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The Board presents its report to shareholders on
directors' remuneration which has been prepared in
compliance with the provisions of Schedule B to the
Combined Code. It confirms that the figures set out
therein in relation to remuneration, share options
and pension entitlements have been subject to audit.
The Remuneration Committee
The duties of the Committee are laid down in
written terms of reference approved by the Board,
extracts of which are as follows:
The remuneration of the non-executive directors is
determined by the Board.
The Committee has access to external professional
advisers, the firm of Towers Perrin, who are
regularly consulted on remuneration matters.
The Committee usually meets on three occasions
each year. However, in the year under review it had
a heavier than usual workload, due in part to the
introduction of incentive schemes, and it met on six
occasions.
The Company responds to any questions from
principal shareholders on its remuneration policy
but, otherwise, it does not discuss these as a matter
of routine.
Policy
The Remuneration Committee is provided
with information on the pay and employment
conditions of senior executives elsewhere in the
Group so that it can be sensitive to the wider
scene especially when determining annual
salary increases.
Historically, the remuneration packages of executive
directors contained a relatively small amount in the
form of performance related incentive arrangements.
A re-alignment of this policy was seen last year
when shareholder approval was given for the
introduction of Long Term Incentive Plans, for the
Chief Executives of Experian, Home Shopping and
Lewis Stores, and Executive Share Option Schemes
for those few senior executives - including executive
directors - whose primary responsibilities are
Group-wide rather than divisional. These
arrangements reflect a recognition, on the part of
the Board, of a need to provide meaningful
incentives to those senior executives upon whose
performance the Company's future success largely
depends.
The Provisions of Schedule A to the Code deal
with performance related remuneration and,
although the existing performance related
remuneration schemes were designed before its
publication, it can, nevertheless be confirmed that:
As indicated in the Directors' Report,
proposals for the adoption of a new executive long
term incentive plan will be submitted at this year's
Annual General Meeting.
Remuneration of the executive directors consists
of annual salary, taxable benefits in kind, pension
contributions, performance related bonuses based
on relevant divisional profit or on personal
achievement, and for certain directors a long term
incentive plan or share option arrangement.
Basic Salary
Benefits
Share Options
The first grant of options under these schemes
was made on 9 December 1998 to eight executives
including two executive directors. The options were
granted at an exercise price of 580.2p being the
average of the middle market quotations of a share
as derived from the Daily Official List
of The London Stock Exchange for the three
immediately preceding Dealing Days.
Options granted to executive directors, which
remained under option at the year end, were
as follows:
Mr. D. G. Bury 39,210 shares
The options were granted at a value equivalent
to annual salary, the intention being that annual
option grants to any individual should not be
in respect of shares with a value in excess of his
annual salary.
The options may not be exercised until 9 December
2001 and they will expire on 8 December 2008.
Further, the options may not be exercised unless,
during a period of three consecutive financial years,
Group earnings per share have increased by an
average of at least 4 per cent per annum more than
the Retail Prices Index.
The market price of the shares at the end of the
financial year was 675p; the highest and lowest
prices during the financial year were 911.5p and
549p respectively.
Long Term Incentive Plans
The plans, designed in conformity with
divisional executive plans already in place, offer
a cash incentive to each of the three participants,
Mr. J. W. Peace (Experian), Mr. P. M. Harris (Home
Shopping) and Mr. A. J. Smart (Lewis Stores),
payable in July 2001, depending on the profit
performance of their respective divisions in the
period from 1 April 1998 to 31 March 2001.
Conditional awards have been made to
the participants, the maximum payment under
which is four times earnings in the case of Mr. P. M.
Harris and Mr. A. J. Smart and six times earnings in
the case of Mr. J. W. Peace.
Only one award per participant will be granted
under the Plan and as soon as each of the awards
has either lapsed or been paid, the Plan will
terminate.
Service Contracts
There are two such cases where the Board has so
varied them:
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