Remuneration report
For the year ended 31 July 2009

This report, approved by the Board, has been prepared in accordance with the requirements of the Companies Act 2006 (the “Act”) and the Listing Rules of the Financial Services Authority. Furthermore, the Board has applied the principles of good governance relating to Directors’ remuneration contained within the Combined Code.

The Act requires the auditors to report to the Company”s shareholders on the audited information within this report and to state whether, in their opinion, those parts of the report have been prepared in accordance with the Act. The auditors’ opinion and those aspects of the report which have been subject to audit are clearly marked.

Back to top

Executive Directors

The Company’s policy continues to be to provide remuneration packages that fairly reward Executive Directors for the contribution they make to the business, taking into account the size and complexity of the Group’s operations and the need to attract, retain and motivate executives of the highest quality. Remuneration packages comprise salary, performance bonuses, share options, long-term incentive awards, benefits in kind and retirement benefit provisions. The Company takes fully into account all of these individual elements in adopting a total approach to remuneration.

The Company’s policy is that each of the packages should incorporate components linking individual and company performance, short- and long-term returns, as well as absolute and relative financial performance. None of the variable elements of remuneration are pensionable. These packages are designed to be broadly comparable with those offered by other similar international businesses and reflect competitive practices in the countries and markets in which the Executive Directors operate.

The Committee believes that the choice of performance measures for the Company’s incentive plans continues to be suitable and provides an appropriate mix and balance. The measures are earnings per share (“EPS”) for executive share options and total shareholder return (“TSR”) for long-term incentive awards. The targets are felt to be demanding for the next three years and align executives’ interests with those of shareholders over this period.

The policy is designed to incentivise the Executive Directors to meet the Company’s financial and strategic objectives, such that a significant proportion of total remuneration is performance related. The Committee considers that the targets set for the different elements of performance related remuneration are appropriate and demanding in the context of the Company’s trading environment and the business challenges it faces.

The following chart shows total remuneration (salary, target and maximum amounts relating to bonus and the value of long-term incentive awards and executive share options granted during the financial year) for Executive Directors in office during financial year 2008/9.

Non Executive Directors

The remuneration of Non Executive Directors is made up of a basic fee plus an additional fee where a Non Executive Director acts as Chairman of either the Audit or Remuneration Committees or has been nominated as Senior Independent Director; details of these additional fees are listed below. Fees are reviewed from time to time by the Chairman and the Executive Directors of the Board. The Non Executive Directors have letters of engagement rather than service contracts and do not participate in any incentive plan, nor is any pension payable in respect of their services as Non Executive Directors.

Additional fees

The Board’s policy is that Non Executive Directors are normally appointed for an initial term of three years, which is then reviewed and extended for a further three-year period. Appointments may be terminated upon six months’ notice by either party. There are no provisions for compensation in the event of termination. The terms and conditions of appointment of the Non Executive Directors are available for inspection at the Company’s registered office during normal business hours and at the Annual General Meeting.

Back to top

The Executive Directors have service agreements with Wolseley plc, which are subject to a maximum of 12 months’ notice of termination if given by the Company and six months’ notice of termination if given by the Executive Director. Such notice periods reflect current market practice and the balance that should be struck between providing contractual protection to the Directors that is fair and the interests of shareholders.

The date of each service agreement and the year in which each Executive Director was last re-elected are noted in the table below. There are no provisions in any service agreement for early termination payments and, in the event of early termination of any service agreement, the Committee will give full and proper consideration to mitigation, which should be taken into account for payable compensation.

Back to top

Back to top

Prior to the annual review of remuneration, the Company announced on 30 June 2009 the appointment of Ian Meakins as Group Chief Executive with effect from 13 July 2009. The Committee agreed a package for Mr Meakins, which is considered to be competitive and appropriate to incentivise him to deliver the next phase of the Company’s strategy. This comprised an annual base salary of 775,000, a maximum annual bonus for 2009/10 of 120 per cent of base salary, total awards in 2009/10 of executive share options and long-term incentive awards of 230 per cent and 125 per cent of base salary respectively, and a cash allowance of 32 per cent of base salary in lieu of joining the Company pension scheme.

The outgoing Group Chief Executive, Chip Hornsby, received the contractual severance terms of 12 months’ salary and benefits. Under the respective share plan rules, all of his share options and long-term incentives lapsed. No bonus payment was made either for the financial year 2008/9 or his 12 month notice period.

Back to top

Basic salaries are determined having regard to individual responsibility and performance and are benchmarked with market data which is derived from a group of companies selected on the basis of comparable size, geographic spread and business focus. Consideration is also given to general pay and employment conditions across the Group. The target salary is set at the mid-market, with the opportunity to go above this level, subject to sustained individual high performance.

The approach on basic salary for new appointments, in particular internal promotions, is to progress towards the mid-market, once expertise and performance has been proven and sustained. The payment of salaries at this level is considered appropriate for the motivation and retention of the calibre of executive required to ensure the successful management of the Company in the challenging international business environment in which it operates.

The Committee reviews the fees of the Chairman and the salaries of the Executive Directors annually, having sought the views of both the Chairman and the Group Chief Executive (other than in the case of their own remuneration). In recognition of the financial circumstances currently being faced by the Company, the Committee has agreed that base salaries for each Executive Director and the Executive Committee for the financial year commencing 1 August 2009 should remain unchanged from the amounts paid from 1 August 2008. The Board also agreed that the fees payable to the Non Executive Directors should also remain unchanged for the forthcoming financial year. The fees payable to the Chairman and Non Executive Directors and base salaries in respect of the Executive Directors for the financial year commencing on 1 August 2009 are therefore as follows: J W Whybrow 360,500; R H Marchbank $964,100; F W Roach $957,900; S P Webster 556,200 and, for each of the Non Executive Directors, 61,800 (exclusive of Committee fees).

Back to top

The emoluments for 2008/9 payable from 1 August 2008 for the Directors who served during the financial year are set out below. The totals received by Messrs Hornsby, Marchbank and Roach were paid in US dollars and have been translated into sterling at the exchange rate $1.5708:£1 (2008: $2:£1):

1. Mr Marchbank elected to repay the 3 per cent increase received for financial year 2008/9 of $28,100 (£17,891). The actual salary paid during the year in $ is therefore unchanged from the figure reported in the 2007/8 Report and Accounts, but is subject to exchange rate variances. £155,547 (2008: £187,050) of the figure for benefits relates to his relocation from the USA to the UK.
2. Mr Meakins was appointed to the Board with effect from 13 July 2009. £14,708 of the figure for benefits relates to a cash supplement in lieu of payments into the Company pension scheme.
3. The actual salary paid during the year in $ is unchanged from the figure reported in the 2007/8 Report and Accounts, but is subject to exchange rate variances.
4. £196,339 (2008: £190,620) of the figure for benefits relates to a cash supplement in lieu of payments into the Funded Unapproved Retirement Benefit Scheme.
5. Mr Hornsby stepped down from the Board with effect from 29 June 2009. This figure represents his emoluments to that date. Payments of salary and benefits to which he is entitled in connection with the cessation of his employment amount to $1,932,934, which will be paid during the course of financial year 2009/10, which includes the $298,700 pension contributions noted below.

Back to top

Performance bonus arrangements for the Executive Directors are designed to encourage individual performance, corporate operating efficiencies and profitable growth. Stretching targets are set for each element of the bonus, determined by the Committee each year, which also considers the levels of performance targets to be achieved for bonus payments to be made in the succeeding year. The annual bonus awards are based on a mix of demanding financial targets, derived from the Company’s historic performance, annual long-term strategic business plan and annual budget, as well as market expectations.

For 2008/9, financial performance was measured equally by trading profit and cash flow metrics. These elements accounted for 80 per cent of the potential bonus with the balance depending on specific strategic personal objectives set for each Executive Director and member of the Executive Committee. Depending on their particular responsibilities and their performance, Executive Directors were eligible to receive up to 70 per cent for UK-based Directors and up to 110 per cent for US-based Directors, for on-target performance.

The performance of the Executive Directors and other non-Board members of the Executive Committee during the year would normally have allowed for them to receive a bonus payment relating to performance against both financial and personal targets. However, in order to ensure the appropriateness of reward in the current challenging trading environment, the Committee determined that no bonuses should be paid for financial year 2008/9 to any Executive Director or member of the Executive Committee. The total bonus “earned”, but not paid, by the Executive Directors and the Executive Committee during the 2008/9 financial year, was an average of 56.1 per cent of salary.

For the year ending 31 July 2010, performance bonuses will be measured principally by trading profit and supported by cash flow and formally linked to the achievement of strategic personal goals. The financial components will continue to account for 80 per cent of the bonus with the balance depending on specific strategic personal objectives set for each Executive Director. A minimum standard of Company trading profit performance will be required for each executive to be considered eligible for payment for strategic personal objectives.

The Committee has determined that the following percentages of base salary will be paid as bonus, subject to the achievement of the minimum, on-target and maximum levels of performance for each element (with the percentages increasing on a linear basis for achievement between each level):

*US-based.

Back to top

For financial year commencing 1 August 2009, it was agreed, following recommendation by the Remuneration Committee, that the Group Chief Executive, the Chairman and the Non Executive Directors will have 15 per cent of base salary or fees withheld each month after tax has been paid in order to buy the equivalent value in the Company’s shares. Each Executive Director will be required to commit 10 per cent of his salary on the same basis. Share purchases will take place on a quarterly basis, on pre-determined dates during 2009/10. All shares purchased will count towards the share ownership requirements in Directors share ownership.

Back to top

Benefits in kind consist of car benefits, healthcare insurance and, in the case of Mr Marchbank, expatriate living allowances following his relocation from the USA to the UK. In addition, to ensure that senior executives who are US citizens are not disadvantaged as a result of paying both UK and US taxes on their income, there is a mechanism of tax equalisation, which avoids the need to increase salaries to meet any additional tax burden.

Back to top

The non-Board members of the Executive Committee are senior executives whose roles are considered able to significantly influence the ability of the Group to meet its strategic objectives. The Committee determines the level of remuneration for this group, based on proposals from the Group Chief Executive. Their total remuneration including salary and benefits, actual bonus (which for the financial year 2008/9 was not paid) and the fair value of long-term incentives granted/awarded during the year ended 31 July 2009 is summarised below:

* These figures reflect changes made to the composition of the Executive Committee during financial year 2007/8.

Back to top

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 salary. 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.

Mr Webster is subject to the plan specific earnings cap on his benefits accrual, which for the Plan year 2008/9 was 117,600. 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 Benefit 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.

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 1,800 (2008: 1,513).

The changes to the UK pension schemes have also been applied to Mr Webster’s benefits.

The table below shows for Mr Webster, the amount of benefit accrued at the end of the year under the Group’s defined benefit scheme as if he had left service on 31 July 2009, 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 Companies Act 2006. 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.

Messrs Hornsby, Marchbank and Roach, who are US citizens, participated 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 until he left the Company on 29 June 2009. Bonus is not included in the calculation of Company pension contributions.

The following table shows those Executive Directors participating in defined contribution pension plans and the cost of the Group’s contributions thereto during the financial year:

*Exchange rate used to convert the $ to over the year to 31 July 2009 is 1.5708.

During his 30 year career, Mr Hornsby participated in Ferguson Enterprise, Inc.’s Executive Retirement Plans, which included the Supplemental Executive Retirement Plan (“SERP”), pursuant to which the Company contributed funding for certain pension benefits. In the accounts for the 2006/7 and 2007/8 financial years, this funding was disclosed as 126,000 and 145,000 respectively. As at the date of his cessation of employment, the value of Mr Hornsby’s accumulated benefit under the SERP stood at $2,801,803 (the “SERP retirement fund”). The SERP retirement fund had not vested at the date of cessation of employment. Recognising the longevity of Mr Hornsby’s service of in excess of 30 years, the Remuneration Committee determined to pay Mr Hornsby a lump sum pension payment equivalent to the accumulated SERP retirement fund that had accrued. A further contribution of $298,700 will be paid in the financial year 2009/10, representing the regular contribution to the SERP for his contractual notice period. After those payments have been made, the Company will not be liable to make any further payments in relation to Mr Hornsby’s pension.

Brossette, a French subsidiary undertaking, has a commitment to a former Director, who is a French citizen, to pay an annual pension of €231,123 (2008: €228,891), 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 2009 was approximately £2.7 million (2008: £2.3 million).

Pensions table

Notes: Mr Webster is building up benefits at the rate of 1/30ths of the earnings cap, payable from age 60. Mr Webster also has a FURBS to which no further contributions are payable and a cash allowance is paid.

Back to top

Following the capital reorganisation and share issue which was completed during April 2009, the Committee reviewed, in accordance with the rules of each of the Company’s share schemes, the appropriate adjustments to be made to reflect the dilutive effect of both transactions. The calculations were made in accordance with HM Revenue and Customs recommendations (“HMRC”). Such calculations were reviewed by the Company’s auditors, who performed specific procedures to recalculate the adjustments made to outstanding awards, on the basis that the Directors of the Company deemed the adjustments to be fair and reasonable.

After adjustments had been made to outstanding awards to reflect the capital reorganisation, a further adjustment was made using the theoretical ex-rights price calculation (“TERP”) as agreed with HMRC. All outstanding awards made under the Company’s share plans were multiplied by a TERP factor of 2.398177677 and the respective option prices and market prices at allocation were multiplied by a factor of 0.416983283.

These formulae were designed to minimise the effect of the capital reorganisation and the share issue upon outstanding awards and, subject to roundings, ensured that the overall value of outstanding awards was the same after adjustment.

The adjustments made to the share incentive awards granted to employees across the Group during the 2008/09 financial year, allowing for lapses of awards in accordance with the scheme rules, which occurred after the relevant dates of grant and prior to the capital reorganisation and share issue, are shown below:

Back to top

The interests of the Directors in office at 31 July 2009, and of their connected persons, in the ordinary shares of the Company at the following dates were:

As a result of the capital reorganisation which was completed on 2 April 2009, each of the Directors noted above now holds a number of deferred shares of 24 pence each. These deferred shares hold no value or voting rights and accordingly, have not been disclosed in the table above.

Back to top

A share ownership programme was introduced with effect from 1 August 2004. It is designed to encourage all Directors and members of the Executive Committee to build up a shareholding in value equivalent to the following levels:

For Executive Directors and members of the Executive Committee, share ownership may be achieved by retaining shares received as a result of participating in a Company share plan, after taking into account any shares sold to finance option exercises or to pay a National Insurance or income tax liability or overseas equivalent. The programme specifically excludes the need for executives to make a personal investment should awards not vest. Normally these levels of shareholding should be expected to be achieved within three to five years from the time the individual is included in the programme. In addition, shares purchased from salary as detailed above in Emoluments (audited), will count towards the necessary targets.The Committee has reviewed and noted the progress which has been made towards meeting these targets during the year. Directors’ current interest in shares are set out opposite.

Back to top

The Company currently operates a long-term incentive plan under the Wolseley plc 2002 Long Term Incentive Scheme (”LTIS”), which was approved by shareholders in December 2002 and amended at the 2004 Annual General Meeting. The purpose of the LTIS is to reward executives for relative outperformance of the Company against a defined list of comparator companies. The LTIS (as amended) provides for awards of ordinary shares in the capital of the Company, subject to the Company meeting TSR targets over single three-year periods. All awards are made subject to the achievement of stretching performance conditions and TSR has been selected as the appropriate performance measure to align more closely the interests of the Executive Directors and senior executives with those of the Company’s shareholders over the long term. Calculations of TSR are independently carried out and verified before being approved by the Committee.

The following performance conditions apply for awards made under the LTIS:

The lists of comparator companies for awards made under the LTIS are based upon the constituent members of the FTSE 100 as at the respective dates of grant, excluding banks, telecommunications, IT and utility companies but together with CRH plc and Travis Perkins plc, which compete in the same sector as the Company. A similar group of companies will be selected for the 2009 awards under the LTIS.

The LTIS is discretionary. The Committee’s current policy is to make annual awards to the Group Chief Executive, Executive Directors and other senior executives. Awards are made in shares, save where there may be material securities or tax law constraints in overseas jurisdictions where the scheme would be operated, in which case conditional awards in cash would be considered. A total of 782,014 shares (as adjusted following the capital reorganisation and rights issue) were conditionally granted under the LTIS in October 2008 to 104 employees (2008: 127).

The maximum amount that can be granted under the amended LTIS for each award is 200 per cent of base salary per annum; however, awards made to date have not exceeded 125 per cent, or in the case of the Group Chief Executive 150 per cent, of base salary. Each year the Committee assesses the relevant proportion of awards arising from both share options and long-term incentive awards. Extant awards remain subject to the achievement of performance conditions following a participant’s agreed retirement and vesting is only determined at the end of the performance period.

The following table sets out the percentage of each award which has vested and the percentage of each extant award, had it vested on 31 July 2009:

Details of the awards conditionally made under the LTIS to the Executive Directors in office during the year, the adjustments made as a result of the capital reorganisation and share issue, and the number of awards outstanding at 31 July 2009 are shown in the table below:

1. The share price on the date of the award was 287.25 pence per share. For comparison, this figure would be equivalent to 1197.8 pence after taking into account the adjustments required following the capital reorganisation and share issue (using the TERP factor of 0.416983283).
2. Awards granted in 2005 did not pass their TSR performance conditions and all awards lapsed in October 2008 (before the capital reorganisation and rights issue).
3. The performance periods range from 1 August 2006 to 31July 2011.
4. In accordance with the rules of the LTIS, all awards lapsed on 29 June 2009 as a consequence of Mr Hornsbys cessation of employment.

Back to top

The Wolseley Share Option Plan 2003 (“2003 Option Plan”) received shareholder approval at the Annual General Meeting held in November 2003. Consequently, no further options have been granted under the Executive Share Option Scheme 1984 (“1984 Scheme”) nor under the Executive Share Option Scheme 1989 (“1989 Scheme”), which are now closed. No options under any such scheme have or will be granted at a discount to the relevant middle market price at the time of grant and no option under any such scheme can be exercised unless performance conditions have been satisfied.

The purpose of the 2003 Option Plan is to reward executives for absolute EPS growth of the Company above UK inflation. All employees and Executive Directors of the Company and its subsidiaries are eligible to participate in the 2003 Option Plan. Participants are selected by the Committee at its discretion. The Committee considers annually the levels of grant, which are phased over time and determines the size of each award at the time of grant based on individual performance, the ability of each individual to contribute to the achievement of the performance conditions and market levels of remuneration. Awards may not exceed an amount equal to five times salary for US-based executives and three times salary for UK and other Europe based executives, although the Committee may, if it so determines, also use the five times salary limit in exceptional circumstances.

No options may be granted more than ten years after the date on which the 2003 Option Plan was approved by the Company’s shareholders. The Committee formally reviewed the 2003 Option Plan at its meeting held in October 2008 and concluded that it remained suitable and appropriate as part of the senior executive remuneration package.

The Company monitors awards made under the various employee and discretionary share plans which it operates in relation to their effect on dilution limits. Options are either satisfied by the issue of new shares or shares purchased in the market. In accordance with the recommendations of the Association of British Insurers (“ABI”), the number of new shares that may be issued to satisfy options granted under the 2003 Option Plan and any other employee share scheme is restricted to 10 per cent of the issued ordinary share capital of the Company over any rolling ten years. Further, as set out in the ABI principles and guidelines, the number of new shares that may be issued to satisfy executive options granted under the 2003 Option Plan and any other discretionary share scheme is restricted to 5 per cent of the issued ordinary share capital of the Company over any rolling ten years. In addition, for US-based participants, the 2003 Option Plan is restricted such that the aggregate number of shares for which options may be granted to such participants during the life of the 2003 Option Plan will not exceed 5 per cent of the issued ordinary share capital of the Company as at the date the 2003 Plan was approved by shareholders.

At 31 July 2009, allowing for the requisite adjustments required following the capital reorganisation and share issue, awards had been granted resulting in shares being issued or capable of being issued during the preceding ten years under all of the Company’s employee share plans representing 9.94 per cent of the issued ordinary share capital at that date and 4.36 per cent of the issued ordinary share capital under the Company’s discretionary share plans. These percentages remain high because the adjustment factors noted in Directors’ interests in shares (audited) are not applied to shares which have already been issued under the Company’s share option schemes in the last ten years, the period used for this calculation.

The extent to which the options will be capable of exercise depends on the satisfaction of a performance condition, based on achieving growth above UK inflation in the Company’s EPS, measured from the year ended immediately prior to grant. The performance condition for options now granted under the 2003 Option Plan operates on the following sliding scale:

The performance of the Company is measured over three financial years, starting with the financial year in which the option grant takes place. For all grants made under the 2003 Option Plan on or after 5 November 2004 there is a single three-year performance period and, in the event that the performance conditions are not fully met on the third anniversary of the date of grant, the unvested options will lapse. Provided the performance condition has been satisfied, an option may be exercised at any time until it lapses, ten years from the date of grant. No amount is payable on the grant of an option.

The Committee can set different EPS targets from those described above for future options, provided that the new conditions are no less challenging in the circumstances than the initial ones. Similarly, the Committee can vary the terms of existing options to take account of technical changes, for example, changes in accounting standards. Any amended target will be materially no less challenging as a result of any such change. The Committee continues to believe that the EPS condition is appropriate for share options, as it requires substantial improvement in the Company’s underlying financial performance and complements the inherent requirement for share price growth for an option to have value.

In November 2008, 5,693,384 options (as adjusted following the capital reorganisation and rights issue) were granted under the 2003 Option Plan to 1,279 employees (2007: 1,370) across the Group at an adjusted option price of 1334 pence. The table in Directors’ interest in share options (audited) shows the number of share options awarded to Executive Directors in office during the year, the adjustments made to the executive share option schemes as a result of the capital reorganisation and share issue, and the number of awards outstanding as at 31 July 2009.

Back to top

1. Options exercisable subject to meeting performance targets.
2. These options lapsed on 4 November 2008 as the 2005 grant did not pass the relevant EPS performance conditions.
3. Performance targets not passed prior to options reaching ten-year limit from date of grant.
4. In accordance with the rules of the Wolseley Executive Share Option Plan 2003, all options lapsed on 29 June 2009.
5. Outstanding options were subject to an adjustment following the capital reorganisation and share issue to reflect the dilutive effect of these transactions. The total number of shares held under option outstanding at 21 April 2009, following the capital reorganisation adjustment, was multiplied by a TERP factor of 2.398177677. The respective option prices were multiplied by a TERP factor of 0.416983283.

No options under either the executive or savings related share option schemes were exercised during the year ended 31 July 2009. The highest mid-market price of the Company’s ordinary 25 pence shares (prior to the capital reorganisation and share issue) was 494 pence and the lowest was 140.4 pence. After the capital reorganisation and share issue, the highest mid-market price of the Company’s ordinary 10 pence shares was 2632 pence and the lowest was 980 pence. The price of the Company’s ordinary 10 pence shares on 31 July 2009 was 1339 pence.

Back to top

The UK- and US-based Executive Directors may, along with all eligible employees, also participate in the UK Savings Related Share Option Scheme (“UK sharesave”) and the Employee Share Purchase Plan (“ESPP”) respectively. Under the UK sharesave, participants can enter into a savings contract for three, five or seven years, up to a maximum level of £250 per month (over all contracts) and 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 no more than $400 per month (the savings amount is linked to the £250 UK savings amount and is therefore adjusted for exchange rate purposes). The Board may determine that the options granted under either scheme may be awarded at a discount. The maximum discount, which was applied to the 2009 awards, is for the UK sharesave scheme 20 per cent and for the ESPP 15 per cent of the average market prices used to determine the price of the award. Similar schemes are also offered to employees across Europe under the Wolseley European Sharesave Plan (“WESP”) and in Ireland under the Wolseley Irish Sharesave Scheme.

Following the adjustments made for the capital reorganisation and share issue, and allowing for lapses completed after the date of grant, a total of 1,176,923 options were granted in April 2009 to 4,068 employees in North America under the ESPP and 614 employees across Europe under the WESP, at an adjusted option price of 743 pence per share. In the UK and Ireland, a total of 2,252,630 options were granted at an adjusted option price of 701 pence per share to 3,588 employees in the UK and 89 employees in Ireland.

The table in Directors’ interests in share options (audited) sets out the number of share options granted to Executive Directors during the year under the UK sharesave and ESPP, the adjustments made as a result of the capital reorganisation and share issue, and the number of options outstanding as at 31 July 2009.

Back to top

The following graph shows the Company’s TSR performance against the performance of the FTSE 100 Index over the five-year period to 31 July 2009. The FTSE 100 Index has been chosen as being a broad equity market index consisting of companies comparable in size and complexity to Wolseley.

Back to top

Executive Directors are encouraged to take on not more than one external non executive directorship on a non-competitor board, as the Committee believes there are significant benefits to be achieved for both the Company and the individual. In order to avoid any conflict of interest, all appointments are subject to the Board’s approval. Executive Directors may retain payments received in respect of these appointments. Mr Webster was, until November 2008, a non executive director of Bradford & Bingley plc, for which the annual rate of his fees was 70,000. The amount received during the financial year prior to his stepping down as a director of this company was £17,500.

This report has been approved by the Board for submission to shareholders at the Annual General Meeting to be held on 18 November 2009 and is signed on its behalf by the Chairman of the Committee.

Back to top