Remuneration report
ii) Pensions
Darren Shapland is a member of the Company’s Executive Stakeholder Pension Plan. Contributions to the Stakeholder Plan by the Company in 2006/07 were £13,575 (2006: £15,088 including a contribution of £13,200 made in respect of Justin King, before he left the Plan).
iii) Long-term incentive plans
Performance Share Plan
Under the Plan, shares conditionally allocated to participants are released to them in the form of options if the performance condition is met at the end of the three-year performance period. The number of shares conditionally allocated in 2004 are shown below. No allocations were made from 2005/06 and the Plan is now closed.
| Number of shares conditionally allocated as at 25 March 2006 | Lapsed during the year | Number of shares conditionally allocated during the year | Mid-market price on date of conditional allocation pence | Options granted during the year under the Plan | Mid-market price on day option granted pence | Number of shares conditionally allocated as at 24 March 2007 | End of performance period | |
|---|---|---|---|---|---|---|---|---|
| Justin King
20.05.04 |
184,762 | — | — | 274.0 | — | — | 184,762 | 24.03.07 |
The above figures for the 2004 award show the maximum award that would be released provided that the Company achieves first position within the comparator group (namely Ahold, Alliance Boots, Carrefour, Casino, DSG International, GUS, Kingfisher, Loblaw, Marks & Spencer, Morrisons, Next and Tesco), at the end of the three–year performance period. Shares to the value of 30 per cent of salary will be released at median performance. Awards will be pro rated at every position between the median and first position in the comparator group. The Company’s relative performance is determined by reference to TSR, being the increase in the value of a share, including reinvested dividends, over the three–year period. This measure was chosen to incentivise participants for maximising shareholder return over the medium term. Awards will vest in May 2007.
On joining the Company, Justin King received a cash equivalent award, which was pro rated on a time basis over the performance period, as if he had received a conditional award under the Performance Share Plan grants made in 2003. As previously disclosed, based on performance and pro rated time, he received a cash award in respect of 65,789 shares at the end of May 2006 (£217,038).
J Sainsbury plc Share Plan 2005
The table below shows the conditional awards granted under this Plan, which would be released if the Company achieves maximum vesting.
| Date of grant | Core share award | Personal investment | Maximum share award1 | Share price at date of award pence | First exercise date2 | Last exercise date | |
|---|---|---|---|---|---|---|---|
| Justin King |
24.03.05 | 237,508 | 118,754 | 1,662,556 | 293.0 | 14.05.08 | 23.03.10 |
| Darren Shapland | 01.08.05 | 102,558 | 70,224 | 793,686 | 280.5 | 14.05.08 | 23.03.10 |
- The maximum share award excludes the personal investment shares acquired by Justin King and Darren Shapland, which must be held for the duration of the Plan. It assumes full vesting.
- Depending on performance, partial vesting may occur following the Preliminary Results announcement in 2008.
- The performance conditions attaching to the award are set out in Notes to the Financial statements.
- The J Sainsbury plc Share Plan 2005 is a nil cost option plan.
Long-Term Incentive Plan 2006
The table below shows the conditional awards granted under this Plan, which would be released if the Company achieves maximum vesting.
| Date of grant | Maximum share award1 |
Share price at date of award pence |
First exercise date2 | Last exercise date | |
|---|---|---|---|---|---|
| Justin King |
13.07.06 | 390,424 | 334.0 | 15.05.09 | 17.07.11 |
| Darren Shapland | 13.07.06 | 188,480 | 334.0 | 15.05.09 | 17.07.11 |
- The maximum share award assumes full vesting.
- Depending on performance, partial vesting may occur following the Preliminary Results announcement in 2009.
- The performance conditions attaching to the award are set out in Notes to the Financial statements.
- The Long-Term Incentive Plan 2006 is a nil cost option plan.
Restricted Share Plans 2004 and 2005
As previously disclosed, Justin King and Darren Shapland gave up valuable entitlements arising from the Marks & Spencer Executive Incentive plans and the Carpetright Executive Incentive plans respectively when they joined the Company. The Committee agreed to compensate them for these lost entitlements, and awards comprising cash payments and restricted shares were made. As the awards compensate them for lost entitlements there are no performance conditions.
Darren Shapland’s outstanding award will be released on the vesting date if he remains an employee of the Company on the relevant date and will vest before the release date if his service contract is terminated by the Company other than for cause, in the event of death or on a change of control, unless the award is replaced by the acquiring company. If he leaves employment for any other reason, the award will be forfeited.
| Number of restricted shares | Date of award | Date of release | Number of shares released | Number of shares lapsed | Notional
gain on
release at
319.0 pence
per share £000 |
Vesting date | |
|---|---|---|---|---|---|---|---|
| Justin King | 70,746 | 27.03.04 | 31.05.06 | 70,746 | — | 225.7 | — |
Justin King retained 41,740 shares arising out of the 2006 release; the remainder was used to fund the income tax and national insurance charge relating to the release.
| Number of restricted shares | Date of award | Date of release | Number of shares released | Number of shares lapsed | Notional
gain on
release at
352.0 pence
per share £000 |
Vesting date | |
|---|---|---|---|---|---|---|---|
| Darren Shapland | 32,200 | 01.08.05 | 01.08.06 | 32,200 | — | 113.3 | — |
| 32,200 | 01.08.05 | — | — | — | — | 01.08.07 |
Darren Shapland retained 18,998 shares arising out of the 2006 release; the remainder was used to fund the income tax and national insurance charge relating to the release.
iv) Savings Related Share Options (“SAYE”) over ordinary shares
At the end of the year, the Options Directors SAYE share options were as follows:
| Number of options | Date | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 25 March 2006 |
Granted during the year | Exercised during the year | Lapsed during the year | 24 March 2007 | Weighted average exercise price pence |
Range of exercise prices pence |
From which exercisable | Of expiry | |
| Justin King |
6,969 | — | — | — | 6,969 | 231.0 | 231.0 | 01.03.11 | 31.08.11 |
| Darren Shapland | — | 2,881 | — | — | 2,881 | 328.0 | 328.0 | 01.03.10 | 31.08.10 |
The Savings Related Share Option Scheme is an all employee share option scheme and has no performance conditions as per Inland Revenue Regulations.
In the period from 25 March 2006 to 24 March 2007, the highest mid-market price of the Company’s share was 557.0 pence and the lowest mid-market price was 311.0 pence and at 24 March 2007 was 549.5 pence.
Approved by the Board on 15 May 2007
Bob Stack
Chairman of the Remuneration Committee