Directors' report on remuneration (PDF 174 KB) - Inchcape
Directors' report on remuneration (PDF 174 KB) - Inchcape
Directors' report on remuneration (PDF 174 KB) - Inchcape
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BUSINESS REVIEW GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION<br />
EXIT PAYMENT POLICY<br />
The Company’s policy is to limit severance payments <strong>on</strong><br />
terminati<strong>on</strong> to pre-established c<strong>on</strong>tractual arrangements. In the<br />
event that the employment of an Executive Director is terminated,<br />
any compensati<strong>on</strong> payable will be determined in accordance<br />
with the terms of the service c<strong>on</strong>tract between the Company<br />
and the employee, as well as the rules of any incentive plans.<br />
Under normal circumstances, Executive Directors receive<br />
terminati<strong>on</strong> payments in lieu of notice equal to pay and<br />
benefits for the length of their c<strong>on</strong>tractual notice period.<br />
In the event an Executive Director leaves for reas<strong>on</strong>s of<br />
death, ill-health, redundancy, retirement (CIP <strong>on</strong>ly), or any other<br />
reas<strong>on</strong> which the Remunerati<strong>on</strong> Committee may, in its absolute<br />
discreti<strong>on</strong>, permit, any outstanding l<strong>on</strong>g-term incentive (LTI)<br />
awards will be pro-rated for time and performance and will<br />
either vest at the end of the performance period or immediately,<br />
at the Committee’s discreti<strong>on</strong>. Up<strong>on</strong> a change of c<strong>on</strong>trol of the<br />
Company, awards will be pro-rated for time and vest immediately<br />
based <strong>on</strong> the extent to which the Committee determines that the<br />
performance c<strong>on</strong>diti<strong>on</strong>s have been met or are likely to be met.<br />
For all other leavers, outstanding LTI awards will lapse.<br />
The Committee retains discreti<strong>on</strong> to alter these provisi<strong>on</strong>s <strong>on</strong><br />
a case-by-case basis following a review of circumstances and<br />
to ensure fairness for both shareholders and participants.<br />
PART 2 – IMPLEMENTATION REPORT<br />
KEY RESPONSIBILITIES OF THE REMUNERATION COMMITTEE<br />
Remunerati<strong>on</strong> Policy<br />
Annual b<strong>on</strong>us targets<br />
Performance targets for share incentive plans<br />
Executive Committee remunerati<strong>on</strong><br />
The terms of reference for the Remunerati<strong>on</strong> Committee can be<br />
found <strong>on</strong> the website www.inchcape.com/aboutus/governance.<br />
COMMITTEE MEETINGS<br />
Member<br />
Member<br />
throughout 2012<br />
Meetings<br />
Held<br />
Meetings<br />
Attended<br />
Nigel Northridge 2 2<br />
Ken Hanna 2 2<br />
Will Samuel 2 2<br />
Till Vestring Joined May 2012 1 1<br />
Only members of the Committee have the right to attend<br />
Committee meetings; however other individuals such as the<br />
Group Chief Executive, Group HR Director and external<br />
c<strong>on</strong>sultants advise the Committee and attend by invitati<strong>on</strong>.<br />
Membership and attendance at meetings are shown in the<br />
table above. No Director takes part in any decisi<strong>on</strong> affecting<br />
his own remunerati<strong>on</strong>.<br />
COMMITTEE ACTIVITIES DURING THE YEAR:<br />
Directors’ <str<strong>on</strong>g>report</str<strong>on</strong>g> <strong>on</strong> remunerati<strong>on</strong> – The Committee approved<br />
the 2011 Directors’ <str<strong>on</strong>g>report</str<strong>on</strong>g> <strong>on</strong> remunerati<strong>on</strong> and recommended<br />
to the Board that the Report be approved by shareholders<br />
at the AGM. Kepler Associates (Kepler) gave the Committee<br />
an update <strong>on</strong> the Department of Business, Innovati<strong>on</strong> & Skills<br />
(‘BIS’) proposals to be adopted by companies from 2013. The<br />
Committee reviewed each element and agreed to adopt the<br />
majority of the proposals early.<br />
B<strong>on</strong>us – The Committee reviewed and agreed the achievement<br />
of the performance targets for the 2011 b<strong>on</strong>us (payable in 2012).<br />
The Committee also discussed the performance targets for the<br />
2012 b<strong>on</strong>us (payable in 2013) and agreed that these were both<br />
relevant and satisfactory in light of the Group strategy. Details of<br />
the 2012 b<strong>on</strong>us paid to the Executive Directors can be found<br />
<strong>on</strong> page 59.<br />
Executive Remunerati<strong>on</strong> – The Committee reviewed the proposals<br />
for Executive Directors and senior management, taking into<br />
account pay and c<strong>on</strong>diti<strong>on</strong>s of employees across the Group.<br />
Details of the salaries paid to the Executive Directors can be<br />
found <strong>on</strong> page 56.<br />
Chairman’s fee – The Committee reviewed the Chairman’s fee<br />
and agreed that it remained appropriate; therefore Ken Hanna<br />
did not receive an increase in 2012. His fee has remained<br />
unchanged since his appointment in 2009. The Chairman’s<br />
fee was reviewed in March 2013. Details are given <strong>on</strong> page 52.<br />
Share plans – The Committee agreed the vesting level of the<br />
2009 Executive Share Opti<strong>on</strong> Plan, reviewed the performance<br />
targets of the 2010 Executive Share Opti<strong>on</strong> Plan and the 2011<br />
Performance Share Plan and reviewed and approved the<br />
performance targets and grant level of the 2012 Performance<br />
Share Plan, the 2012 Share Matching Plan and the 2012 SAYE<br />
grant. Details of the awards made to Executive Directors can<br />
be found <strong>on</strong> pages 60 to 61. The Committee also m<strong>on</strong>itored<br />
headroom limits in accordance with ABI guidelines.<br />
Remunerati<strong>on</strong> update – The Committee received an annual<br />
update from its advisors, Kepler, <strong>on</strong> the current remunerati<strong>on</strong><br />
trends, industry best practice and external developments<br />
including the BIS proposals.<br />
GOVERNANCE<br />
The Committee reviewed its terms of reference and c<strong>on</strong>firmed<br />
that it had been fully compliant throughout the year.<br />
The Committee reviewed its membership and c<strong>on</strong>firmed<br />
that it complied with the Code.<br />
ADVISORS TO THE COMMITTEE<br />
Kepler acted as the independent remunerati<strong>on</strong> advisor to the<br />
Committee during the year. Kepler attends Committee meetings<br />
and provides advice <strong>on</strong> remunerati<strong>on</strong> for executives, analysis<br />
<strong>on</strong> all elements of the remunerati<strong>on</strong> policy and regular market<br />
and best practice updates. Kepler <str<strong>on</strong>g>report</str<strong>on</strong>g>s directly to the<br />
Committee Chairman and complies with the Code of<br />
C<strong>on</strong>duct for Remunerati<strong>on</strong> C<strong>on</strong>sultants (which can be<br />
found at www.remunerati<strong>on</strong>c<strong>on</strong>sultantsgroup.com).<br />
Kepler provides no other services to the Company. Kepler’s<br />
fees are charged at an hourly rate in accordance with the<br />
terms & c<strong>on</strong>diti<strong>on</strong>s set out in the Engagement Letter. They were<br />
paid fees of £35,733 for their services during the year including<br />
expenses and VAT.<br />
www.inchcape.com 55