96 John Lewis Partnership plc Annual Report and Accounts 2016 Remuneration Committee report (continued)


Remuneration report


Relative spend on Pay In 2015/16, the Partnership spent £1,889.3m on employment and related costs. This represented 19.4% of the Partnership’s revenue. £1,380.3m was spent on basic pay and every eligible Partner received 10% of their 2015/16 gross pay as a Partnership Bonus, at a total cost of £145.0m.


What is the Chairman paid? (Audited)


In the year under review, the value of the Chairman’s total reward decreased by 0.2% to £1,526,000. To rebalance the Chairman’s pension benefit value and basic pay in line with market practice, the Chairman received a 11.7% increase to basic pay to offset a reduction in pension benefit. The Chairman’s pension benefit will further reduce in line with the implementation of the Pension Benefit Review across the Partnership in April 2016. The Chairman did not receive a separate increase to basic pay as part of the 2015 annual Pay Review, taking into consideration business performance in the 2014/15 performance year, market movement and the transition of pension value into basic pay. The total reward figure also reflects Partnership Bonus that was awarded for 2015/16. The total reward package is made up of the following elements:


2015/16 £


Basic pay Partnership Bonus


Pension supplement in lieu of further defined pension accrual


Cash value of benefits Total reward


2014/15 £


1,051,000 941,000 105,000 104,000


356,000 470,000 14,000 14,000


1,526,000 1,529,000


What about 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.’


At the end of the reporting period, the pay of the highest-paid Partner, the Chairman, was 73 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 total reward, including pension benefit 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. The total reward excluding Partnership Bonus of the Chairman who was the highest-paid Partner in the year ended 30 January 2016 was 59 times the average total reward, excluding Partnership Bonus, of non-management Partners with three or more years’ service.


What are the pension arrangements for Members of the Board? (Audited)


At the end of the reporting period, one Executive Director, who joined the Partnership Board in 2015/16, continues to accrue benefits in the Partnership’s pension scheme. The Chairman, the remaining Executive Directors and the Partners’ Counsellor have all ceased to accrue further pension benefits in the Partnership’s pension scheme. In lieu of pension accrual for current service, each of these Directors receives a monthly supplement. These supplements are cash payments that are broadly equivalent in value to the defined benefit pension that the Partner would previously have accrued in the Partnership’s pension scheme. These Partners will receive a reduction in the value of their cash supplement in proportion to the Pension Benefit Review proposals with effect from April 2016. This will ensure that all Partners are fairly affected by the changes made through the Pension Benefit Review.


How much is the total pension supplement? (Audited)


During the year ended 30 January 2016, the total pension supplement paid to the Chairman, Executive Directors and Partners’ Counsellor was £1,348,000 (2015: £2,035,000).


What is the defined benefit pension accrual for the Executive Directors? (Audited)


The 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:


Annual pension entitlement


£50,000 – £100,000 £100,001 – £150,000 £150,001 – £200,000 £200,001 – £250,000 £250,001 – £300,000 Total


2015/16 2014/15 2 1 2 1 1 7


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 for seven individuals was £1,052,000 per annum (2015: £991,000 for six individuals).


The accrued pension for the Chairman, Executive Directors and Partners’ Counsellor increases 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 (2015: £35,000 for four individuals). For those Directors where there was an increase, the transfer value of the aggregate increase in total accrued pension entitlement above consumer price inflation during the year was £272,000 including temporary pensions (2015: £81,000).


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