Full Annual Report - Inchcape

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Governance Remuneration report continued The plan has been extended to certain other senior executives below Board level. The shares acquired will be matched at the end of the three year vesting period. The match will be determined by performance against the cumulative Economic Profit target. For 2008 awards will vest according to the following sliding scale: EP growth over three years Matching shares Less than RPI+3% 0 RPI+3% 1:1 RPI+12% 2:1 Between RPI+3% and RPI+12% Straight line basis The Remuneration Committee decided to suspend the coinvestment plan during 2009. This decision was taken since the plan is designed to stretch performance and due to the downturn in the second half of 2008 and 2009, it was improbable that there would be any matching element. The Remuneration Committee has also decided to suspend the coinvestment plan for 2010. The Remuneration Committee noted the concerns of shareholders in respect of lower share prices creating the opportunity for windfall gains. Therefore this decision has been taken since the existing performance conditions would not be stretching enough when viewed in context of the recovery phase of the business. Deferred bonus plan The deferred bonus plan was a voluntary plan for Executive Directors and certain other senior executives. Final awards under this plan were made in 2007. Details of these awards are shown on page 73. Participants in the plan were able to invest a minimum of 10% and maximum of 75% post tax annual bonus to acquire ordinary shares in the Company. The shares are then matched on a 1:1 basis at the end of a three year vesting period. For Executive Directors there is a performance condition attached to the vesting of the award shares of EPS growth of RPI+3% per annum with no retesting. This performance target was not achieved for the awards granted in 2007, therefore the award will lapse in full. Save as you earn (SAYE) Executive Directors are eligible to participate in the Company’s SAYE scheme on the same terms as other employees. Participants make monthly savings, to a maximum of £250 per month, over a three year period. At the end of the savings period the funds are used to purchase shares under option. The acquisition of shares under this scheme is not subject to the satisfaction of a performance target. Executive share ownership To emphasise the importance the Remuneration Committee places on executive share ownership, Executive Directors are required to hold a fixed number of shares equivalent to 200% of base salary. Each Executive Director has five years from 2007, or date of appointment (if later), to reach this shareholding target. As at 31 December 2009, André Lacroix and John McConnell held 181% and 110% respectively of base salary in shares. Retirement benefits The Inchcape Group (UK) Pension Scheme (UK Scheme) provides benefits for Executive Directors and certain senior executives at normal retirement age of 65, equal to a maximum of two thirds of final base salary, where salary has scheme specific ceiling of £123,600 in the 2009/10 tax year, subject to completion of between 20 and 40 years’ service. Pensions in payments are guaranteed to increase in line with the lesser of 5% and the increase in the RPI. The UK Scheme requires members who join after March 2005 to contribute 7% of base salary up to the scheme specific ceiling of £123,600 in the 2009/10 tax year. Executive Directors, whose base salary is higher than £123,600, are paid a monthly cash supplement to enable them to make additional pension arrangements. Barbara Richmond and John McConnell received such supplements in 2009. Details of the amounts paid are shown on page 71. André Lacroix received a cash supplement of 40% of his base salary in lieu of a formal pension provision. He is not a member of the UK Scheme except in respect of the life assurance benefit for death in service. A lump sum life assurance benefit of four times full base salary is provided on death in service. For pension scheme members, a spouse’s pension of either half or two thirds of the prospective member’s pension may also be payable. Children’s pensions may also be payable, up to half of the member’s pension. Taxable and other benefits These include items such as Company cars, medical care and life assurance premiums. These benefits are in line with the remuneration policy framework outlined in this report. These benefits are non-pensionable. Total Shareholder Return (TSR) The TSR graph is shown in the investor relations section of the Corporate Governance report on page 63. Service contracts The Company’s policy is for Executive Directors’ service contract notice periods to be no longer than 12 months, except in exceptional circumstances. All current contracts contain notice periods of 12 months. In the event of termination the Company will seek fair mitigation of contractual rights. Within legal constraints, the Remuneration Committee tailors its approach, in the event of early termination, to the circumstances of each individual case. Non-Executive Directors are appointed for an initial period of three years, which may be extended by agreement with the Board. No Non-Executive Director is engaged on a service contract with the Company. Name Date of contract Notice period Unexpired term André Lacroix John McConnell By order of the Board 01 September 05 12 months from the Director; 12 months from the Company To normal retirement age 01 October 09 12 months from the Director; 12 months from the Company To normal retirement age Michael Wemms Chairman of the Remuneration Committee 9 March 2010 70 Inchcape plc ¦ Annual Report and Accounts 2009
Section Two Two Governance Notes to the Board report on Remuneration (audited) 1. Individual emoluments for the year The table below shows a breakdown of remuneration, including taxable and other benefits for each Director. Details of pension entitlements, share options and other long term incentive plans are shown in notes 2, 3, 4 and 5 on pages 72-74 Company contributions Taxable and paid in year in respect Base salary/fees Bonus other benefits (f) of pension arrangements Termination payment Total remuneration (g) 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Chairman Peter Johnson (left 14 May 2009)(a) 110.6 296.5 – – 0.5 1.6 – – – – 111.1 298.1 Ken Hanna 201.3 54.0 – – 7.3 – – – – – 208.6 54.0 Executive Directors André Lacroix (b) 756.0 742.0 907.2 – 18.4 18.4 302.4 296.8 – – 1,984.0 1,057.2 John McConnell (c) (appointed 1 October 2009) 97.5 – 117.0 – 38.2 – 20.0 – – – 272.7 – Barbara Richmond (d) (left 30 June 2009) 225.0 441.4 225.0 – 10.4 19.5 49.4 97.5 572.0 – 1,081.8 558.4 Non-Executive Directors Raymond Ch’ien (e) (left 14 May 2009) 13.3 36.0 – – – 12.9 – – – 13.3 48.9 Alison Cooper (e) (appointed 1 July 2009) 20.0 – – – – – – – – – 20.0 – Karen Guerra (e) (left 14 May 2009) 15.0 40.0 – – – – – – – – 15.0 40.0 Nigel Northridge (e) (appointed 1 July 2009) 20.0 – – – – – – – – – 20.0 – Graham Pimlott (e) 44.8 31.7 – – – – – – – – 44.8 31.7 William Samuel (e) 70.0 70.0 – – – – – – – – 70.0 70.0 David Scotland (e) 48.0 48.0 – – – – – – – – 48.0 48.0 Michael Wemms (e) 54.0 54.0 – – – – – – – – 54.0 54.0 Total 1,675.5 1,813.6 1,249.2 – 74.8 52.4 371.8 394.3 572.0 – 3,943.3 2,260.3 Notes on Directors’ emoluments: a) The Company agreed to extend post retirement medical expenses for Peter Johnson and his wife until 13 May 2011. b) The payment of £302,400 (2008 – £296,800) was paid directly to André Lacroix to allow him to make his own pension arrangements outside the Company’s plan. This payment was subject to tax. The salary paid to André in 2008 includes three months at his 2007 salary level as salary increases are in April of each year. There was no further increase in 2009. c) The payment of £19,980 (2008 – none) was paid to John McConnell to allow him to make his own pension arrangements outside the Company’s plan. This payment was subject to tax. d) Barbara Richmond left the Group on 30 June 2009. In accordance with the terms of her contract she was paid the sum of £402,000, subject to the deduction of tax in lieu for the balance of her notice together with a payment of £120,000 in lieu of her pension supplement, a termination payment of £50,000 and a bonus payment of £225,000. e) The details shown include fees at the rate of £10,000 per annum for the Audit Committee and Remuneration Committee Chairmanships and at the rate of £4,000 per annum for each of the Audit, Remuneration and Nomination Committee memberships. Raymond Ch’ien, Karen Guerra and Peter Johnson left the Group on 14 May 2009. f) Taxable and other benefits comprise such items as company car, medical care, life assurance premiums, petrol allowance and relocation expenses. All Executive Directors are entitled to such benefits. g) No Directors waived emoluments in respect of the year ended 31 December 2009 (2008 – none). www.inchcape.com 71
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Annual Report and Accounts 2009 Ind
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Section One Business review Financi
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Section One Business review Strengt
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Section One Business review Busines
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The Inchcape business model Section
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The Inchcape Advantage Section One
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Global experience Section One Busin
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Full Annual Report - Inchcape

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