Q&A
Questions within this page:
- What were the Company’s principles in terms of remuneration for Directors?
- What were the Executive Directors paid this year?
- What bonuses were paid to the Executive Directors this year?
- How was share price performance factored into the Directors’ remuneration?
- What was on the agenda at meetings of the Committee during the year?
- How much did you pay Non-executive Directors?
What were the Company’s principles in terms of remuneration for Directors?
Our pay and rewards should attract the best people to the business and incentivise them to produce superiorreturns for our shareholders. Therefore we believe we should reward people for achieving and exceeding Company targets. This is why a substantial part of our Executive Directors’ reward is performance-related pay, with incentives to exceed industry benchmarks and to deliver relative Total Shareholder Return outperformance in comparison to our peer group. We seek to align incentives with shareholders’ interests and to reward the Executive Directors for delivering on the Group’s strategic objectives. The Committee also took into considerationthe output from a Remuneration Workshop held by the Board in November 2009.
The Committee is conscious of the fall in the value of shareholdings in the Company experienced over the past two years. This loss of value was also experienced by the Executive Directors through their individual shareholdings and through the lower value of their deferred share and LTIP/Matching Share awards.
There are three principal elements to the remuneration we provide:
- Salaries reflect an individual’s consistent performance and contribution to the business, as defined and decided by the Committee. We aim to pay salaries at a mid-market level. The Committee takes account of salary levels and increases across the organisation, together with institutional shareholders’ concerns on the ratcheting of basic salaries. Please see our Policies for more details on basic salaries.
- Annual bonuses reward performance according to a set of key performance indicators, aimed at ensuring the Company delivers on its key priorities for the year. There is a bonus opportunity for Executive Directors of up to 100% of basic salary and, at the Remuneration Committee’s discretion, this can be increased to 130%. There is also a bonus opportunity of up to 200% of basic salary for exceptional performance. However, no Director may earn a bonus of more than 300% of basic salary in total. Tables 56 and 57 set out the criteria for each type of bonus.
- Long-term Incentive Plan rewards for Directors are aligned with our long-term business objectives and the level of value created for shareholders. Please see our Policies for more on long-term incentives.
What were the Executive Directors paid this year?
The Committee decided that the Executive Directors should not receive any pay increases during the financial year 2009/10. The Committee has decided that their pay should be increased by an average amount of 2.0% to take effect from 1 July 2010. This was below the overall figure for salary increases across the Group of 2.4%. It also decided that it was appropriate to resume the payment of bonuses this year to reflect the improved performance of the Company together with relative performance against a set of independent industry benchmarks.
Table 46 details the salaries and annual bonuses given to our Executive Directors this year.
What was the Executive Directors’ remuneration for 2009/10?(£’000)
What bonuses were paid to the Executive Directors this year?
The bonuses awarded to the Executive Directors in respect of 2009/10 are set out in Table 59. Francis Salway was awarded an annual bonus of 77% and a discretionary bonus of 25% of salary. Martin Greenslade was awarded an annual bonus of 80% and a discretionary bonus of 20% of salary. Richard Akers was awarded an annual bonus of 79% and an award of 200% of salary under the additional bonus opportunity. Robert Noel received a bonus amounting to 44% of annual salary as partial compensation for a bonus foregone at his previous employer. 25% of any annual bonus award and 50% of any additional bonus opportunity is deferred into the Company’s shares for a period of three years.
How was share price performance factored into the Directors’ remuneration?
It was factored in through the Long-term Incentive Plan and also through awarding part of the annual bonuses in the form of deferred shares that vest after three years. However, it is not considered best practice to make share price performance a major incentive. This could encourage Directors to make decisions that bolster the share price in the short-term rather than decisions that benefit the Company and its shareholders in the long term. In addition, all Executive Directors must, within five years of joining the Board, own shares with a value of at least 1.5 x basic salary – and for the Chief Executive 2.0 x basic salary – to ensure their interests are aligned with those of shareholders.
What was on the agenda at meetings of the Committee during the year?
Subjects reviewed by the Committee were as follows:
- achievement against targets under the annual bonus scheme and the Long Term Incentive/Matching Share Plan
- Group revenue profit target used to determine annual bonuses
- review of salaries of Executive Directors and senior managers, together with overall levels of salary increases across the Group
- proposed share incentive awards to Executive Directors and senior managers
- compliance with Share Ownership Guidelines
- payments and share awards made to Mike Hussey upon his leaving the Group
- proposed service contract, salary and share awards to Robert Noel upon his joining the Group
- pension arrangements across the Group in the context of proposed legislative changes
- wording of the Directors’ Remuneration Report
- changes to the performance measures for the Long term Incentive/Matching Share Plan and to conditionality applying to the Additional Bonus Opportunity
- changes to the structure for allocating annual bonuses across the Group (but not the amount of those bonuses).
How much did you pay Non-executive Directors?
We pay a base fee and in autumn 2009 this was set at £60,000. Non-executive Directors are paid further amounts for specific duties and responsibilities, such as chairing a Board Committee, but are not paid additional fees for attending Board Committee meetings. Please see Table 47 for more information on what we paid our Non-executive Directors this year.
What were the Non-executive Directors paid in 2009/10? (£’000)
