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John Lewis Partnership plc Annual Report and Accounts 2014


REMUNERATION REPORT CONTINUED


What is the Chairman paid? (audited) In the year under review, the value of the Chairman’s total reward increased by 2.8% to £1,520,000. The total reward package is made up of the following:


£ Pay Partnership Bonus


Pension supplement in lieu of further defined


pension accrual Cash value of benefits 14,000 What about Rule 63?


RULE 63: “ The pay of the highest-paid Partner will be no more than 75 times the average basic pay of non-management Partners, calculated on an hourly basis.”


In 2013/14, the pay of the highest-paid Partner, the Chairman, was £904,000, which was 66 times the average basic pay of non-management Partners calculated on an hourly basis.


Although Rule 63 itself applies only to basic pay, the Remuneration Committee also considers each year the relationship between the total reward, including pension allowance and other benefits, as well as pay, of the highest-paid Partner and the average total reward of non-management Partners with three or more years’ service (who are eligible for membership of the Partnership’s non-contributory defined benefit pension scheme).


The Committee values defined benefit pension benefits on a “buy-out” basis that is the estimated cost of obtaining similar benefits in the market. On this basis, the total reward excluding Partnership Bonus of the Chairman who was the highest-paid Partner in the year ended 25 January 2014 was £1,384,000, which was 69 times the average total reward, excluding Partnership Bonus, of non-management Partners with three or more years’ service.


The review of Executive Directors’ pay takes account of not only what has been achieved, but also how it has been achieved. This reflects the same principles taken in the ‘My Performance’ appraisal framework used for all Partners.


18,000 1,520,000 1,478,000 2014 2013


904,000 825,000 136,000 140,000 466,000 495,000


What are the pension arrangements for members


of the Board? (audited) The Chairman, Executive Directors and Partners’ Counsellor have all ceased to accrue further pension benefits in the Partnership’s pension scheme. One Director joined the Partnership in 2012 and has not joined the Partnership’s pension scheme. In lieu of pension accrual for current service, the Chairman, Executive Directors and Partners’ Counsellor each received a monthly pension supplement. These supplements are cash payments that are broadly equivalent in value to the defined benefit pension that the individual would previously have accrued in the Partnership’s pension schemes.


The pension arrangements for the Chairman, Executive Directors and Partners’ Counsellor will be reviewed as part of the broader ongoing review of the pension scheme.


How much is the pension


supplement? (audited) During the year ended 25 January 2014, the total pension supplement paid to the Chairman, Executive Directors and Partners’ Counsellor was £2,022,000 (2013: £2,066,000).


What is the value of the defined benefit pension for the Executive


Directors? (audited) The aggregate annual defined benefit pension entitlement from the age of 60, accrued at the end of the year, for the Chairman, Executive Directors and Partners’ Counsellor who have accrued pension, and who served on the Partnership Board during any part of the year, were as follows:


£50,000 – £100,000 £100,001 – £150,000 £150,001 – £200,000 £200,001 – £250,000 TOTAL


2014 1 2 1 2 6


2013 1 2 1 2 6


For the Chairman, Executive Directors and Partners’ Counsellor who served on the Partnership Board during any part of the year, the aggregate defined benefit pension entitlement accrued at the end of the year was £972,000 per annum for six individuals (2013: £930,000 for six individuals).


The accrued pensions for the Chairman, Executive Directors and Partners’ Counsellor increase in line with either price inflation or future pay increases, depending on their individual arrangements. Where there are any accrued defined benefit pensions remaining on an unfunded basis, the Partnership has made provision for the associated liability.


In addition, most of the Directors are entitled to temporary pensions, payable from age 60 until their state pension starts. The aggregate entitlement to temporary pensions was £35,000 per annum for four individuals (2013: £34,000 for four individuals). For those Directors where there was an increase, the transfer value of the aggregate increase in accrued pension entitlement above consumer price inflation during the year was £151,000 including temporary pensions.


What pension will the Chairman


receive? (audited) The Chairman’s aggregate defined benefit pension entitlement from the age of 60 accrued at the end of the year was £245,000 per annum (2013: £224,000 per annum).


What are the contractual notice


periods for Executive Directors? Contracts of employment for the Chairman and the Executive Directors provide for a notice period of between six months and one year. No contract contains a provision regarding early termination compensation.


No compensation for loss of office was paid to departing directors during the period under review or to the date of this report.


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