Directors' report on remuneration (PDF 174 KB) - Inchcape

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BUSINESS REVIEW GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION EXIT PAYMENT POLICY The Company’s policy is to limit severance payments on termination to pre-established contractual arrangements. In the event that the employment of an Executive Director is terminated, any compensation payable will be determined in accordance with the terms of the service contract between the Company and the employee, as well as the rules of any incentive plans. Under normal circumstances, Executive Directors receive termination payments in lieu of notice equal to pay and benefits for the length of their contractual notice period. In the event an Executive Director leaves for reasons of death, ill-health, redundancy, retirement (CIP only), or any other reason which the Remuneration Committee may, in its absolute discretion, permit, any outstanding long-term incentive (LTI) awards will be pro-rated for time and performance and will either vest at the end of the performance period or immediately, at the Committee’s discretion. Upon a change of control of the Company, awards will be pro-rated for time and vest immediately based on the extent to which the Committee determines that the performance conditions have been met or are likely to be met. For all other leavers, outstanding LTI awards will lapse. The Committee retains discretion to alter these provisions on a case-by-case basis following a review of circumstances and to ensure fairness for both shareholders and participants. PART 2 – IMPLEMENTATION REPORT KEY RESPONSIBILITIES OF THE REMUNERATION COMMITTEE Remuneration Policy Annual bonus targets Performance targets for share incentive plans Executive Committee remuneration The terms of reference for the Remuneration Committee can be found on the website www.inchcape.com/aboutus/governance. COMMITTEE MEETINGS Member Member throughout 2012 Meetings Held Meetings Attended Nigel Northridge 2 2 Ken Hanna 2 2 Will Samuel 2 2 Till Vestring Joined May 2012 1 1 Only members of the Committee have the right to attend Committee meetings; however other individuals such as the Group Chief Executive, Group HR Director and external consultants advise the Committee and attend by invitation. Membership and attendance at meetings are shown in the table above. No Director takes part in any decision affecting his own remuneration. COMMITTEE ACTIVITIES DURING THE YEAR: Directors’ <strong>report</strong> on remuneration – The Committee approved the 2011 Directors’ <strong>report</strong> on remuneration and recommended to the Board that the Report be approved by shareholders at the AGM. Kepler Associates (Kepler) gave the Committee an update on the Department of Business, Innovation & Skills (‘BIS’) proposals to be adopted by companies from 2013. The Committee reviewed each element and agreed to adopt the majority of the proposals early. Bonus – The Committee reviewed and agreed the achievement of the performance targets for the 2011 bonus (payable in 2012). The Committee also discussed the performance targets for the 2012 bonus (payable in 2013) and agreed that these were both relevant and satisfactory in light of the Group strategy. Details of the 2012 bonus paid to the Executive Directors can be found on page 59. Executive Remuneration – The Committee reviewed the proposals for Executive Directors and senior management, taking into account pay and conditions of employees across the Group. Details of the salaries paid to the Executive Directors can be found on page 56. Chairman’s fee – The Committee reviewed the Chairman’s fee and agreed that it remained appropriate; therefore Ken Hanna did not receive an increase in 2012. His fee has remained unchanged since his appointment in 2009. The Chairman’s fee was reviewed in March 2013. Details are given on page 52. Share plans – The Committee agreed the vesting level of the 2009 Executive Share Option Plan, reviewed the performance targets of the 2010 Executive Share Option Plan and the 2011 Performance Share Plan and reviewed and approved the performance targets and grant level of the 2012 Performance Share Plan, the 2012 Share Matching Plan and the 2012 SAYE grant. Details of the awards made to Executive Directors can be found on pages 60 to 61. The Committee also monitored headroom limits in accordance with ABI guidelines. Remuneration update – The Committee received an annual update from its advisors, Kepler, on the current remuneration trends, industry best practice and external developments including the BIS proposals. GOVERNANCE The Committee reviewed its terms of reference and confirmed that it had been fully compliant throughout the year. The Committee reviewed its membership and confirmed that it complied with the Code. ADVISORS TO THE COMMITTEE Kepler acted as the independent remuneration advisor to the Committee during the year. Kepler attends Committee meetings and provides advice on remuneration for executives, analysis on all elements of the remuneration policy and regular market and best practice updates. Kepler <strong>report</strong>s directly to the Committee Chairman and complies with the Code of Conduct for Remuneration Consultants (which can be found at www.remunerationconsultantsgroup.com). Kepler provides no other services to the Company. Kepler’s fees are charged at an hourly rate in accordance with the terms & conditions set out in the Engagement Letter. They were paid fees of £35,733 for their services during the year including expenses and VAT. www.inchcape.com 55
Directors’ <strong>report</strong> on remuneration continued TOTAL ACTUAL REMUNERATION To aid transparency for our shareholders, the table below sets out the total actual remuneration received by each Director for the year to 31 December 2012. Executive Director 1. Base salary £’000 2. Benefi ts £’000 3. Pension £’000 4. Annual bonus £’000 5. Long-term incentives £’000 Total remuneration £’000 André Lacroix 790 18 311 815 232 2,166 John McConnell 408 10 168 420 120 1,126 Director 1. Fee £’000 2. Benefi ts £’000 3. Pension £’000 4. Annual bonus £’000 5. Long-term incentives £’000 Total remuneration £’000 Ken Hanna 275 7 – – – 282 Vicky Bindra 57 – – – – 57 Simon Borrows 60 – – – – 60 Alison Cooper 50 – – – – 50 Nigel Northridge 60 – – – – 60 Will Samuel 76 – – – – 76 David Scotland 23 – – – – 23 Till Vestring 50 – – – – 50 The fi gures have been calculated as follows: 1. Base salary/fee: amount earned for the year. Non-Executive Directors received a fee of £50,000 p.a. plus an additional £10,000 for Committee Chair. The Deputy Chairman received a fee of £76,000 p.a. 2. Benefi ts: the taxable value of annual benefi ts received in the year 3. Pension: the value of the Company’s contribution during the year 4. Annual bonus: the value at grant of the annual incentive payable for performance over 2012, including amounts paid in shares 5. Long-term incentives: Includes any CIP, PSP and options based on the value at vesting of shares or options vesting on performance over the three year period ending 31 December 2012. Value stated relates to the vesting of 2010 option grants, valued based on the average share price from 1 October to 31 December 2012 of £4.05. BASE SALARY Salaries are reviewed annually and typically take effect from 1 April of each year. The Committee reviews base salary for the Executive Directors and Executive Committee against organisations of similar size, complexity and type, and also takes into account pay and conditions elsewhere in the Group. During the year the quantum of executive total remuneration was reviewed against four comparator groups: retailers, distributors, companies of similar market cap and companies with similar revenues. The salaries for 2011, 2012 and 2013 are set out in the table below, together with the average increases across the Group. Name 1 April 2011 1 April 2012 1 April 2013 André Lacroix £778,680 (3% increase) John McConnell £401,700 (3% increase) Average increase across the Group £794,254 (2% increase) £409,734 (2% increase) 3.16% increase £810,140 (2% increase) £426,123 (4% increase) 2.84% increase ANNUAL BONUS In 2012, as for 2011, the Executive Directors’ annual bonuses were assessed against a fi nancial performance matrix. This matrix was designed to reward stretching targets of revenue and operating profi t, whilst maintaining exceptional levels of customer service. During the year, the Group delivered revenue above target and operating profi t between target and maximum. The Group met the NPS targets. The Committee reviewed performance against the targets and rules of the scheme and, taking into account all relevant factors, has determined that both the Group Chief Executive and the Group Finance Director receive a bonus of 102.6% of salary for 2012. As the 2012 bonuses were more than 100% of salary the Executive Directors will have 2.6% of salary automatically invested in Company shares through the co-investment plan. Executive Directors will also be able to make voluntary investments up to 47.4% of salary into the scheme to make a maximum investment of 50% of salary. ILLUSTRATION OF BONUS STRUCTURE FOR EXECUTIVE DIRECTORS Financial performance matrix (% of salary) Revenue Stretch Target Threshold 30% 90% 150% 20% 60% 120% 15% 45% 90% Threshold Target Operating profit Stretch NPS multiplier X 0.8 -1.0 Note: In this way, 20% of total bonus is based on NPS – the customer measure 56 Inchcape plc Annual Report and Accounts 2012
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Directors' report on remuneration (PDF 174 KB) - Inchcape

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