemes. The face value of this award is shown in the 2020/21 row of the above table. Details of the calculation method were disclosed on page 94 of last year’s annual report.
FIGURE 6: REMUNERATION STRUCTURE 2021/
1% increase in line with other management positions
Payments made are 95% of maximum bonus opportunity 0% of award vested
Total payments are c.55% of maximum potential
EXECUTIVE DIRECTORS’ REMUNERATION
For more information see p97 For more information see p
Base salary
Benefits
Pension benefits
200% of salary maximum bonus opportunity (with 50% deferral)
Measured against a balance of Group PBT before adjusting items and individual performance
250% of salary awarded in 2019
Measured against adjusted EPS, average ROCE and TSR achievement was 0% against targets set
Annual Report & Financial Statements 2022 97
GOVERNANCE
ANNUAL BONUS SCHEME 2021/22 (AUDITED) CONTINUED
PBT outturn for the year was £522.9m, which was above the target set to trigger payments under both the corporate and individual elements of the scheme. As shown in Figure 11 below, the strong PBT performance during the year exceeding the maximum target set at the start of the year meaning that executive directors were awarded 100% of maximum opportunity under the corporate element of the scheme and c.83% of the maximum for individual performance. Total bonus achievement was 95% of opportunity.
When discussing the payments to executive directors, the Committee noted
that under the terms of scheme, Steve would not technically be eligible for a payment due to being under notice before the payment date. However, the Committee considered his direct impact on delivering this first phase of transformation and his achievements against the individual objectives set for 2021/22. Given these and Steve’s agreement to continue to support M&S beyond the end of his tenure, the Committee deemed it appropriate to apply their discretion and agree a bonus payment commensurate with his performance over the year.
The Committee reviewed achievement to ensure that total payments were appropriate in the context of several factors. These included M&S’ overall financial performance, the outturn of individual objectives, and the level of bonus payable elsewhere in the business. Figure 11 below sets out the Group PBT targets comprising 70% of awards and illustrates the extent to which each director achieved their four individual objectives. Total payments shown below directly correspond to the figure included in the single figure table on page 95.
FIGURE 10: INDIVIDUAL OBJECTIVES (AUDITED)
Director Individual
Steve Rowe Creation and implementation of revised Executive Committee structure and roles and the development of strong succession plans. Streamlined and sharpened the Executive Committee, creating a cohesive top team, supported by the CEO through coaching and counselling. Supported the Board in the delivery of a strong succession plan, as demonstrated by the internal appointment of the new leadership team. Delivery of the transformation programme in Clothing & Home. Clothing & Home delivered sales growth of 3.8% vs 2019/20 with three consecutive quarters of underlying growth. Online sales grew 55.6% with strong growth throughout the year outperforming pure play peers and gaining 60bps of market share. Store sales declined 11.2% with performance continuing to be impacted by legacy High Street and City Centre stores which is being addressed through the store renewal programme. Operating profit before adjusting items of £330.7m, compared to £224.0m in 2019/20 reflected the benefit of sales growth combined with a much stronger full price sales mix. Brand strategy established and model refined, with third party brands across Clothing & Home and Beauty generating c.£100m of orders in 2021/22. Reset the strategic relationship with Ocado regarding platform integration, data sharing, infrastructure and category strategy. Significant improvement in working relationships with Ocado Group. Greater “omni-channel” joint working, with upcoming trials on data sharing and category approaches. As expected 2021/22 saw a reduction in average basket size resulting in a decline in revenue, however, Ocado substantially outperformed the online grocery market. M&S branded products consistently make up over 25% of Ocado Retail’s sales, generating substantial buying gains for both M&S Foods and Ocado Retail. Revitalise Plan A. Plan A has always been an important pillar within the M&S business, and this year saw a relaunch of a strengthened Plan A mission providing new oversight, energy and momentum, and a singular focus on cutting the M&S carbon footprint by one third by 2025 and to be fully net zero by 2040. Agreed a new £850m Revolving Credit Facility linked to the delivery of the net zero roadmap.
Eoin Tonge Drive a focus on financial delivery of critical transformation strategies in Property and supply chain. Stepped up the new store pipeline to enable a drive in rotation with c.15 new full line stores and a further 32 store closures in the pipeline over the next three years with expectation that this will build further. Trials implemented to test an accelerated “close and recapture” model delivered proof of concept, expanding possibilities around estate rotation capabilities. Strong results from recent openings with sales averaging 11% above plan with payback at around 1.5 years (-44% against plan). With regard to supply chain, Eoin played a key role in the resetting of the Gist relationship. Put a strong three-year plan in place for Clothing & Home supply chain and successfully delivered in-store fulfilment. Design and deliver critical Group investment evaluation processes and models. Further tightening of our capital discipline and appraisal processes. Delivered corporate development through purchase of strategically identified businesses, such as Nobody’s Child, The Sports Edit and our investment in the True investment fund. Successfully integrated Jaeger into the M&S family. Shape and strengthen the balance sheet. Balance sheet strengthened with net debt down two-thirds from two years ago, through prudent cashflow management, capex discipline and working capital initiatives. Critically renegotiated bank revolving credit facility. Deliver step change in the control environment. Improvement in all internal governance mechanisms including reporting to and engaging with the Audit Committee and ESG Committee. New business model control framework put in place.
FIGURE 11: ANNUAL BONUS SCHEME 2021/22 (AUDITED)
Director
CORPORATE GROUP PBT (70%) INDIVIDUAL (30%) TOTAL PAYMENT Target/performance Performance Achievement Min £315m Max £361m % of salary £
Steve Rowe 100% of max bonus^ 83.3% of max bonus^ 190% £1, £522.9m
Eoin Tonge 100% of max bonus^ 83.3% of max bonus^ 190% £1, £522.9m
ANNUAL BONUS SCHEME
98 Marks and Spencer Group plc
REMUNERATION
REMUNERATION REPORT
CONTINUED
ANNUAL BONUS SCHEME CONTINUED
DEFERRED SHARE BONUS
PLAN (AUDITED)
Currently 50% of any bonus payment is compulsorily deferred into a conditional share award. These awards vest after three years, subject to continued employment as well as malus provisions. As the ABS did not operate in 2020/21, no share awards under the DSBP were made during the year. The table below provides the value of the share awards to be made in respect of the 2021/22 bonus. This value reflects half of the value shown for the 2021/22 bonus payments in the single figure table on page 95.
FIGURE 12: DSBP AWARDS IN RESPECT OF 2021/
Basis of award
Face value of award £
End of deferral period
Steve Rowe 50% of bonus
Eoin Tonge 50% of bonus
ANNUAL BONUS SCHEME FOR 2022/
During the year, the Committee reviewed the 2022/23 scheme, considering the accelerated Never the Same Again transformation programme together with bonus arrangements elsewhere in the business. The Committee was satisfied that the structure of the ABS, as approved by shareholders at the 2020 AGM, remains appropriate. Subject to the achievement of stretching targets, set in line with the 2022/23 financial plan, the scheme provides for a competitive bonus opportunity with a strong focus on stretching PBT performance. Executive directors are eligible to receive a bonus payment of up to 200% of salary. Performance will be focused on Group PBT before adjusting items (PBT) (70%) with individual measures set against key areas of delivery of the transformation plan. Individual performance will again be
measured independently of PBT performance; no individual element may be earned until a threshold level of PBT is achieved. The remaining 30% of the bonus will be measured against a scorecard of individual objectives, identified as the measurable key priorities required to drive the continued transformation of M&S. The performance targets for the 2022/ scheme are deemed by the Board to be too commercially sensitive to disclose at this time, as they are not disclosed elsewhere in the report. Where possible, they will be disclosed in next year’s report. The Committee, at its absolute discretion, may use its judgement to adjust outcomes to ensure that any payments made reflect overall business and individual performance during the year. Any discretion applied will be clearly disclosed and justified.
Director
CORPORATE TARGETS INDIVIDUAL OBJECTIVES
Group PBT before adjusting items PBT
Scorecard of individual measures % bonus % bonus Measures
Stuart Machin
70% 30% –^ Lead and develop a successful rhythm and effective ways of working with new executive team. Leadership and governance of Executive Committee.
- Implement a simplified and effective organisational structure.
- Evolve the Ocado Retail joint venture and strategic plan.
- Deliver the Food supply chain transformation.
- Deliver the Property store rotation and renewal programme.
- Create a high performing and engaged culture across the whole of M&S.
Katie Bickerstaffe
70% 30% – Deliver the MS2 and omni-channel strategy and performance.
- Improvement in Sparks active members, engagement, personalisation and payment.
- Achieve International growth and strategy for India expansion.
- Deliver end to end clothing supply chain (phase 1).
- Deliver digital and data capability and put at the heart of the delivery of the next phase of growth transformation.
- Clothing category management and effective ways of working.
Eoin Tonge 70% 30% –^ Continue to improve and strengthen the Group balance sheet.
- Implement a new energised control and risk framework
- Lead the strategic framework review for the next phase of growth transformation
- Accelerate the Property store rotation programme.
- Lead the organisation productivity and efficiency initiatives.
- Deliver a step change in our sustainability plan and put at the centre of our Brand and proposition.
100 Marks and Spencer Group plc
REMUNERATION
REMUNERATION REPORT
CONTINUED
PERFORMANCE SHARE PLAN (PSP) CONTINUED
2019/20 award
Adjusted EPS in 2021/ (p)
Average ROCE (2019/20-2021/22) (%) TSR
1/3 of award 1/3 of award 1/3 of award
Total vesting % of award
Threshold performance 22.7 10.2 Median
Maximum performance 28.5 12.7 Upper quartile Actual performance achieved 21.7p 8.7% Below median
Percentage of maximum achieved 0% 0% 0%
The targets outlined above are stated on a post-IFRS 16 basis and include adjustments that have been made for the impact of the investment in Ocado Retail Limited. The original targets were EPS 24.0p-31.0p and ROCE 13.0%-17.0%. For threshold performance 20% of the 2019/20 award would have vested, increasing to 100% on a straight-line basis between threshold and maximum performance.
FIGURE 17: VESTING VALUE OF AWARDS VESTING IN 2021/22 (AUDITED)
On grant At the end of performance period (2 April 2022)
Number of shares granted (incl. rights issue adjustment)
% of salary granted
Dividend equivalents accrued during the performance period
Number of shares vesting
Number of shares lapsing
Impact of share price performance
Total vesting of award £
Steve Rowe 983,801 250% 51,437 0 1,035,238 – £0k
Dividend equivalents accrued during the performance period have been included in the table above.
PSP AWARDS TO BE MADE IN 2022/
During the year, the Committee reviewed the long-term incentive framework at M&S, assessing the extent to which it remained suitable. While the 2022 PSP will maintain the measures used for the 2021 PSP awards (30% adjusted EPS, 30% ROCE, 20% relative TSR and 20% strategic measures), the EPS and ROCE targets have been increased from those seen in awards from previous years.
In making this decision, the Committee was mindful of the need to ensure that M&S’ PSP motivates senior leaders to drive the required transformation to secure M&S’ long-term success while balancing shareholder interests. Overall, the Committee believes that these PSP targets are appropriately stretching in the context of the business and analyst expectations and remain equally challenging as those set at the start of the performance period for previous awards.
TSR will once again be measured against a bespoke group of companies taken from the FTSE 350 General and Food & Drug Retailers indices. The existing group of 13 companies, as detailed in Figure 14, was thoroughly reviewed to ensure the constituents remained appropriate and aligned to M&S’ business operations. This review resulted in the removal of Wm Morrisons, as it is no longer listed on the FTSE. The revised TSR comparator group of 12 companies can be found in Figure 19.
Following a debate on M&S’ share price performance since the 2020/21 PSP was awarded in June 2021, a grant of 250% of salary was approved for the 2022 PSP. The Committee will review and reconfirm this decision immediately prior to grant to ensure this remains appropriate.
Performance will be measured as shown in Figure 18 below, with 20% of awards vesting for threshold performance and 100% for maximum.
FIGURE 18: PERFORMANCE CONDITIONS FOR PSP AWARDS TO BE MADE IN 2022/
2022/23 award measures Weighting
Details Threshold Maximum
Adjusted EPS in 2024/25 (p) 30% 18p 27p ROCE in 2024/25 (%) 30% 11.5% 14.0%
Relative TSR 20% Median Upper quartile
Strategic measures 20% M&S.com growth Food like-for-like sales Store staff cost to sales ratio
Annual Report & Financial Statements 2022 101
GOVERNANCE
PERFORMANCE SHARE PLAN (PSP) CONTINUED
FIGURE 19: TSR COMPARATOR GROUP 2022/23 AWARD
ASOS Dunelm Group J Sainsbury Next B&M European Frasers Kingfisher Tesco Dixons Carphone JD Sports Fashion N Brown Group WHSmith
EXECUTIVE DIRECTORS’ REMUNERATION
FIGURE 20: DIRECTORS’ SHAREHOLDINGS (AUDITED)
The table below sets out the total number of shares held by each executive director serving on the Board during the period to 2 April 2022. Shares owned outright include those held by connected persons.
There have been no changes in the current directors’ interests in shares or options granted by the Company and its subsidiaries between the end of the financial year and 24 May 2022. No director had an interest in any of the Company’s subsidiaries at the statutory end of the year.
Shares owned outright
Unvested
Vested unexercised options
With performance conditions
Without performance conditions Performance Share Plan
Restricted Share Plan
Steve Rowe 562,662 3,861,479 – –
Eoin Tonge 277,999 2,032,049 789,252 –
FIGURE 21: SHAREHOLDING REQUIREMENTS INCLUDING POST-CESSATION (AUDITED)
All executive directors are required to build shares equivalent in value to a minimum percentage of their salary within a five-year period from their appointment date. For the CEO, this requirement is 250% of salary and for other executive directors the requirement is 200% of salary. A similar requirement of 100% of salary currently applies to members of the Executive Committee below Board level.
The chart below shows the extent to which each executive director has met their target shareholding as at 2 April 2022. For Steve Rowe, his 250% shareholding requirement is measured from the date he was appointed CEO. Although the respective target has not yet been achieved, the Committee is satisfied that no shares granted or held have been sold by either the CEO or his related parties and that the CEO’s interests remain strongly aligned with shareholders.
For the purposes of the requirements, the net number of unvested share awards not subject to performance conditions is included and is reflected in the chart below. The Committee continues to keep shareholding requirement guidelines and actual director shareholdings under review and will take appropriate action should it feel this is necessary.
To support the Committee’s intention to drive long-term, sustainable decision-making for the benefit of M&S and our shareholders and in line with the 2018 UK Corporate Governance Code changes and the Investment Association’s updated guidelines, in 2020 the Committee approved the extension of shareholding guidelines to beyond the time at which an executive director leaves M&S. Directors are required to maintain their minimum shareholding requirement, or, if their level of shareholding is below this, their actual shareholding, for two years after leaving M&S. For the avoidance of doubt, the Committee has approved all vesting awards from 2020 grants onwards to be held in a nominee vehicle to ensure the successful operation of this policy.
For the purposes of this calculation, an average share price is used to reduce the impact of share price volatility on the results. The average share price for the year was £1.809, with resultant shareholdings illustrated in the chart below.
Shares owned outright Unvested DSBP/RSP shares Shareholding requirement
210%
250% of salary
200% of salary
126% Steve Rowe
Eoin Tonge
Annual Report & Financial Statements 2022 103
GOVERNANCE
EXECUTIVE DIRECTORS’ REMUNERATION CONTINUED
FIGURE 26: PERFORMANCE AND CEO REMUNERATION COMPARISON
This graph illustrates the Company’s performance against the FTSE 100 over the past 10 years. While M&S is not currently a constituent of the FTSE 100 Index, the Committee feels that this remains the most appropriate comparator. The calculation of TSR is in accordance with the relevant remuneration regulations. The table below the TSR chart sets out the remuneration data for directors undertaking the role of CEO during each of the last 10 financial years.
0
50
100
150
200
0
5
10
15
20
25
30
35
40
2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/
FTSE 100 Index (£)
CEO single figure remuneration (£000)
Source: Thomson Reuters
Marks and Spencer Group plc (£)
£ £m
02/04/12 30/03/
29/03/14 28/03/15^ 02/04/ 01/04/ 31/03/18 (^) 30/03/ 28/03/ 03/04/21 02/04/
CEO CEO single figure (£000)
Steve Rowe – – – – 1,642 1,123 1,517 1,205 1,068 2, Marc Bolland 2,142 1,568 2,095 2,015 – – – – – – Annual bonus payment (% of maximum)
Steve Rowe – – – – 36.98% 0.00% 0.00% 0.00% 0.00% 95.0%
Marc Bolland 42.50% 0.00% 30.55% 31.90% – – – – – – PSP vesting (% of maximum)
Steve Rowe – – – – 0.00% 8.20% 34.0% 11.20% 0.00% 0.00% Marc Bolland 00.00% 7.60% 4.70% 4.80% – – – – – –
FIGURE 27: PERCENTAGE CHANGE IN DIRECTORS’ REMUNERATION
% change 2020/21-2021/22 % change 2019/2020-2020/ 2020/ Base salary/ fees Benefits Annual bonus
2019/ Base salary/ fees Benefits Annual bonus Steve Rowe (^) 1% -20% 100% 0% -36.8% –
Eoin Tonge 1% -33% 100% 0% – –
Archie Norman 1% 200% N/A 0% -74% N/A
Andy Halford 1% 100% N/A 0% 0% N/A
Andrew Fisher 1% 100% N/A 0% -100% N/A Justin King 1% -100% N/A 0% 100% N/A
Tamara Ingram 1% – N/A 0% – N/A
Sapna Sood 1% – N/A 0% – N/A
Evelyn Bourke 1% 100% N/A N/A N/A N/A Fiona Dawson (^) 1% – N/A N/A N/A N/A
UK colleagues (average FTE) 2% 0% 100% 0% 0% –
The table sets out the annual percentage change in salary, benefits and bonus for each director compared with that of the average full-time equivalent total reward for all UK colleagues. For non-executive directors, benefits comprise taxable expense reimbursements relating to travel, accommodation and subsistence in connection with the attendance at Board and Committee meetings during the year. The change in the taxable benefits is a result of Covid-19 travel restrictions easing and not a change in the benefits policy.
FIGURE 28: RELATIVE IMPORTANCE
OF SPEND ON PAY
The table opposite illustrates the Company’s expenditure on pay in comparison with profits before tax and distributions to shareholders by way of dividend payments and share buyback. Total colleague pay is the total pay for all Group colleagues. Group PBT before adjusting items has been used as a comparison, as this is the key financial metric that the Board considers when assessing Company performance.
2020/ £m
2021/ £m % change Total colleague pay 1,463.7 1,487.5 1.6% Total returns to shareholders Nil Nil – Group PBT before adjusting items 41.6 522.9 1,257% Group PBT before adjusting items as disclosed on page 86.
104 Marks and Spencer Group plc
REMUNERATION
REMUNERATION REPORT
CONTINUED
EXECUTIVE DIRECTORS’ REMUNERATION CONTINUED
FIGURE 29: SERVICE AGREEMENTS
In line with our policy, directors have rolling contracts which may be terminated by the Company giving 12 months’ notice or the director giving six months’ notice.
Date of appointment Notice period Steve Rowe 02/04/2016 12 months/6 months Eoin Tonge 08/06/2020 12 months/6 months
CHANGES TO EXECUTIVE MEMBERSHIP OF THE BOARD DURING 2021/
DIRECTORS APPOINTED TO THE BOARD
As announced on 10 March 2022, Stuart Machin will join the Board on 25 May 2022 as CEO. His basic annual salary is £800,000. Stuart’s incentive arrangements are aligned with our Remuneration Policy, as summarised on page 91.
It was announced on the same day that Katie Bickerstaffe, having previously served as a non-executive director, will rejoin the Board on 25 May 2022 as Co-Chief Executive. Her basic annual salary is £750,000. Katie’s incentive arrangements are aligned with our Remuneration Policy on page 91.
PAYMENTS FOR THE
LOSS OF OFFICE (audited) As announced on 10 March 2022, Steve Rowe will stand down from the Board after the preliminary results on 25 May and will cease full-time employment with M&S at the AGM on 5 July. In view of his wisdom and formidable knowledge of the business, he has agreed to remain as an adviser to the new leadership for up to 12 months. The terms of his remuneration upon leaving are in line with the approved Termination Policy. Steve is contractually entitled to receive a salary, and benefits, by way of phased monthly payments
from 6 July 2022 to 5 July 2023, subject to mitigation. The Committee determined good leaver treatment in line with the plan rules, and therefore his unvested conditional shares awarded under the 2020 and 2021 PSP will be time pro-rated to 5 July 2022. As detailed earlier in the report, the PSP awards granted in 2019 vested in June 2022 at 0%, resulting in the award lapsing in full. PAYMENTS TO PAST DIRECTORS (audited) There were no payments made to past directors during the period.
EXTERNAL 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 Policy is for the individual director to retain any fee. No executive directors held an external appointment during 2021/22.
FIGURE 30: NON-EXECUTIVE DIRECTORS’ TOTAL SINGLE FIGURE REMUNERATION (AUDITED)
Non-executive directors receive fees reflecting the time commitment, demands and responsibilities of the role. Fees paid to the non-executive directors and Board Chairman for 2021/22 and 2020/21 are detailed in the table opposite.
Benefits include expense reimbursements relating to travel, accommodation and subsistence in connection with the attendance at Board and Committee meetings during the year, which are deemed by HMRC to be taxable.
The amounts in the table opposite include the grossed-up cost of UK tax paid by the Company on behalf of the non-executive directors. Non-taxable expense reimbursements have not been included in the table.
As reported last year, the basic non- executive fee increased by 1% to £72, with effect from 1 July 2021. The Board Chairman was similarly awarded an increase of 1% with effect from 1 July 2021. The total aggregate fee for the Board Chairman increased to £618,000.
The additional fee for chairing a committee increased in the year from £15,500 to £20,000 with effect from 1 January 2022. In line with pay increases across the business, non-executive director fees will increase by 3% to £74,380 with effect from 1 July 2022. The Board Chairman was also awarded an increase of 3% bringing the total aggregate fee to £636,540. Fee levels will again be reviewed in the year, ahead of any changes which would be effective 1 July 2023.
Director Year
Basic fees £
Additional fees £
Benefits £
Total £
Archie Norman (^) 2021/22 72 544 10 626 2020/21 71 541 5 617 Andy Halford 2021/22^72 31 0^103 2020/21 71 31 0 102 Andrew Fisher 2021/22 72 17 1 90 2020/21 71 16 0 87 Justin King 2021/22 72 0 0 72 2020/21 71 0 1 72 Tamara Ingram^1 2021/22^72 17 0^89 2020/21 60 10 0 70 Sapna Sood 2021/22 72 0 0 72 2020/21 60 0 0 60 Evelyn Bourke 2021/22 72 0 1 73 2020/21 12 0 0 12 Fiona Dawson (from 25 May 2021)
- The 2020/21 additional fees for Tamara Ingram have been restated to include £5,167 Committee Chair fees earned in 2020/21 but paid in 2021/22.
