Tesco 1999 Annual Report Download - page 16

14 TESCO PLC ANNUAL REPORT 1999
Report of the Directors on Remuneration continued
Executive incentive scheme continued
The Committee sets performance targets annually for the
incentive scheme for each of the criteria noted above, confirms
achievement of performance and awards to be made under the
scheme and directs the general administration of the scheme.
The Executive Committee has adopted a policy of extending
the Group Board executive incentive scheme to a wider body of
senior executives within the Group. The scheme rules and
awards of this extension are administered on a consistent basis
as previously set out for the executive directors.
The holding period for both the long term and short term
shares may be extended to seven and five years respectively by
the scheme members. During this holding period, the shares
held are increased by 121⁄2% at the beginning of each year based
on the scheme shares held. This holding period may be
extended only subject to personal shareholding targets set by
the Committee being met by the scheme members and
conditional upon continuous employment with the company.
Share options
Executive directors are included in an approved executive share
option scheme (ESOS), and are eligible to join the employees’
savings-related share option scheme (SAYE) when they have
completed one year’s service.
Executive options granted since 1995 may be exercised only
subject to the achievement of performance criteria related to
growth in earnings per share, in accordance with ABI guidelines.
Pensions
Executive directors are members of the Tesco PLC Pension
Scheme which provides a pension of up to two-thirds of base
salary on retirement, normally at the age of 60, dependent
upon service. The scheme also provides for dependants’
pensions and lump sums on death in service. The scheme is a
defined benefit pension scheme, which is approved by the
Inland Revenue.
Service agreements
Executive directors have service contracts with entitlement to
notice of 24 months. This notice period is renewed annually by
the Remuneration Committee and is regarded as an essential
part of the remuneration package, designed to retain key
executives within the company.
Non-executive directors
Non-executive directors do not have contracts but each
appointment is subject to review every three years. Non-
executive directors receive a basic fee plus an additional sum in
respect of committee membership. Baroness O’Cathain has the
benefit of the use of a company car.
Increase in accrued Transfer Accrued
pension during value of increase total pension at
Age at Years of the year during the year 27 Feb 1999
Table 3 Pension details of the directors 27 Feb 1999 service (a) £000 £000 (b)£000
Mr T P Leahy 43 20 18 165 189
Mr D E Reid 52 14 21 292 212
Mr R S Ager 53 13 13 183 160
Mr P A Clarke (c) 38 24 5 36 48
Mr J Gildersleeve 54 34 14 203 255
Mr A T Higginson (d) 41 1 12 102 14
Mrs L James 49 14 11 141 100
Mr T J R Mason 41 17 13 117 109
Mr D T Potts (c) 41 26 4 44 73
Mr J M Wemms 59 27 14 246 250
a) The increase in accrued pension during the year excludes any increase for inflation.
b) The accrued pension is that which would be paid annually on retirement at 60 based on service to 27 February 1999.
c) The increase in accrued pension during the year for Mr P A Clarke and Mr D T Potts relates to the period from 16 November 1998
when they were appointed to the Board of Directors.
d) Part of Mr A T Higginson’s benefits, in respect of pensionable earnings in excess of the earnings limit imposed by the Finance Act
1989, are provided on an unfunded basis within a separate unapproved arrangement.