74


John Lewis Partnership plc Annual Report and Accounts 2014


REMUNERATION REPORT


“ During the year the Remuneration Committee focussed on the remuneration of the Chairman, Executive Directors and Non-Executive Directors.”


Pay and reward in the Partnership In 2013/14, the Partnership spent £1,754m on employment and related costs. This represented 19% of the Partnership’s revenue. £1,271m was spent on pay and every Partner received 15% of their gross pay as a Partnership Bonus, at a cost of £202.5m.


How is pay determined in Steve Gardiner Kim Lowe


the Partnership? Each job in the Partnership has a pay range that is informed by the market. The rate of pay for each Partner is reviewed each year, based on their performance and following a review with their line manager. All Partners have the opportunity to increase their pay through the pay range as their performance develops.


Partners who display outstanding performance may be recognised with special bonus awards of up to 10% of salary.


Committee members Members at the date of this report: Denis Hennequin (Chair), Steve Gardiner, Baroness Hogg and Kim Lowe.


Changes in Committee membership: During the year, the Committee was chaired by David Barclay, a Non-Executive Director. David Barclay retired from the Board at the end of February 2014.


Denis Hennequin was appointed Chair of the Remuneration Committee from 1 March 2014.


Quorum: Two members, to include one Non-Executive Director and one Elected Director. When approving the remuneration of Non-Executive Directors, the quorum is two Elected Directors.


Meetings and attendance There have been nine Remuneration Committee meetings during the year and Directors’ attendance at those meetings is shown in the table below.


David Barclay Steve Gardiner Baroness Hogg Kim Lowe


7 9 7 9


Under the terms of reference of the Remuneration Committee, Non-Executive members take no part in the deliberations with regard to Non-Executive remuneration and therefore David Barclay and Baroness Hogg were only eligible to attend seven Remuneration Committee meetings.


Role of the Committee The Remuneration Committee has oversight of the application of the pay policy to executive remuneration. The Committee operates in accordance with terms of reference. These were reviewed during the year and are available at www.johnlewispartnership.co.uk.


The policy needs to attract, retain and motivate executive management of the quality required to run the Partnership successfully without paying more than is necessary, based on the market rate.


As well as submitting a recommendation on the Chairman’s pay to the Partnership Board and setting the pay of the Partnership’s Executive Directors, this year the Remuneration Committee has:


– Considered the pay benchmarking methodology for members of the Chairman’s Committee, the Partners’ Counsellor, Directors reporting to the Chairman and divisional Management Boards;


– Reviewed senior reward, agreeing to rebalance the value of pension and basic salary within the total reward package for the Executive Directors;


– Considered the remuneration for the Deputy Chairman;


– Reviewed the Remuneration Committee Terms of Reference and Roles and Responsibilities; and


– Considered the remuneration of Non- Executive Directors (Elected Director Committee members only).


The agenda for each meeting is approved by the Committee Chairman and each Committee member has the right to request reports on matters of interest.


This approach is underpinned by Rule 61 and Rule 62 of the Constitution:


RULE 61:


“ The Partnership sets pay ranges which are informed by the market and which are sufficient to attract and retain high calibre people. Each Partner is paid a competitive rate for good performance and as much above that as can be justified by better performance. Partnership Bonus is not taken into account when fixing pay rates.”


RULE 62:


“ Pay rates must be decided with such care that if they were made public each would pass the closest scrutiny. Managers are responsible for ensuring that Partners are paid fairly in comparison with others who make a similar contribution.”


Under Rule 44 of the Constitution, the Chairman is ultimately responsible for ensuring that the system for deciding the pay and benefits of individual Partners is fair.


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