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Summary remuneration report
The Company’s current remuneration policy
for 2007 and beyond is designed to help ensure
the recruitment, retention and motivation of
the executive directors by providing fair reward
for the responsibilities they undertake and
the performance they achieve on behalf of
shareholders. In this context, the Remuneration
Committee’s policy is to set the overall
remuneration package at a competitive level
and in a form that permits significant additional
remuneration to be earned for high performance
over a sustained period. This is normally
achieved by benchmarking base pay against
comparator companies and a range of factors,
including performance, and by providing, in
addition, short and long term incentives geared
to performance.
In assessing the balance of performance
related and non-performance related elements of remuneration, base pay and benefits are treated as non-performance related, whereas annual bonus (including awards under the Deferred Annual Share Bonus Scheme – ‘DASBS’) and long term incentives are treated as performance related. For this purpose, share options and performance shares are valued at an appropriate proportion of their face value
on grant or award. On this basis, the Committee sets the remuneration package such that about half the total target remuneration package is derived from the performance related elements.
Base pay
The base pay of each executive director
is set to reflect the size and scope of that
director’s responsibilities undertaken on behalf of the Board, the level of overall performance achieved, including that related to environmental, social and governance issues and experience in the post. It is benchmarked against comparator companies and the actual pay level is set after taking into account individual performance
and the general movement of base pay within the Group.
Annual bonus plan
The executive directors participate in an annual bonus plan intended to support the Company’s overall remuneration policy. The bonus plan
for each executive director contains meaningful targets that seek to focus attention on one
or two key measures of short to medium
term achievement. Half of this annual bonus
is normally paid in cash and the balance
(but with the total aggregate amount capped)
is deferred under the rules of the DASBS.
Under the DASBS, eligible executives, including the executive directors, receive the deferred element of their annual bonus as an award
of ordinary shares. The ordinary shares are transferred to the executive on 1 March in the third year after the year in which the award
is made, provided normally the executive has remained in the employment of the Group throughout that period or until their normal retirement date.
Share based incentives
The Remuneration Committee believes that
the long term performance of the Group is an important consideration for shareholders and that share based incentives are an important part of helping to align the interests of shareholders and those employed by the Group. A formal share ownership guideline is in place under which executive directors are expected over a period of time to retain a shareholding worth at least equal to their basic salaries.
The Group operates a Long Term Incentive
Plan under which the executive directors and other senior executives in the Group may be granted options and awards in respect of performance shares. Participation in the Plan
is at the discretion of the Committee. The Committee reviews biannually the level of grant taking account of each executive’s performance and job responsibilities. Annual grants of share options may not exceed an amount equal to three times base salary. In normal circumstances options granted are exercisable, subject to satisfaction of the relevant performance condition, after three years with no provision
for retesting, not earlier than three years and
not later than 10 years after the date of grant. Annual awards of performance shares may
not exceed an amount equal to two times base salary. A performance share award will normally vest (i.e. become exercisable) on the third anniversary of its grant to the extent that the applicable performance condition has been satisfied, with no provision for retesting, and will remain capable of being exercised for the three year period following the date on which it vests.
Retirement benefits
The Group utilises both defined benefit and defined contribution pension schemes throughout the world. All defined benefit schemes are closed to new entrants
who are now offered a defined contribution arrangement. The executive directors are
eligible to participate in the relevant pension scheme and/or may choose to take a pension allowance, part of which can be paid into
a private pension scheme.
Service contracts
It is the Company’s policy that executive directors are normally employed on contracts that provide for 12 months’ notice from the Company and six months’ notice from the executive. The non-executive directors do not have service contracts.
Directors' emoluments for 2007
The directors’ aggregate emoluments for 2007 were £3.2 million, the aggregate amount of gains made by directors on the exercise of
share options during the year was £0.9 million, the aggregate market value of performance share awards exercised by directors under
long term incentive schemes during the year was £0.7 million, the aggregate market value
of shares exercised by directors under the DASBS was £0.5 million and the aggregate amount of contributions paid by the Company
to money purchase pension schemes in respect of the directors was £0.2 million. Two of the current directors participate in defined benefit pension schemes, one of whom (who is no longer accruing future benefits under the defined benefit scheme) also participates in a money purchase pension scheme.
Total shareholder return
The Company's total shareholder return over the last five years compared to that of the FTSE Support Services Sector is shown below.
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