Tesco 2012 Annual Report Download - page 70

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 Employees as shareholders – It is an important part of the Tesco
values that all of our employees, not just senior management, have
the opportunity to become Tesco shareholders. Over 210,000 of
ourpeople participate in our all-employee schemes and we delivered
over 26million shares in 2011 under our Shares In Success Plan,
aplanwhich awards free shares to all UK employees based on
Company performance.
When determining Executive remuneration arrangements the
Committee takes into account pay conditions throughout the Group
toensure that the structure and quantum of executive pay remains
appropriate in this context. When considering salary increases the
Committee considers the general Group wage increase. In the last
few years executive salary increases have been at a similar level to the
general employee increase.
Remuneration framework
The following chart and accompanying table on page 67, provide a
summary of the different elements of pay, their purpose and linkage
toour strategy, and the key features of each component:
We are not proposing any significant changes to the structure of
remuneration for 2012/13, as these arrangements were only introduced
a year ago. We will, however, continue to monitor our approach to pay
toensure that it remains appropriate, aligned with our strategy and fair
to Executives and shareholders in the context of the rapidly evolving
environment around executive pay.
Remuneration arrangements throughout the Group
Remuneration arrangements at Executive Director level and throughout
the Group are designed around a set of common Tesco pay values.
Ensuring that employees are focused on delivering the same core
objectives is an important part of Tesco’s reward philosophy:
 Annual bonus – Annual bonuses throughout the Group are linked
tolocal business performance but are consistent in structure to
thatofthe Executives with a focus on underlying profit growth
andperformance against key strategic objectives.
 Share incentives – Over 5,000 of our senior employees across
theglobe participate in the Performance Share Plan based on the
same performance conditions as Executive Directors. This senior
population also receives some of their bonus in Tesco shares
deferred for a period.
Directors’ remuneration report
Base salary
Short-term performance Long-term performance
Performance share plan (three years)
Matrix of EPS growth and ROCE
Underlying profit growth (70%)
and strategic objectives (30%)
Cash bonus Deferred share bonus
(three years)
Fixed element
Performance related element
c. 14% – 40% depending on individual incentive arrangements and performance
c. 60% – 86% depending on individual incentive arrangements and performance
66 Tesco PLC Annual Report and Financial Statements 2012