John Lewis Partnership Annual Report and Accounts 2015

Annual Report and Accounts 2015

John Lewis Partnership plc

113

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 2014/15, the pay of the highest-paid Partner, the Chairman, was £941,000 (2014: £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. Following the triennial pension scheme valuation the buyout value of the pension scheme for non management Partners has increased this year. This change increases the average total reward of non-management Partners and narrows the gap with the highest- paid Partner.

66 times 60 times

How much is the pension supplement? (audited)

The Chairman’s basic pay is 66 times the average basic pay of non-management Partners compared to a maximum of 75 times per the Constitution.

During the year ended 31 January 2015, the total pension supplement paid to the Chairman, Executive Directors and Partners’ Counsellor was £2,035,000 (2014: £2,022,000).

What is the value of the defined benefit pension for the Executive Directors? (audited)

The Chairman’s total pay excluding Partnership Bonus is 60 times the average basic pay of non-management Partners with three or more years’ service.

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:

On this basis, the total reward excluding Partnership Bonus of the Chairman, who was the highest-paid Partner in the year ended 31 January 2015, was £1,425,000, which was 60 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)

The Chairman, the Executive Directors apart from one 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 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.

One Executive Director joined the Partnership Board in 2014 and remains in the waiting period for joining the Partnership’s pension scheme. This Executive Director is a member of the defined contribution scheme and receives a pension cash supplement.

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

2015 1 1 2 1 1 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 £991,000 per annum for six individuals (2014: £972,000 for six individuals).

2014 1 2 1 2 – 6

Introduction

Partnership difference

Principles

Strategy

Performance

Governance

Financial statements

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