Tesco PLC Annual Report and Financial Statements 2013
49
OVERVIEW
Service contracts
At a glance • 12 months’ notice by the Company and six months’ notice by the Executive. • For new appointments the Committee reserves the right to vary this period to 24 months for the initial period of appointment and for the notice period to then revert to 12 months. No Executive currently has a notice period of greater than 12 months.
Expiry date
• Philip Clarke and Laurie McIlwee entered into service agreements with Tesco PLC on 31 May 2011 and 27 January 2009 respectively. • Rolling service contract. • No fixed expiry date.
Termination payments (Does not apply if notice is provided, as per the service agreement, or for termination by reason of resignation or unacceptable performance or conduct)
• CEO – Termination payments in lieu of notice based on base salary and benefits only. • CFO – Termination payments in lieu of notice based on base salary, benefits and the average annual bonus paid for the last two years. • Our policy for new appointments is that termination payments in lieu of notice will be based on base salary and benefits only. • No account will be taken of pension. • Termination payments will be subject to mitigation and normally paid in instalments to facilitate this (other than for long-serving Executives). • If the termination occurs within one year of retirement, the termination payment will be reduced accordingly.
Other information
• The Committee may determine that an Executive Director may receive a pro rata bonus in respect of the period they remained in employment in respect of the financial year in which they ceased employment. Where an Executive leaves by reason of death, disability or ill-heath they are entitled to a pro rata bonus for the year of cessation. • In the event that an Executive Director retires from the Company they shall be entitled to retain their private medical cover in retirement. New Executive Directors will not be entitled to this benefit going forward.
The service agreements are available to shareholders to view on request from the Company Secretary. Share plan rules – leaver provisions The treatment of outstanding share awards in the event that an Executive Director leaves is governed by the relevant share plan rules. The following table summarises leaver provisions under the executive share plans. In specific circumstances the Committee may exercise its discretion to modify the policy outlined if the rules of the share plan allow such discretion. Leavers in other circumstances (other than gross misconduct)
• Unvested awards vest at cessation. • 12 months to exercise (if options).
• Unvested awards vest at the normal vesting date. • 12 months to exercise (if options).
Performance Share Plan
• Awards granted in the 12 months prior to leaving lapse. • Other unvested awards continue until the normal vesting date and remain subject to performance. • 12 months to exercise (if options).
• Unvested awards lapse.
Share Option Plan
• Awards granted in the 12 months prior to leaving lapse. • Other unvested awards continue until the normal vesting date and remain subject to performance. • Three years from leaving to exercise.
• Unvested awards lapse. • 12 months from leaving to exercise vested awards.
All-employee share plans
• Leaver provisions under all-employee share plans are determined in accordance with HMRC approved provisions.
GOVERNANCE
‘Good leavers’ as determined by the Committee
Executive Incentive Plan
PERFORMANCE REVIEW
Current service contracts
Notice period
BUSINESS REVIEW
Provision
FINANCIAL STATEMENTS