Further details of each of the components of the directors' remuneration are given in the report below.

The remuneration committee

During the year the Committee comprised the following independent non-executive directors:

Jonathan Dawson (Committee Chairman)
Steve Barber
John Barton
Christine Cross
Francis Salway
Caroline Goodall (from January 2013)

The Committee met five times during the year under review and all meetings were fully attended with the exception of one which Caroline Goodall was unable to attend due to other commitments relating to her induction as a director of NEXT.

Role of Remuneration Committee

The Committee determines the remuneration of the Group's Chairman and executive directors, and reviews that of senior executives. It is also responsible for determining the targets for performance-related pay schemes, approves any award of the Company's shares under share option or incentive schemes to employees and oversees any major changes in employee benefit structures. The Committee members have no conflicts of interest arising from cross-directorships and no director is permitted to be involved in any decisions as to his or her own remuneration. The remuneration of non-executive directors is decided by the Chairman and executive directors of the Board. The Committee's terms of reference are available on the Company's website (www.nextplc.co.uk) or on request from the Company Secretary.

Assistance to the Committee

During the period the Committee received input from the Chief Executive and Group Finance Director and retained the services of Aon Hewitt and FIT Remuneration Consultants LLP to provide independent external advice regarding executive remuneration. These advisors have no other connection with the Company. PricewaterhouseCoopers provided independent verification services of total shareholder returns for NEXT and the comparator group of companies under the long term incentive plan (LTIP).

Additional information on Board remuneration

LTIP

The comparator group of companies for the three year performance periods to July 2012 and January 2013 was as follows:

ASOS	Findel	J Sainsbury	N Brown
Burberry	French Connection	Kesa	Signet
Carpetright	Halfords	Kingfisher	Tesco
Carphone Warehouse	HMV	Marks & Spencer	WH Smith
Debenhams	Home Retail Group	Morrisons
Dixons Retail	JJB Sports	Mothercare

For subsequent performance periods the changes to the comparator group above are:

1. periods ending July 2013 and January 2014 - Ted Baker added and Findel, French Connection and JJB Sports removed;
2. period ending July 2014 - Supergroup added and Signet removed; and
3. periods ending January 2015 and July 2015 - Dunelm Group added and HMV removed.

The comparator group consists of UK listed retail companies which are most comparable with NEXT in size or nature of their business. Comparison against such a group of companies is more likely to reflect the Company's relative performance against its peers, thereby resulting in grants being made on an appropriate basis.

Details of potential awards granted for outstanding performance periods are as follows:

	Maximum potential award granted (% of base salary)
Performance periods commencing	Lord Wolfson	Christos Angelides	David Keens & Andrew Varley	Other employees
August 2010 and February 2011	100%	125%	75%	60%
August 2011, February 2012 and August 2012	100%	75%	75%	60%

The Committee has discretion as to whether entitlements earned are payable in NEXT shares or cash and to date it has allowed participants the choice. Entitlements earned are not pensionable and are based on salary and share price at the start of the performance period. No individuals included in the plan have received grants under the management share option scheme in the same year.

Share Matching Plan

Vesting of awards is dependent solely on achieving the fully diluted post-tax EPS targets detailed below.

	Required fully diluted EPS (pence)
Date of grant	For 0.5:1 match	For 1:1 match	For 2:1 match
June 2010	191.5	206.5	221.5
April 2011	231.3	240.2	258.1
	For 0.25:1 match	For 0.5:1 match	For 1:1 match
April 2012	267.2	281.5	310.2

These targets require a minimum three year growth in EPS of 8.8% (2010 award) and 12% (2011 and 2012 awards) before any shares vest and a maximum award is only achieved if EPS growth reaches 25.8%, 25% and 30% respectively over three years. The effective matching ratio will be calculated on a straight line basis for EPS falling between each of the threshold points. Details of the calculation of fully diluted EPS are provided in Note 9. The Committee has reviewed the performance conditions of awards to be made in 2013 and for the period to January 2016, the fully diluted EPS hurdle will be 314.5 pence (12% growth) for a minimum match of 0.25 of a share to vest and 365.0 pence (30% growth) for the maximum match of one share.

Management share options

The management share option plan provides for options over shares, exercisable between three and ten years following their grant, to be allocated to Group employees. This plan is primarily aimed at middle management and senior store staff. No options were granted to any directors or changes made to existing entitlements in the year under review. No employee is entitled to be granted options under the scheme and be included in the LTIP or the SMP in the same year.

The total number of options which can be granted is subject to shareholder approved limits and there are no cash settlement alternatives. Options are set at the prevailing market price at the time of grant, which are generally made annually. The maximum total market value of shares (i.e. the acquisition price of shares) over which options may be granted to any person during any financial year of the Company is three times salary. This limit may be increased to five times salary in circumstances considered by the Committee to be exceptional, for example on the grant of options following recruitment. The maximum grant during the year was 120% of salary.

Sharesave options

Executive directors can participate in the Company's Save As You Earn (Sharesave) scheme which is open to all employees. Grants are generally made annually and the scheme is subject to HMRC rules which limit the maximum monthly savings to £250. Options are granted at a discount of 20% to the prevailing market rate and are exercisable three, five or seven years from the date of grant. Sharesave options granted to, or exercised by, directors in the year are detailed in the Share matching plan and sharesave interests section within this report.

Dilution of share capital by employee share plans

The Company monitors and has complied with dilution limits in its various share scheme rules and has not issued a significant number of new or treasury shares in satisfaction of share schemes in the last 10 years. Share-based incentives are usually satisfied from shares held by the ESOT – see Note 26.

Group pension plan

Executive directors are members of the NEXT Group Pension Plan (the "Plan") which has been approved by HM Revenue & Customs and consists of defined benefit and defined contribution sections.

The trustee of the Plan is a limited company, NEXT Pension Trustees Limited (the "Trustee"). The Board of the Trustee includes members of the Plan, a pensioner member and an independent director who is also the Chairman of the Trustee. Two of the directors are member nominated directors and cannot be removed by NEXT; the other directors, including the independent director, are appointed by and can be removed by NEXT. All directors of the Trustee receive a fee for their services, including those directors who are also employees of NEXT. No director of the Company is a director of the Trustee.

The Plan's investments are kept separate from the business of the NEXT Group and the Trustee holds them in trust. Responsibility for investment of the Plan's funds has been delegated by the Trustee to professional investment managers.

The Group operates a salary sacrifice scheme whereby members from either section can elect to receive a reduced gross salary in exchange for enhanced employer pension contributions. The participation of members in the salary sacrifice scheme does not result in any overall increase in costs to the Group.

Defined contribution section

Employees of the Group can join the defined contribution section of the Plan. Members elect to pay either 3% or 5% of their pensionable earnings which is matched by the Company. For death prior to retirement, a lump sum of three times the member's base salary at the previous April is payable along with the current value of the member's fund.

Defined benefit section

The defined benefit section was closed to new members in 2000 and during the current year the Group reviewed its operation for remaining employee members. Following a consultation process with those employees, from November 2012 the future accrual of pension benefits will be based on pensionable salary frozen at that time, rather than final earnings. In addition, those employees can elect to receive either a salary supplement or additional contributions to a defined contribution scheme. From November 2012, the defined benefit section provides members with a retirement benefit of one sixtieth or one eightieth (depending on the member's chosen contribution rate) of pensionable earnings at 31 October 2012 for each year of pensionable service.

This section provides a lump sum death in service benefit and dependants' pensions on death in service or following retirement. Pensions are only payable to deceased members' children after death in service. In the case of ill-health retirement, only the accrued pension is payable. All benefits are subject to Plan limits. Increases to pensions in payment are at the discretion of the Trustee although pensionable service post-1997 is subject to limited price indexation. From 2006, sales and profit related bonuses were excluded from pensionable earnings and the normal retirement age under the Plan was increased from 60 to 65.

Members contribute 3% or 5% of pensionable earnings, whilst the Company currently makes contributions at the rate of 17.5%. The last full triennial valuation of the Plan was carried out as at March 2010, the next will take place as at March 2013. As calculated in accordance with International Financial Reporting Standards, the surplus in the Plan at January 2013 was £65.6m; further details are given in Note 21 to the financial statements.

Certain members whose accrued or projected pension fund value exceeds their personal lifetime allowance are provided with benefits through an unfunded, unapproved arrangement. The relevant members contribute towards the additional cost of providing these benefits by a deduction of 5% on all pensionable earnings. Since April 2011, where existing members have reached either the annual or lifetime pension contributions limits, the Company has offered those members the choice of leaving the defined benefit section and either joining the defined contribution section (with an enhanced Company contribution) or taking a salary supplement, in both cases equal to 10% or 15% of their salary (depending on their existing contributions and benefits).

Auto-Enrolment

Following the introduction of Auto-Enrolment (A-E) in 2012, most employees now have the option of joining the NEXT plan, the statutory A-E plan or opting out of pension provision through the Company. Contributions to A-E commenced in February 2013.

Specific information in respect of executive directors' pension entitlements is detailed at the end of this report.

Service contracts

Executive directors

Apart from service contracts (detailed in the Remuneration Policy Table), no director has had any material interest in any contract with the Company or its subsidiaries.

Non-executive directors

Letters of appointment for the Chairman and non-executive directors do not contain fixed term periods; however they are appointed in the expectation that they will serve for a minimum of six years, subject to satisfactory performance and successful re-election at Annual General Meetings.

Dates of appointment and notice periods for non-executive directors are set out below:

Date of appointment		Notice period
Chairman
John Barton	17 May 2006	12 months
Non-executive directors
Steve Barber	1 June 2007	1 month
Christine Cross	19 January 2005	1 month
Jonathan Dawson	13 May 2004	1 month
Caroline Goodall	1 January 2013	1 month
Francis Salway	1 June 2010	1 month

Executive directors' external appointments

Andrew Varley is a non-executive director of LondonMetric Property plc and the Remuneration Committee has approved his retention of the director's fee of £50,000 per annum for this appointment. No other executive director holds any non-executive directorships outside the Group.

Directors' interests

The Company has a formal share ownership requirement for executive directors, as set within the Remuneration Policy Table.

Directors' beneficial interests in shares at the beginning of the financial year and at the end of the year were as follows:

	Ordinary shares of 10p each
	2013 No. of shares	2012 No. of shares
Lord Wolfson	1,520,505	1,638,010
Christos Angelides	77,171	72,975
Steve Barber	5,000	10,000
John Barton	16,000	16,000
Christine Cross	5,598	5,598
Jonathan Dawson	5,000	5,000
Caroline Goodall	Nil	N/A
David Keens	165,535	151,574
Francis Salway	9,258	9,258
Andrew Varley	69,817	76,460

David Keens has a beneficial holding of £83,000 (2012: £83,000) nominal value of the Company's 2013 5.25% corporate bonds.

There have been no changes to directors' interests in the shares of the Company from the end of the financial year to 19 March 2013. Full details of directors' interests in the shares and share options of the Company are contained in the Register of Directors' Interests which is open to inspection.

Performance graph

The graph below illustrates the performance of the Company when compared with the FTSE All Share and FTSE General Retailers index. These have been selected to illustrate the Company's total shareholder return performance against a wide UK index and a sector specific index for the five year period ending January 2013.

Information subject to audit

Directors' remuneration £'000	Salary/ fee	Annual performance related bonus	Benefits	Salary supplement1	Total 2013	Total 2012
Chairman
John Barton	250	–	–	–	250	250
Executive directors
Lord Wolfson	714	1,064	45	27	1,850	1,486
Christos Angelides	519	514	33	19	1,085	900
David Keens	477	472	19	72	1,040	916
Andrew Varley	355	351	27	53	786	674
Non-executive directors
Steve Barber	60	–	–	–	60	60
Christine Cross	50	–	–	–	50	50
Jonathan Dawson	70	–	–	–	70	70
Caroline Goodall	4	–	–	–	4	–
Francis Salway	50	–	–	–	50	50
Total	2,549	2,401	124	171	5,245	4,456
Total 2012	2,495	1,751	115	95	4,456

1. Directors received a salary supplement of 15% in lieu of pension provision from April 2011 (Andrew Varley), June 2011 (David Keens) and November 2012 (Lord Wolfson and Christos Angelides).

Lord Wolfson was the highest paid director in the current and previous year; £350,000 of his annual performance-related bonus is payable in NEXT shares (2012: £56,000), deferred for a period of two years and will be forfeited if he voluntarily resigns prior to the end of that period.

The Company paid a pension under the unfunded, unapproved arrangement to a former director of the Company of £36,496 (2012: £35,606).

Long term incentive plans

For the three year performance period to July 2012, TSR ranked fifth in the comparator group of 22 and 96% of the grant made in July 2009 vested. Before allowing the award to vest the Remuneration Committee assessed the performance of the Company during the performance period in light of underlying economic and other conditions ('the economic underpin'). The Committee noted that EPS compound growth of 19.7% and pre-tax profit compound growth of 10.4% over the three year period, was well ahead of RPI compound growth of 4.3%. In addition, dividends had grown in line with EPS and £727m had been returned to shareholders through buybacks. The Committee also assessed earnings growth against selected comparable major UK retailers and concluded that NEXT had performed favourably. Taking these factors into account, the Committee determined that the economic underpin performance condition for the July award had been satisfied. Details of the amounts that vested for each executive director are detailed in the table below. The awards were cash settled for all executives except David Keens who received shares.

For the performance period to January 2013, TSR ranked fifth against the comparator group of 22 which corresponds to an expected vesting of 98% of the maximum award made in January 2010. The Remuneration Committee will formally assess the performance of the Company for this period in April on the same basis as the grant made in July 2009 before determining whether the economic underpin performance condition has been satisfied. If the condition is satisfied, the January 2013 award will be settled in April, and based on the share price of £41.10 on 19 March 2013, awards for each executive director for the year are detailed below:

	July 2012		January 2013		Total	Total for 2012
	Actual no. of shares	Value £'000	Actual no. of shares	Estimated value £'000	Estimated value £'000	Adjustment to estimate £'000	Final value £'000
Lord Wolfson1	42,582	1,448	25,596	1,052	2,500	–	2,500
Christos Angelides1	37,062	1,260	30,170	1,240	2,500	33	1,673
David Keens	21,291	724	16,796	690	1,414	31	1,602
Andrew Varley	15,849	539	12,487	513	1,052	23	1,193
	116,784	3,971	85,049	3,495	7,466	87	6,968

1. As noted in the LTIP Section of the Remuneration Report, the value of the LTIP awards for Lord Wolfson and Christos Angelides will be restricted in respect of the financial year ended January 2013 to a maximum of £2.5m, as it was for Lord Wolfson in 2012.

Details of directors' interests in long term schemes, comprising the LTIP and deferred bonus shares, are summarised below:

	Date of award	Maximum share potential January 20121	Shares awarded during the year	Shares vested during the year3	Shares lapsed during the year	Maximum share potential January 20131	Market value on date of award (£)	Market value on date cash equivalent determined (£)	Vesting date
Lord Wolfson
LTIP	Mar 2009	62,374	–	28,426	33,9484	–	10.93	30.14	Jan 2012
	Sept 2009	44,356	–	42,582	1,774	–	15.37	34.01	Jul 2012
	Mar 2010	34,228	–	–	–	34,2285	20.13	–	Jan 2013
	Sept 2010	32,592	–	–	–	32,592	21.14	–	Jul 2013
	Mar 2011	33,684	–	–	–	33,684	20.70	–	Jan 2014
	Sept 2011	30,289	–	–	–	30,289	23.02	–	Jul 2014
	Mar 2012	–	26,861	–	–	26,861	26.60	–	Jan 2015
	Sept 2012	–	23,175	–	–	23,175	30.83	–	Jul 2015
Deferred bonus shares2	Apr 2010	15,615	–	15,615	–	–	21.83	29.33	Apr 2012
	Apr 2011	17,020	–	–	–	17,020	20.24	–	Apr 2013
	Apr 2012	–	1,902	–	–	1,902	29.33	–	Apr 2014
Total		270,158	51,938	86,623	35,722	199,751
Christos Angelides
LTIP	Mar 2009	32,573	–	27,036	5,537	–	10.93	30.14	Jan 2012
	Sept 2009	38,606	–	37,062	1,544	–	15.37	34.01	Jul 2012
	Mar 2010	31,048	–	–	–	31,0485	20.13	–	Jan 2013
	Sept 2010	29,565	–	–	–	29,565	21.14	–	Jul 2013
	Mar 2011	30,556	–	–	–	30,556	20.70	–	Jan 2014
	Sept 2011	16,486	–	–	–	16,486	23.02	–	Jul 2014
	Mar 2012	–	14,619	–	–	14,619	26.60	–	Jan 2015
	Sept 2012	–	12,614	–	–	12,614	30.83	–	Jul 2015
Total		178,834	27,233	64,098	7,081	134,888
David Keens
LTIP	Mar 2009	31,187	–	25,885	5,302	–	10.93	30.14	Jan 2012
	Sept 2009	22,178	–	21,291	887	–	15.37	34.01	Jul 2012
	Mar 2010	17,139	–	–	–	17,1395	20.13	–	Jan 2013
	Sept 2010	16,320	–	–	–	16,320	21.14	–	Jul 2013
	Mar 2011	16,866	–	–	–	16,866	20.70	–	Jan 2014
	Sept 2011	15,166	–	–	–	15,166	23.02	–	Jul 2014
	Mar 2012	–	13,449	–	–	13,449	26.60	–	Jan 2015
	Sept 2012	–	11,604	–	–	11,604	30.83	–	Jul 2015
Total		118,856	25,053	47,176	6,189	90,544
Andrew Varley
LTIP	Mar 2009	23,217	–	19,270	3,947	–	10.93	30.14	Jan 2012
	Sept 2009	16,510	–	15,849	661	–	15.37	34.01	Jul 2012
	Mar 2010	12,742	–	–	–	12,7425	20.13	–	Jan 2013
	Sept 2010	12,133	–	–	–	12,133	21.14	–	Jul 2013
	Mar 2011	12,536	–	–	–	12,536	20.70	–	Jan 2014
	Sept 2011	11,273	–	–	–	11,273	23.02	–	Jul 2014
	Mar 2012	–	9,995	–	–	9,995	26.60	–	Jan 2015
	Sept 2012	–	8,624	–	–	8,624	30.83	–	Jul 2015
Total		88,411	18,619	35,119	4,608	67,303

1. The maximum number of LTIP shares is the award that could be receivable if the TSR performance conditions outlined on in the Remuneration Policy Table are fully met.
2. Full details of deferred bonus are set out on in the Remuneration Policy Table and within the Audited Information.
3. See the LTIP information for details of the performance conditions and vesting levels applicable to the LTIP schemes vesting in the year, including the restriction on the maximum value that could vest.
4. The maximum value of LTIP awards that vest for a participant in a year is capped at £2.5m. This cap was applied to Lord Wolfson's awards that vested in the year to January 2012. The impact of the cap was to reduce shares vested and increase shares lapsed by 23,344 shares.
5. See the LTIP information for details of these awards which are expected to vest in April 2013.

The LTIP performance periods which mature after January 2013 are not yet complete and no entitlement has yet been earned. A charge of £23,368,000 for the year (2012: £17,159,000) has been made in the accounts in respect of these LTIP grants, of which approximately £9,554,000 (2012: £7,956,000) related to the executive directors.

For all LTIP participants, the total maximum shares receivable at January 2012 was 1,364,175 (January 2011: 1,776,284). During the year, grants over 517,192 shares vested (2012: 615,044), grants over 57,545 shares lapsed (2012: 189,723) and further grants over 295,033 shares were issued (2012: 392,658). At January 2013 the total maximum shares receivable was 1,084,471 (excluding the impact of any cap on the total value which may apply) with an average remaining contractual life of 1.6 years (2012: 1.6 years).

Share Matching Plan and Sharesave interests

Details of directors' interests in the SMP and Sharesave option scheme are as follows:

	Date of grant	Maximum share potential at January 2012	Options granted during the year	Options exercised during the year	Options waived during the year2	Maximum share potential at January 20134	Option price (£)	Option period
Lord Wolfson
SMP1	Jun 2010	65,190	–	–	65,190	–	Nil	Jun 2013 – Jun 2020
	Apr 2011	67,098	–	–	–	67,098	Nil	Apr 2014 – Apr 2021
Sharesave	Oct 2008	1,826	–	–	–	1,826	9.17	Dec 2013 – Jun 2014
Total		134,114	–	–	65,190	68,924
Christos Angelides
SMP1	Jun 2010	46,132	–	–	–	46,132	Nil	Jun 2013 – Jun 2020
	Apr 2011	48,690	–	–	–	48,690	Nil	Apr 2014 – Apr 2021
	Apr 2012	–	8,392	–	–	8,392	Nil	Apr 2015 – Apr 2022
Sharesave	Oct 2011	431	–	–	–	431	20.84	Dec 2014 – Jun 2015
Total		95,253	8,392	–	–	103,645
David Keens
SMP1	Jun 2010	44,796	–	–	–	44,796	Nil	Jun 2013 – Jun 2020
	Apr 2011	44,796	–	–	–	44,796	Nil	Apr 2014 – Apr 2021
	Apr 2012	–	6,714	–	–	6,714	Nil	Apr 2015 – Apr 2022
Sharesave	Oct 2008	385	–	3853	–	–	9.17	Dec 2011 – Jun 2012
	Oct 2010	319	–	–	–	319	17.82	Dec 2013 – Jun 2014
	Oct 2011	158	–	–	–	158	20.84	Dec 2014 – Jun 2015
Total		90,454	6,714	385	–	96,783
Andrew Varley
SMP1	Jun 2010	32,204	–	–	–	32,204	Nil	Jun 2013 – Jun 2020
	Apr 2011	33,306	–	–	–	33,306	Nil	Apr 2014 – Apr 2021
	Apr 2012	–	6,714	–	–	6,714	Nil	Apr 2015 – Apr 2022
Sharesave	Oct 2011	431	–	–	–	431	20.84	Dec 2014 – Jun 2015
Total		65,941	6,714	–	–	72,655

1. View the performance criteria attached to the SMP.
2. As disclosed within Part 1 of the Remuneration report, Lord Wolfson has waived his potential entitlement to the 2010 SMP grant.
3. The market price of shares at the date of exercise was £26.25 for David Keens, equal to a gain of £6,576.
4. The market price for the shares at the end of the financial year was £40.59, the lowest and highest share price during the financial year was £26.19 and £40.59 respectively.

Save for the waiver of Lord Wolfson's 2010 SMP entitlement, there have been no other changes to awards under the SMP or Sharesave during the year.

Directors' pension entitlements

The Policy Table details the pension entitlements of the executive directors who held office during the year. In summary, these are as follows:

	Age at January 2013	Years of pensionable service	Accrued annual pension £'000	Change in accrued annual pension £'000	Change in accrued annual pension (net of inflation) £'000	Transfer value of accrued annual pension		Increase in transfer value less director's contributions £'000
						2013 £'000	2012 £'000
Lord Wolfson	45	18	308	20	14	4,333	3,911	386
Christos Angelides	49	20	272	16	11	4,802	4,336	440
David Keens	59	25	182	4	–	5,696	4,914	782
Andrew Varley	62	24	74	2	–	2,154	2,135	19

Years of pensionable service shown above may include bought-in service from the transfer of other pension entitlements into the Plan. Directors' pension arrangements are subject to the same actuarial reduction as other employees on termination or early retirement.

On behalf of the Board