Remuneration Committee activities 2012/13
The following provides a summary of the Committee’s activities during and shortly following the end of the financial year:
Meeting Standing agenda items Other agenda items
April 2012 • Review and agree payout outcomes for short-term annual bonus, long-term PSP and share option awards for 2011/12.
• Approval of short-term bonus and long-term PSP targets for 2012/13 – 2014/15 awards.
• Sign off 2011/12 Directors’ Remuneration Report. • AGM communication plan.
• Professional development update on Department for Business, Innovation and Skills (‘BIS’) shareholder voting rights consultation.
June 2012 • Report from the Tesco Bank Remuneration Committee. • Update on shareholder feedback on Directors’ Remuneration
Report.
• Review of Executive Director base salary and total compensation. • Determine base salaries with effect from 1 July 2012.
• Consideration of the relationship between Executive Director and Executive Committee reward and reward at the level below this. • Benchmarking of Chairman’s pay against market and agreeing
his pay for 2012/13.
• Packages for new Executive Committee members.
• Update on pension arrangements. • Response to BIS on shareholder rights
consultation.
• Confirmed leaving arrangements for Richard Brasher, Andrew Higginson and David Potts.
October 2012 • Review of remuneration trends and developments in best practice. • Review of remuneration strategy for 2013/14.
• Review approach to 2012/13 Directors’ Remuneration Report. • Follow-up from Committee effectiveness review.
• Remuneration Committee bible.
• Response to BIS consultation. • Professional development update on
Hermes discussion paper, FR lab project on single figure, Kay Review and Fidelity Principles of Ownership.
February 2013 • Review of performance against short-term annual bonus, long-term PSP and share option awards for 2012/13.
• Review of remuneration strategy and policy for 2013/14 and review of shareholder feedback in relation to proposed changes.
• Review of the first draft of the 2012/13 Directors’ Remuneration Report.
• Committee effectiveness review.
• Packages for new Executive Committee members.
• Information provided on the Company’s HR polices for the Committee to note. • Professional update on Association of British Insurers (‘ABI’), ISS and NAPF guidelines, BIS response to the Kay Review, FR Lab project and NAPF stewardship code. • Confirmed leaving arrangements for
Tim Mason and Lucy Neville-Rolfe. April 2013
(Following year end) • Review and agree payout outcomes for short-term annual bonus, long-term PSP and share option awards for 2012/13. • Approval of short-term bonus and long-term PSP targets for 2013/14
– 2015/16 awards.
• Sign off 2012/13 Directors’ Remuneration Report. • AGM communication plan.
Number of meetings • Normally four meetings per year. • Four meetings were held during 2012/13. External advisors Deloitte LLP – Appointed by the Committee.
Deloitte is one of the founding members of the Remuneration Consultants Code of Conduct and adheres to this Code in its dealings with the Committee. The Committee is satisfied that the advice provided by Deloitte is independent. Deloitte also provided unrelated advisory services in respect of corporate tax planning, technology consulting, risk management, share schemes, international taxation, corporate finance and treasury to the Group during the year. Internal advisors Jonathan Lloyd, the Company Secretary, is Secretary to the Committee.
Philip Clarke (Chief Executive of the Group) and Laurie Mcllwee (Group CFO) attend meetings at the invitation of the Committee. They are not present when their own remuneration is being discussed.
The Committee is supported by Alison Horner (Group Personnel Director), Drew Matthews (Group Remuneration Director) and Corporate Secretariat and Finance functions.
R VI EW B U S IN E S S R EVI EW P E RF O RM A N C E RE V IE W G O V E R NAN C E FI NAN C IAL S TA T EM EN Shareholder voting
Tesco remains committed to ongoing shareholder dialogue and carefully reviews voting outcomes on remuneration matters. In the event of a substantial vote against a resolution in relation to Directors’ remuneration, Tesco would seek to understand the reasons for any such vote, and would detail any actions in response to it in the Directors’ Remuneration Report.
The following table sets out actual voting in respect of our last report in 2012:
% of votes For Against
2011/12 Directors’ Remuneration
Report (2012 AGM) 96.85% 3.15%
92,278,876 votes were withheld in relation to this resolution (c.1% of shareholders).
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 Executive plans is c.4% of shares in issue. Where shares are purchased in the market, these may be held by Tesco 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.
Change of control
Long-term incentive awards may vest or become exercisable before their normal vesting date in the event of a change of control of Tesco PLC subject to the rules of the applicable plans.
Compliance
In carrying out its duties, the Remuneration Committee gives full consideration to best practice. The Committee was constituted and operated throughout the period in accordance with the principles outlined in the Listing Rules of the Financial Conduct Authority derived from the UK Corporate Governance Code. The auditors’ report, set out on page 71, covers the disclosures referred to in this report that are specified for audit by the Financial Conduct Authority.
The report has been drawn up in accordance with the UK Corporate Governance Code, Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and the Financial Conduct Authority Listing Rules.
Details of Directors’ emoluments and interests are set out on pages 60 to 66 of this report.
Approved by the Board on 1 May 2013
Tables 1–9 are audited information