Annual report and financial statements 2008

Remuneration report

Part 1: Unaudited information

Remuneration Committee

Who makes up the Remuneration Committee?

During 2007/08, the Committee comprised the following non-executive directors:

  • Louise Patten (Committee Chairman);
  • Martha Lane Fox (appointed on 1 June 2007);
  • Steven Holliday;
  • Sir David Michels; and
  • Jack Keenan (retired on 10 July 2007).

There were five meetings of the Committee during the year under review and attendance at the meetings is detailed in the Corporate governance statement.

What is the remit of the Remuneration Committee?

The Committee has a remit covering the total remuneration of the executive directors of the Company, ensuring that the most talented individuals are recruited, motivated to deliver results and retained. The remit includes the following:

  • setting the senior remuneration strategy and framework for the top levels in the organisation;
  • ensuring that executive directors and senior managers are fairly rewarded for their individual performance and contribution to the overall Company results;
  • reviewing and approving the remuneration and terms and conditions of employment, including any terminations, for executive directors and senior managers;
  • approving the design and targets for any annual incentive schemes that include the executive directors and senior managers;
  • agreeing the design and targets, where applicable, of all share incentive plans for approval by shareholders; and
  • assessing the appropriateness and subsequently the achievement of performance targets related to any share incentive plan.

The Committee takes into account the financial and commercial health of the organisation when considering its approach to total remuneration. The Committee has appointed Hewitt New Bridge Street as external advisors and invites internal support from the Company Chairman, Chief Executive, Group Secretary and Head of Senior Remuneration. The Chairman and Chief Executive are not present for any discussions that relate directly to their own pay and benefit awards.

The Committee regularly reviews external data produced through a number of surveys and bespoke benchmarking data, including those published by Hewitt New Bridge Street, Monks PwC, Towers Perrin and Watson Wyatt.

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What is our remuneration framework?

The remuneration framework is simple and transparent, aligning the reward of our executive directors and senior managers to that of shareholders through a package highly geared towards share incentive plans. The key components are:

  • salary and benefits;
  • Annual Bonus Scheme with a compulsory deferred share element; and
  • Performance Share Plan (PSP).

The following charts show the balance of the package split between pay at risk and fixed pay for on-target and maximum performance. The Committee considers that the balance of fixed and variable pay is appropriate to the external market.

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