Tesco 2015 Annual Report Download - page 66

Information supporting the policy table
Shareholding guidelines
Tesco also operates shareholding guidelines. See page 53 of the Annual Remuneration Report for further details.
Dividend equivalents
Awards may incorporate the right (in cash or shares) to receive the value of dividends between grant and exercise in respect of the number of
shares that vest. The calculation of dividend equivalents may assume reinvestment of those dividends in Company shares on a cumulative basis.
Clawback and malus provisions
The Committee has the discretion to scale back deferred share awards and performance share awards prior to the satisfaction of awards
in the event that results are materially misstated or the participant has contributed to serious reputational damage of the Company or one
of its business units or their conduct has amounted to serious misconduct or fraud.
Where Performance Share Plan awards are settled prior to the fifth anniversary of the grant of the award, the Committee shall have the
discretion to claw back awards up to the fifth anniversary of the grant of awards in the circumstance described above.
Cash bonus payments can also be ‘clawed back’ in the circumstances described above up to the third anniversary of payment.
Cash payments
If the Committee considers it to be appropriate, it may determine that share awards may be settled in cash.
Terms of share awards
The Committee may amend the terms of awards or the rules of share plans within the scope defined in the rules of the plans.
For share awards, in the event of a variation of the Company’s share capital or a demerger, delisting, special dividend, rights issue or other
event, which may, in the Remuneration Committee’s opinion affect the current or future value of awards, the number of shares subject
to an award may be adjusted.
The Committee may amend performance targets in accordance with the terms of an award or if a transaction occurs which causes the
Committee to consider (taking into account the interest of shareholders) that an amended performance condition would be more
appropriate and would continue to achieve the original purpose.
Discretionary Share Option Plan
Prior to 2011, Executive Directors were granted market value options under the Company’s 2004 Discretionary Share Option Plan. Outstanding
awards are no longer subject to performance and may be exercised until the tenth anniversary of the date of award. No further awards will
be made under this plan.
Defined benefit pension
Former Executive Directors, Philip Clarke and Laurie McIlwee, participated in a defined benefit pension plan which provides for a pension
of up to two-thirds of base salary at retirement with a minimum 10% of salary per annum employee contribution. Pension benefits are
provided through registered arrangements up to approved HMRC limits, with the remainder provided through a secured unfunded
arrangement. In the event that an Executive Director retires early there will be no augmentation of pension benefits.
Payments outside policy
The Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising any discretions
available to it in connection with such payments) notwithstanding that they are not in line with the Policy set out in this report where the
terms of the payment were agreed (i) before the policy came into effect or (ii) at a time when the relevant individual was not a Director of
the Company and, in the opinion of the Committee, the payment was not in consideration for the individual becoming a Director of the
Company. For these purposes ‘payments’ includes the Committee satisfying awards of variable remuneration, and an award over shares
is ‘agreed’ at the time the award is granted.
Minor changes
The Committee may make minor changes to this Policy for regulatory, exchange control, tax or administrative purposes or to take account
of a change in legislation without seeking shareholder approval for that amendment.
Selection of performance measures
Annual bonus
The annual bonus performance measures have been selected to provide an appropriate balance between incentivising Executive Directors
to meet financial targets for the year and incentivising them to achieve specific strategic and operational objectives. The particular bonus
metrics are selected by the Committee each year to ensure that Executive Directors are appropriately focused on the key objectives for the
next 12 months.
Performance Share Plan
Performance measures for the PSP are selected to ensure that they incentivise Executive Directors to deliver long-term sustainable returns
for all of our shareholders.
64 Tesco PLC Annual Report and Financial Statements 2015
Directors’ remuneration report continued
Directors’ remuneration policy