Directors’ remuneration report

All-employee share plans

We encourage employees to become shareholders through the operation of all-employee share plans. In 2007 we invited all employees to participate in an SAYE plan approved by HM Revenue & Customs (HMRC). This gave our employees the opportunity to apply for options to acquire shares in the future. The option price was 80% of the market value of a Home Retail Group share, calculated as the average price over the three business days before the date of invitation, this being 379p. The number of shares over which the option was granted was determined by the amount committed by the employee under their savings contract.

Employees could elect for their savings contract to run over a period of three or five years, with a maximum saving of £250 per month. Options will be exercisable during the six months following the end of the contract. We intend to run a second invitation for employees in 2008.

Non-executive directors

Our policy on non-executive director remuneration is as follows:

• Remuneration should be in line with recognised best practice and sufficient to attract and retain high-calibre non-executives
• Remuneration should be set by reference to the responsibilities undertaken by the non-executive, taking into account that each non-executive director is expected to be a member of the audit, remuneration and nomination committees
• Remuneration should be a combination of cash fees paid monthly and shares, bought twice each year
• Non-executive directors are obliged to retain shares awarded until their retirement from the Board of Directors. Any tax liability connected to these arrangements is the responsibility of the individual director
• Non-executive directors should not participate in share plans operated by the Group
• Non-executive directors should not receive any benefits in kind.

We review our fees for non-executive directors every two years. The next review will take place in 2009. Fees are reviewed in the light of market practice of FTSE 100 companies, the anticipated number of days worked and individual responsibilities. Non-executive remuneration from 1 April 2007 is as follows:

	Fees £000s	Shares Number
Chairman	175	23,000
Non–executive base fee	40	6,000
Senior independent director	10	–
Chair of audit/remuneration committee	10	4,500