BOC Report and accounts 2005 - Alle jaarverslagen

More documents

Recommendations

Info

76 The BOC Group plc Annual report and accounts 2005 Report on remuneration Outside appointments The remuneration committee’s view is that non-executive directorships are a significant benefit in broadening executives’ experience.Any such appointments are subject to review by the nominations committee and the approval of the board.The executive is permitted to retain any fees for the service.Tony Isaac received fees of £50,000 as a non-executive director of International Power plc and US$70,000 and an annual award of 2,000 shares as a non-executive director of Schlumberger Ltd. Dr Raj Rajagopal received fees of US$15,000 and an option over 15,000 shares at an option price of $4.21 as a non-executive director of FSI International Inc. and £13,542 as a non-executive director of Foseco plc. Non-executive directors Non-executive directors are initially appointed for a three year term after which, whilst not automatic, their appointment may be extended for a second term subject to mutual agreement and shareholder approval.The fees are set at a level which will attract individuals with the necessary experience and ability to make a significant contribution to The BOC Group’s affairs and are benchmarked with those fees paid by other UK listed companies. The basic fees for the non-executive directors are £40,000 per annum, £10,000 of which, less tax, is invested in BOC shares. In addition, the fees for chairing a committee are £10,000 per annum, £5,000 of which, less tax, is invested in BOC shares. Following a review in November 2005 the board agreed that the basic fee should be increased by £5,000 per annum with effect from 1 January 2006.This increase, less tax, will be invested in BOC shares.The fee for Rob Margetts, company chairman, is £260,000 per annum. The non-executive directors do not have service contracts.They do not participate in the Group’s variable compensation arrangements, its long-term incentive arrangements or its pension arrangements.They do not receive any benefits in kind. Appointment of director Alan Ferguson joined the company on 15 September 2005 and was appointed a director on 30 September 2005. As permitted under 9.4.2R(2) of the Listing Rules, Mr Ferguson received an award of shares to the value of £550,000 on the day he joined the company.Two thirds of this award will vest in March 2006.The remaining shares will vest in March 2007. He also received an award of shares to the value of 200 per cent of salary under the LTIP. Vesting will be in accordance with the performance conditions and performance period set by the remuneration committee for the November 2004 LTIP award. In addition, the number of shares vesting will be pro-rated to the number of months worked during the performance period.This will amount to twenty four months at the expected vesting date.These awards were used to facilitate the recruitment of Mr Ferguson. He held a significant number of share options and restricted shares under his previous employer’s share plans.The value of the awards provided was calculated on a straight swap basis and will be payable unless his employment is terminated by reason of summary dismissal.The details of Mr Ferguson’s contract are included below. Future arrangements for chief executive Tony Isaac, the chief executive is due to retire in 2007.The remuneration committee wish to ensure that he continues to be rewarded appropriately.With this in mind the remuneration committee has decided that he should continue to participate in the long-term incentive arrangements during the financial year 2006. However for the financial year 2007 the remuneration committee have agreed that he should not participate in these arrangements and propose to award delivery of his 2007 objectives solely in cash, based on salary and cash bonus and linked to additional specific and rigorous performance conditions.This approach will align Mr Isaac‘s pay with that of the other directors, although at a lower level of deferred pay. Service contracts The company’s policy is for all executive directors to have contracts of employment that terminate on the attainment of retirement age. In order to mitigate its liability on early termination, the company’s policy is that it should be able to terminate such contracts on no more than 12 months’ notice, and that payments on termination are restricted to the value of salary, car benefit and bonus entitlement (calculated on the basis of the average of actual payments over the preceding two years) for the unexpired portion of the notice period.The company has revised this policy further for all new appointments, so that in the event of early termination, the company will pay either monthly compensation calculated as per the terms set out above for the unexpired portion of the notice period, or else a lump sum payment equal to the base salary pro-rated to the unexpired portion of the notice period. In the event that monthly compensation is paid, should an individual obtain alternative employment during the period of the monthly payments, the company’s obligation is reduced by the amount of the monthly remuneration from the alternative employment.The revised policy has applied to all new appointments during the financial year and will apply to subsequent appointments. Pension provisions on termination are detailed in the individual service contracts below.
Report on remuneration 77 Individual service contracts Mr Bevan has a contract dated 5 December 2002 that can be terminated by the company on 12 months’ notice. In the event of early termination, the contract provides for the payment of compensation based on the value of salary, car benefit and bonus entitlement (calculated on the basis of the average of actual payments over the preceding two years) for the unexpired portion of the notice period. Mr Bevan would also be entitled to his deferred pension, with the unexpired portion of the notice period being added to his pensionable service in the calculation of his pension entitlement. Mr Isaac has a contract dated 19 November 2002, varied by letter dated 1 June 2004, which expires upon the conclusion of the Annual General Meeting in 2007 subject to possible extension by mutual agreement. The contract can be terminated by the company on 12 months’ notice. In the event of early termination, the contract provides for the payment of compensation based on the value of salary, car benefit and bonus entitlement (calculated on the basis of the average of actual payments over the preceding two years) for the unexpired portion of the notice period. Mr Isaac would also be entitled to a contribution to his funded unapproved retirement benefit scheme amounting to the sum of 40 per cent of his pay above the ‘pension cap’ imposed by the Finance Act 1989 and 58.33 per cent of his pay up to the cap for the unexpired portion of his notice period. Dr Rajagopal has a contract dated 1 May 1999, amended 22 November 2002, that can be terminated by the company on 12 months’ notice. In the event of early termination, the contract provides for the payment of compensation based on the value of salary, car benefit and bonus entitlement (calculated on the basis of the average of actual payments over the preceding two years) for the unexpired portion of the notice period. Dr Rajagopal would also be entitled to have his deferred pension from the UK senior executive pension scheme (a) calculated with the inclusion of the unexpired portion of his notice period in the calculation of pensionable service; and (b) paid without actuarial reduction from age 55. Mr Masters has a contract dated 11 March 2005, effective from 1 March 2005, that can be terminated by the company on 12 months’ notice. In the event of early termination, the contract provides for the monthly payment of compensation based on the value of salary, car benefit and bonus entitlement (calculated on the basis of the average of actual payments over the preceding two years) for the unexpired portion of the notice period. Should Mr Masters obtain alternative employment during the period for payment of the monthly payments then each monthly payment still outstanding would be reduced by the basic monthly remuneration received from his alternative employment. Alternatively, the contract also provides for the company to pay a lump sum termination payment in lieu of the unexpired portion of the notice period instead of the monthly termination payments. Such a payment would be equal to the base salary pro-rated to the unexpired portion of the notice period.The unexpired portion of Mr Master’s notice period would be added to his pensionable service in the calculation of his pension entitlement from the US Senior Executive Retirement Plan. His US Cash Balance Retirement Plan and Savings Investment Plan benefits would be credited with an amount equivalent to the amount the company would have contributed during the unexpired portion of his notice period. His active participation in the Cash Balance Retirement Plan and Savings Investment Plan would cease on termination. Mr Ferguson has a contract dated 5 May 2005 that can be terminated by the company on 12 months’ notice. In the event of early termination, the contract provides for the monthly payment of compensation based on the value of salary, car benefit and bonus entitlement (calculated on the basis of the average of actual payments over the preceding two years) for the unexpired portion of the notice period. Should Mr Ferguson obtain alternative employment during the period for payment of the monthly payments then each monthly payment still outstanding would be reduced by the basic monthly remuneration received from his alternative employment. Alternatively, the contract also provides for the company to pay a lump sum termination payment in lieu of the unexpired portion of the notice period instead of the monthly termination payments. Such a payment would be equal to the base salary pro-rated to the unexpired portion of the notice period. Mr Ferguson would be entitled to a contribution to his personal pension plan or a cash amount in lieu of his pay supplement for the unexpired portion of his notice period. If the contract is terminated within two years of his date of appointment, the company, with Mr Ferguson’s agreement, has the discretion to make such termination payments in one lump sum or on a monthly basis. All of the above contracts can be terminated by the individual director on six months’ notice. Mr Walsh resigned from the board on 1 March 2005 and left the company on 31 March 2005. He received no severance payment.All of his long-term incentive plans lapsed on his resignation. Mr Médori resigned from the board and left the company on 31 May 2005. He received no severance payment. He was entitled to exercise one vested share option which he was granted under the Executive Share Option Scheme 1995 within three months of leaving the company.All of his other long-term incentives lapsed on his resignation. Shareholding guidelines The remuneration committee encourages the executive management group to grow personal shareholding in the business over time. It is anticipated that each executive would build towards a shareholding of one times salary. The remuneration committee believes that the vehicle of the long-term incentive arrangements will facilitate the building of such a shareholding over a period of time.
Page 1 and 2:
BOC Report and accounts 2005
Page 3 and 4:
01 The BOC Group plc is a public li
Page 5 and 6:
Financial highlights 03 Dividends p
Page 7 and 8:
Chairman’s statement 05 Conduct a
Page 9 and 10:
Chief executive’s review 07 Indus
Page 11 and 12:
Board of directors 09 08 09 10 11 1
Page 13 and 14:
Executive management board 11 09 10
Page 15 and 16:
Group five year record 13 Capital e
Page 17 and 18:
Group profile 15 Analysis of result
Page 19 and 20:
Group profile 17 Principal industri
Page 21 and 22:
Group profile 19 In China, signific
Page 23 and 24:
Group profile 21 Sales opportunitie
Page 25 and 26:
Employees 23 At 30 September 2005 t
Page 27 and 28: Employees 25 Retirement benefit pla
Page 29 and 30: Social, environmental and ethical p
Page 39 and 40: Research, development and informati
Page 41 and 42: Risk factors 39 BOC relies on devel
Page 43 and 44: Operating review 41 Exceptional ite
Page 45 and 46: Operating review (comparing 2005 wi
Page 57 and 58: Financial review 55 Net debt/equity
Page 59 and 60: Financial review 57 The balance she
Page 61 and 62: Financial review 59 Manganese litig
Page 63 and 64: Financial review 61 Current asset p
Page 65 and 66: Financial review 63 Average exchang
Page 67 and 68: Corporate governance 65 During the
Page 69 and 70: Corporate governance 67 Performance
Page 71 and 72: Corporate governance 69 During the
Page 73 and 74: Corporate governance 71 There is a
Page 75 and 76: Report on remuneration 73 Variable
Page 77: Report on remuneration 75 Current m
Page 81 and 82: Report on remuneration 79 Executive
Page 83 and 84: Report on remuneration 81 Opening m
Page 85 and 86: Report on remuneration 83 Mr Médor
Page 87 and 88: Report by the independent auditors
Page 89 and 90: Group balance sheet At 30 September
Page 91 and 92: Total recognised gains and losses Y
Page 93 and 94: Accounting policies 91 General •
Page 95 and 96: Notes to the financial statements 9
Page 129 and 130:
Notes to the financial statements 1
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Group undertakings 139 Principal Gr
Page 143 and 144:
Shareholder information 141 The tab
Page 145 and 146:
Shareholder information 143 Taxatio
Page 147 and 148:
Shareholder information 145 Payment
Page 149 and 150:
Glossary of terms 147 Terms used in
Page 151 and 152:
©The BOC Group plc 2005. Designed
show all

BOC Report and accounts 2005 - Alle jaarverslagen

Create successful ePaper yourself

Delete template?

Save as template?