114


John Lewis Partnership plc Annual Report and Accounts 2015 Remuneration Committee report (continued)


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 (2014: £35,000 for four individuals). For those Directors for whom there was an increase, the transfer value of the aggregate increase in accrued pension entitlement above consumer price inflation during the year was £81,000 including temporary pensions (2014: £151,000).


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 £255,000 per annum (2014: £245,000 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.


One Executive Director left the Partnership Board during the year, receiving emoluments in accordance with their contract.


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


What are the Executive Directors, the Non-Executive Directors and Partners’ Counsellor paid? (audited)


The table below shows the number of Directors and their total remuneration for the year, including both Partnership Bonus and the pension supplements described below, for all Directors except the Elected Directors:


£1 – £50,000


£50,001 – £100,000 £300,001 – £350,000 £700,001 – £750,000 £750,001 – £800,000 £900,001 – £950,000 £1,050,001 – £1,100,000 £1,100,001 – £1,150,000 £1,200,001 – £1,250,000 £1,250,001 – £1,300,000 £1,500,001 – £1,550,000


2015 2 4 1 1 1 1 – 1 – 1 1


2014 1 2 1 2 – – 2 – 1 – 1


The Chairman, Executive Directors, Elected Directors and Partners’ Counsellor are also entitled to the same benefits as all other Partners, including shopping discount, long leave and other benefits.


How do we compensate the Elected and Non-Executive Directors for their contributions to the Board?


Elected Directors are not paid for their service on the Partnership Board, as their pay is determined by their respective roles and responsibilities in the Partnership. Their pay is therefore not considered by the Committee or the Partnership Board.


Non-Executive Directors receive fixed annual fees, which are reviewed periodically and set at levels that reflect the Directors’ time commitment and responsibilities. Non- Executive Directors’ fees are determined by the Elected Directors on behalf of the Committee. Non-Executive Directors are not entitled to Partnership Bonus, or to any other salary or benefits from the Partnership.


Comply or explain?


Remuneration for Non-Executive Directors


Code Provision D.2.3 states that the board should determine the remuneration of the Non-Executive Directors. Where permitted by the Articles of Association, the board may, however, delegate this responsibility to a committee that might include the chief executive. The provision supports the Code principle that care should be taken to recognise and avoid conflicts of interest.


The Partnership does not comply with the Code as the Partnership Board does not determine the remuneration for Non- Executive Directors. Instead, this is the responsibility of the Elected Directors on the Remuneration Committee, who receive a recommendation from the Director of Personnel, while also considering the Chairman’s views and relevant market data provided by the independent external remuneration consultant.


The Partnership has voluntarily adopted the UK Corporate Governance Code on a comply or explain basis. For more information: Go to page 84,


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