Annual Report and Accounts 2006 - Optos

Directors’ Remuneration Report
continued
SERVICE CONTRACTS
The Company has entered into service contracts with each of its executive Directors, none of which is for a fixed term. It is the remuneration committee’s policy to
offer service contracts for an indefinite term subject to termination on a maximum of one year’s notice or an equivalent severance payment. Save for Mr Butts who
has a US-style service agreement, each of the executive Directors’ service contracts can be terminated by the Director giving not less than six months’ written notice
of termination or by the Company giving the Director not less than 12 months’ written notice of termination. The dates of the executed contracts for each executive
Director are as follows:
Allan Watson 9 February 2006
Douglas Anderson 9 February 2006
Ian Stevens 6 October 2006
Thomas Butts 15 December 2006
Save in relation to Mr Butts, the Company has the right, in its absolute discretion, to terminate each of the service contracts at any time by making a payment in lieu of
the notice period comprising basic salary, car allowance (if applicable), bonuses (based upon the bonus paid during the previous financial year), benefits and pension
contributions.
Mr Butts is a US citizen and the Company has agreed to provide him with a service contract which is consistent with market practice in the United States and is
governed by the laws of the Commonwealth of Massachusetts. The Company has the right, in its absolute discretion, to terminate Mr Butts’ service contract at any time
without “Cause” by giving him two months’ written notice or making a payment in lieu of notice equal to his salary for the notice period. In addition and in exchange
for the execution by Mr Butts of a release of claims against the Company, Mr Butts is entitled to a severance package comprised of one year of salary,
bonus (based on the bonus paid during the previous financial year) and medical benefits. The severance package will be reduced by the amount of any payments
Mr Butts receives in lieu of his notice period. If Mr Butts resigns in certain circumstances, he is also entitled to receive the severance package referred to above.
Mr Stevens’ international assignment to the United States ended on 30 September 2006. The Company has agreed that it will endeavour to find Mr Stevens a new role
working for the Company in the United Kingdom which is similar to the position he held in the United Kingdom prior to his international assignment and acceptable
to Mr Stevens. In the event that the Company fail to find such a position by 30 June 2007 (or, if earlier, three months after the date on which the Company appoints
a permanent chief executive officer), then either party will be entitled to terminate Mr Stevens’ service contract. In such an event, Mr Stevens will be entitled to a
severance payment which will comprise: (a) a pro rata bonus for the current financial year (in proportion to those pro rata performance targets which have been
met as at the termination date); (b) 12 months’ basic salary, car allowance and pension contributions; (c) a bonus of 50% of his basic salary (but, in the event that the
pro rata performance targets were not met as at the termination date, then such bonus will be reduced proportionately); and (d) £3,500 in lieu of 12 months’
contractual benefits. Mr Stevens will also be entitled to exercise his share options for a period of two years following the termination date.
There are no other provisions for early termination of the service contracts.
NON-EXECUTIVE DIRECTORS
The Company’s policy is to establish and maintain a body of non-executive Directors with a breadth of skills and experience that is relevant to the Company’s business.
In this context, it is the Board’s policy for the non-executive Directors to be paid a level of fee that reflects market conditions and is sufficient to attract individuals with
appropriate knowledge and experience. The Board seeks to pay the market rate to reflect the time taken to carry out the role of non-executive Director and reviews
the rates annually.
The Company has entered into a letter of appointment with each of the current non-executive Directors. Each letter of appointment is for a fixed three-year term,
provided that either party may terminate the appointment at any time during the term of appointment by giving three months’ notice of termination and the
appointment may be terminated any time in accordance with the articles of association of the Company or the Companies Act 1985. The dates of the letters of
appointment and the expiry dates are:
Non-executive Director Date of Letter of Appointment Expiry Date
Dr John Padfield 11 January 2006 30 December 2008
Anne Glover 27 January 2006 26 January 2009
Patrick Paul 27 January 2006 26 January 2009
Barry Rose 27 January 2006 26 January 2009
Dr David Guyer 5 May 2006 26 January 2009
Optos plc Annual Report & Accounts 2006 27