Annual Report for the year ended 31 December 2008

Award levels have been determined in the light of the impact on
shareholders’ dilution. At the year end the dilution (as defined by the
guidelines of the Association of British insurers) arising from the Group’s
discretionary schemes was 9.7% (2007: 9.7%) taking into account own
shares purchased by the Group’s employee trust to satisfy outstanding
awards. This level of dilution reflects our undertaking to keep dilution
capped at 12% as detailed at the time of the adoption of the performance
share plan at the 2006 Annual General Meeting. This excludes the
impact of the psp which is a separate scheme approved by shareholders
in addition to the existing discretionary schemes and is subject to the
performance conditions detailed above. The Remuneration Committee
keeps the levels of dilution under regular review.
awards to the esl chief executive officer
in the 2006 Remuneration Report it was reported that two further
awards under the 2002 Esis of 500,000 shares would be made to
Andrew umbers in 2007 and 2008 which would be subject to three
years vesting. Following discussions between the Group Chief Executive
Officer and members of the Committee the allocation of the 2007
award was deferred until following the announcement of the Group’s
preliminary results. Following completion of his 2007 appraisal and
the approval of the Remuneration Committee on 27 March 2008 and
recognising certain undertakings made to Andrew umbers at the time
of his joining the Group, Andrew umbers was awarded 500,000 shares
under the 2002 Esis on the 28 March 2008. Call rights will be granted
and the shares will vest on 31 January 2010 subject to Andrew umbers
remaining with the Group up to that date. The final 500,000 tranche of
this award was made on the 30 December 2008 vesting on 31 January
2011.
The evolution group share incentive plan (“sip”)
Executive Directors are eligible to participate in the Evolution Group
share incentive plan (“sip”). The sip is an HMRC approved plan open to
all uK permanent employees. Eligible employees may contribute up to
£125 each month and the trustee of the plan uses the money to buy
partnership shares on their behalf. The Company issues an equivalent
number of matching shares, with the equivalent cost met by the
employing company. partnership and matching shares are eligible for
dividends and dividend shares are acquired on receipt of the relevant
paid amounts. On 15 January 2008 the Committee agreed to the award
of free shares under the sip for up to a maximum of £3,000 per
employee. in order to qualify for £1,000 of shares employees must have
been employed for a period of 12 continuous months. £2,000 worth of
shares were awarded for 3 years service and £3,000 worth of shares
for five or more years services. On 18 January 2008 Alex snow was
awarded 2,658 free shares an Andrew umbers was awarded 868
free shares.
direcTors' remuneraTion reporT CONTiNuED
for The year ended 31 december
34 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
Details of the Executive Directors’ share interests under this plan are
given in the table below:
1 January Partnership Matching Free Dividend 31 December
2008 shares shares shares shares 2008
Alex snow 10,222 1,543 1,543 2,658 315 16,281
Andrew umbers 2,148 1,543 1,543 886 98 6,218
Between 1 January 2009 and 2 April 2009 Alex snow and Andrew
umbers were both awarded 409 partnership and 409 Matching shares.
pensions
None of the Directors receives any employer pension contributions from
the Group either under defined contribution or under final salary
schemes.
proportion of fixed and variable remuneration
in line with the reward structure outlined above, the relative proportions
of fixed annual remuneration and performance related pay made for
2008 for the Executive Directors are as follows:
Non-performance Performance
related (%) related (%)
Alex snow 12.2 87.8
Andrew umbers 15.7 84.3
directors’ service contracts
The Combined Code recommends that a one-year notice period or
contract terms be set as an objective for Executive Directors. The
Remuneration Committee’s policy is that service contracts should not
have a notice period exceeding 12 months and should not contain a
liquidated damages clause in the event of termination. payment of the
notice period for Andrew umbers may be made at monthly intervals and
is mitigated by any salary earned from new employment in the period of
notice in accordance with recommended best practice.
All Executive Directors have service contracts without fixed terms and
with notice periods of 12 months or less. The principal terms extant in
these contracts are as set out below. The Directors’ service contracts
and letters of engagement for Non-executive Directors will be available
for inspection at the Company’s Annual General Meeting.
Contract Notice
Contractual
termination
date period payment
Alex snow 13.11.03 12 months None
Andrew umbers 16.10.06 12 months None