Tesco 2014 Annual Report Download - page 55

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£000m
0.6%
5.6%
Distributions to
shareholders
Total employee
pay
12/13 13/14 12/13 13/14
9
8
7
6
5
4
3
2
1
0
Asdescribedabove,2011PSPawardsareduetolapseon14July2014.PSPawardsgrantedtoLauriein2012and2013willlapseupon
himleavingthebusiness.Lauriemayexercisevesteddiscretionaryshareoptionawardsgrantedin2007,2008and2009foraperiodof
12monthsfromtermination,inaccordancewiththetermsoftheplanrules.Theseawardsare,however,currentlyunderwater.
Theawardsgrantedundertheall-employeeSharesaveschemein2011,2012and2013willlapseandtheawardsgrantedin2009
and2010maybeexercisedinaccordancewiththerulesoftheplan.Sharesheldundertheall-employeeShareIncentivePlanwillbe
transferredtoLaurieinaccordancewiththerulesoftheplan.
TheCompanywillpayforout-placementservicesandlegalcostsinconnectionwithLaurie’sterminationofemploymentuptoa
maximumof£50,000and£5,000excludingVATrespectively.
Other policy information
Risk management
Riskmanagementisanimportantpartofbusinessprocess.TheCommitteeconsidersthatTesco’sprocessesinthisareaprovidethe
necessarycontrolstopreventinappropriaterisktaking.WhenreviewingremunerationstructurestheCommitteeconsideredwhetherany
aspectofthesemightencouragebehavioursthatareincompatiblewithourTescoValuesandthelong-terminterestsofshareholders.
Ifnecessary,theCommitteewouldtakeappropriatestepstoaddressthis.
Outside appointments
TescorecognisesthatitsExecutiveDirectorsmaybeinvitedtobecomeNon-executiveDirectorsofothercompanies.SuchNon-executive
dutiescanbroadenaDirector’sexperienceandknowledgewhichcanbenefitTesco.
SubjecttoapprovalbytheBoard,ExecutiveDirectorsareallowedtoacceptNon-executiveappointments,providedthattheseappointments
arenotlikelytoleadtoconflictsofinterest,andtheymayretainthefeesreceived.CurrentlyneitherPhilipClarkenorLaurieMcIlweeholdany
outsideappointments.
Funding of equity awards
Executiveincentivearrangementsarefundedbyamixofnewlyissuedsharesandsharespurchasedinthemarket.Wheresharesare
newlyissuedtheCompanycomplieswithABIdilutionguidelinesontheirissue.Thecurrentdilutionusageofdiscretionaryplansis
c.3.5%ofsharesinissue.Wheresharesarepurchasedinthemarket,thesemaybeheldbyTescoEmployeesShareSchemesTrustees
Limited,inwhichcasethevotingrightsrelatingtothesharesareexercisablebythetrusteesinaccordancewiththeirfiduciaryduties.
At22February2014thetrustheld3,182,335shares.
Other disclosures
Change in CEO remuneration compared to the change in colleague remuneration
ThefollowingtableillustratesthechangeinCEOsalary,benefitsandbonusbetween2012/13and2013/14comparedtootherUKcolleagues.
TheCommitteedecidedtouseotherUKcolleaguesforthepurposeofthisdisclosureasoverhalfofourcolleaguesarebasedintheUK
andtheCEOisalsopredominatelybasedintheUK(albeitwithaglobalroleandresponsibilities).TheCommitteethereforeconsidered
thatthisisanappropriatecomparatorgroupgiventhatpaychangesacrosstheGroupdependonlocalmarketconditions.
Salary Benefits Bonus
CEO 2% -36% –*
UKcolleagues 2% 5% –*
* Nobonuseswerepaidinrespectof2013/14or2012/13.
Relative importance of spend on pay
Thefollowingchartshowstotalemployeepaycomparedto
distributionstoshareholders.
AtTescoourcolleaguesareanessentialpartofhowwedo
businessandhowwemeetourcustomerneeds.Overthelasttwo
yearswehaveinvestedinourcolleagues,increasingthenumber
ofcolleaguesinstoretoimprovetheofferingtoourcustomers.
In2012/13weemployedanaverageof506,856colleagues
acrosstheGroup.Thishasincreasedto510,444in2013/14.
Totalemployeepayincludeswagesandsalaries,socialsecurity,
pensionandsharebasedcosts.(£6,885min2012/13and
£7,271min2013/14–seeNote4oftheaccountsonpage83).
Distributionstoshareholdersincludesinterimandfinaldividendspaidinrespectofeachfinancialyear(£1,186minrespectof2012/13
and£1,193minrespectof2013/14–seeNote8oftheaccountsonpage88).Therewerenosharebuy-backsin2012/13or2013/14.
52 Tesco PLC Annual Report and Financial Statements 2014
Directors’ remuneration report continued
Annual remuneration report