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Remuneration report
Savings related share option schemes The UK- and US-based Executive Directors may, along with all eligible employees, also participate in the UK Savings Related Share Option Scheme (‘SRSOS’) and the Employee Share Purchase Plan (‘ESPP’) respectively. Under the SRSOS, participants who enter into a savings contract for three, five or seven years, to a maximum level of £250 per month, are granted options to subscribe for shares in the Company. Under the ESPP, a US Code 423 Plan, US participants may enter into a one-year savings contract to a maximum level of $400 per month. The Board may determine that the options granted under either scheme may be awarded at a discount. The maximum discount, as applied to the 2007 awards, is 20 per cent for the SRSOS and 15 per cent for the ESPP of the average market prices used to determine the price of the award. The following table sets out the number of share options held under the SRSOS and ESPP by the Executive Directors.
| Savings related share option schemes 2006/07 | Options at 1 August 2006 (or date of appointment) |
|||
|---|---|---|---|---|
| Name of Director | Subscription price (pence) |
Options exercisable on or between |
Options at 31 July 2007 |
|
| F N Hord | 1236.00 | 01.05.07 – 21.05.07 | – | 222 |
| 1038.00 | 01.05.08 – 19.05.08 | 235 | – | |
| C A S Hornsby | 1236.00 | 01.05.07 – 21.05.07 | – | 222 |
| 1038.00 | 01.05.08 – 19.05.08 | 235 | – | |
| R H Marchbank | 1164.00 | 01.06.09 – 30.11.09 | 803 | 803 |
| 1038.00 | 01.05.08 – 19.05.08 | 235 | – | |
| F W Roach | 1236.00 | 01.05.07 – 21.05.07 | – | 222 |
| 1038.00 | 01.05.08 – 19.05.08 | 235 | – | |
| S P Webster | 1164.00 | 01.06.09 – 30.11.09 | 803 | 803 |
Gains made on all share options during the year to 31 July 2007
| Name of Director | Option prices | Total options exercised |
Value realisable 2007 £000 |
Value realisable 2006 £000 |
||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 349.75p | 381p | 397p | 483.5p | 543p | 743p | 1236p | ||||
| F N Hord | 40,000b | 196e | 40,196 | 389 | 87 | |||||
| C A S Hornsby | 101,871d | 196e | 102,067 | 564 | 782 | |||||
| F W Roach | 11,839a | 196e | 12,035 | 84 | 1 | |||||
| S P Webster | 1,750c | 12,000c | 2,450c | 16,200 | 148 | 220 | ||||
| Date of exercise | Closing market price on date of exercise (pence) |
|---|---|
|
The value realisable from gains made on share options is the difference between the closing market price on the date of exercise and the original option price before any relevant tax deductions, although in most cases, some or all of the shares have been retained by the relevant Director.
The total number of options exercised in May 2007 by each of Messrs Hord, Hornsby and Roach under the ESPP was reduced by 26 (which lapsed) from the total of 222 as listed at 1 August 2006, due to exchange rate fluctuations.
Pensions Mr Webster, a UK citizen, participates in the Wolseley Group Retirement Benefits Plan (the ‘Plan’). The Plan is a defined benefit scheme and provides benefits based on final pensionable salaries. The Company makes contributions to the Plan based on the recommendation of the Plan actuary. Bonuses payable to Executive Directors are not pensionable. Mr Webster currently contributes 8 per cent per annum of his pensionable salary to the Plan.
The Finance Act 1989 introduced an earnings cap (the ‘Cap’) for employees joining the Plan after 31 May 1989. This has the effect of limiting the amount of an employee’s salary that can be pensioned through a tax approved pension scheme. A Plan specific earnings cap was introduced as a result of changes introduced by the Finance Act 2004, effective 6 April 2006, when the Cap was prospectively abolished. The current Plan specific annual limit, to which Mr Webster is subject, is £112,800. The Company previously agreed to provide Mr Webster with benefits which are broadly comparable with those that would have applied under the Plan had the Cap not been introduced, which were provided for by payments into a Funded Unapproved Retirement Benefits Scheme (‘FURBS’). Following the introduction of the Finance Act 2004, the FURBS was no longer a tax efficient vehicle to fund pension benefits. Accordingly, since 6 April 2006, Mr Webster’s benefits have been provided through the Plan and through a cash supplement which, together, are broadly comparable to those to which he would previously have been entitled. No further monies have been paid into the FURBS.
Additionally, the Finance Act 1989 capped life assurance payable through a registered pension scheme in respect of such executives. Mr Webster receives life cover up to the HM Revenue & Customs’ Lifetime Allowance under the Plan. A separate insurance policy, paid for by the Company, has been taken out to cover the excess above the Lifetime Allowance. The amount charged to the profit and loss account during the year in respect of his future obligation was £1,256 (2006: £2,988).
Messrs Hornsby, Marchbank and Roach, who are US citizens, participate in the defined contribution pension arrangements of Ferguson Enterprises, Inc. Messrs Marchbank and Roach received contributions at the level of 23 per cent of their base salary and Mr Hornsby at a level of 20 per cent. Bonus ceased to be included in the calculation of pension contributions from 1 August 2006.
Mr Hord, also a US citizen, participated in the qualified defined contribution plan of Stock Building Supply, Inc. Mr Hord’s pensionable earnings included his bonus up to a maximum of $742,400 as agreed when the bonus scheme was introduced in order to preserve his pension entitlement at that time. Mr Hord was also a member of a US non-qualified defined benefit plan and he elected to receive a cash lump sum payment, in lieu of the 20 year instalments, at his retirement.
The following table shows those Executive Directors participating in defined contribution pension plans and the cost of the Group’s contributions thereto:
| Pensions: defined contribution plans | 2007 £000 |
2006 £000 |
|---|---|---|
| F N Hord | 4 | 5 |
| C A S Hornsby | 126 | 99 |
| R H Marchbank | 99 | 107 |
| F W Roach | 91 | 52 |
A US subsidiary undertaking has a commitment to a former Director, who is a US citizen, to pay a joint survivor pension of $300,000 per annum for 15 years from 1 August 1993. The net present value of the future obligation at 31 July 2007 was £149,479 (2006: £298,000), which has been charged in prior years’ accounts.
Additionally, Brossette, a French subsidiary undertaking, has a commitment to a former Director, who is a French citizen, to pay an annual pension of €225,597 (2006: €221,833), with a widow’s entitlement of 60 per cent, subject to an annual increase based on the agreed French pension index. The full actuarial cost of this arrangement was provided in previous years as part of Brossette’s ongoing pension obligations. The Company is guarantor of this future pension commitment which at 31 July 2007 was approximately £2.2 million (2006: £2.3 million).
The following table shows the Executive Directors in office on 31 July 2007 who participated during the year in the Group’s defined benefit schemes and the amount of benefit accrued at the end of the year as if the Director had left service on 31 July 2007, the change in accrued benefit over the year, the transfer value at both the beginning and end of the year as well as the change in the transfer value over the year as required by the Directors’ Remuneration Report Regulations 2002. The increase in transfer value figures represents an obligation on the pension fund or the Company – they are not sums due or paid to the Director. The Listing Rules of the UK Listing Authority require additional disclosure of the change in accrued benefit net of inflation and the transfer value of this change. These pension liabilities are calculated using the cash equivalent transfer value method prescribed in the Listing Rules.
