BOC Report and accounts 2005 - Alle jaarverslagen

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.