John Lewis Partnership plc annual report and accounts 2013


Remuneration Report


This report forms part of the Directors’ Report and has been prepared in accordance with the disclosure requirements applying to the Partnership, which are set out in Schedule 5 of the Large and Medium-sized Companies and Groups (Accounts and Report) Regulations 2008 (the Regulations).


Since the Partnership is not quoted, and has no share based incentive schemes or other long term incentives, the Partnership Board has decided not to adopt the full disclosure provisions applicable to quoted companies. However, in the interests of transparency, certain disclosures within this Report go beyond the requirements of Schedule 5 of the Regulations.


The directors’ emoluments section on pages 48 and 49 is cross referenced from note 8 of the financial statements and forms part of the audited financial statements.


Remuneration in the Partnership


 The Partnership’s remuneration policy is based on Rule 61 (which was amended during the year with the consent of the Partnership Council) and Rule 63 of the Constitution:


“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 61)


and


“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.” (Rule 63)


The Partnership Board each year determines the level of Partnership Bonus, which is distributed as the same percentage of gross pay to all Partners. In exceptional circumstances, outstanding performance is recognised and discretionary awards of up to 10% of salary may be paid. There are no annual incentive bonuses related to individual or company performance.


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.


 


Senior reward policy


In applying the Partnership’s remuneration policy to the Chairman, executive directors and the Partners’ Counsellor, the Remuneration Committee takes into account:


• individual performance, including the achievement of specified personal objectives and the behaviours demonstrated in achieving those objectives;


• the performance of the function or division for which the individual is responsible, and/or group performance where appropriate;


• the market context, based on the advice of Towers Watson, who are the Committee’s independent remuneration consultants;


• the overall positioning of Partnership pay against the market, including pension provisions; and


• Rule 63 of the Constitution, set out above.


In making pay comparisons with the market, the Remuneration Committee considers and reviews each individual’s overall package for the year, that is the sum of base pay, pension arrangements and other benefits. The overall package is benchmarked against upper quartile total cash in the external market, including salary, target annual bonus, benefits and pension value, but excluding the value of long term incentives, share and share option schemes, which are widely available in the market at these levels.


In relation to Rule 63, the pay of the highest paid Partner, who was the Chairman, was £825,000, which was 60 times the average basic pay of non-management Partners calculated on an hourly basis.


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


 


47

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100