Anglo American Annual Report 2012

2.2 Supplementary informationThe Company has additionalguidance for executive directors onshareholding targets and external andinternal directorships.Shareholding targetsWithin five years of appointment,executive directors are expected tohold Company shares with a valueof two times basic salary for thechief executive and one and a halftimes basic salary for other executivedirectors. The Committee takes intoconsideration achievement againstthese targets when making grantsunder the Company’s variouslong-term incentive plans.External directorshipsExecutive directors are not permittedto hold external directorships oroffices without the prior approval ofthe Board. If approved, they may eachretain the fees payable from only onesuch appointment.Internal directorshipsAny fees earned through internaldirectorships must be ceded tothe Company.In addition:• The remuneration provisionswithin the service contracts forCynthia Carroll and René Médoriare consistent with the policy outlinedin Figure 1 above and in Figure 4(termination provisions).• The remuneration arrangementsfor the executive directors outlinedin Figure 1 are consistent with thosefor other executives serving on theGroup Management Committee andthe Executive Committee, althoughopportunity levels vary.• The performance conditionsattaching to the longer-term incentivearrangements for executive directorswere chosen to ensure alignmentwith the Company’s strategicobjective of operating efficiency(AOSC – LTIP) and with the returnsbeing delivered to shareholders(TSR – LTIP) or the funding of thosereturns (real EPS growth – BSPEnhancement Shares).Figure 3: Executive director total remuneration atdifferent levels of performancePerformance LevelPerformance LevelChief ExecutiveAboveTargetBelowAboveTargetBelow£1.6mFinance Director£1.0m0 2.04.06.08.010.0Basic salaryBenefitsPensionBSP (cash)BSP (deferred shares)BSP (enhancement shares)LTIP£3.6m£5.1m£6.1mIndicative total pay (£m)£8.8mAboveThe Company’s three-year TSR would need to out-perform sectorpeers by 5% pa and be ranked 20th against the FTSE 100.TargetThe Company’s three-year TSR would need to out-perform sectorpeers by 2.5% pa and be ranked 35th against the FTSE 100.BelowTotal pay for below threshold performance includes basic salary,benefits and pension only.(1)Charts have not been included for the non-executive directors as their fees are fixed and do not varywith performance.(2)Share price movement and dividend accrual have been excluded from all figures.(3)Participation in the SAYE and SIP has been excluded given the relative size of the opportunity levels.(4)Total pay for above target performance comprises basic salary, benefits, pension, 100% of maximum bonusopportunity (50% of which is deferred into Bonus Shares), a 0.75 for 1 match of Enhancement Shares (100% ofmaximum) and 100% of maximum LTIP opportunity. For this level of pay, three-year EPS growth would need tobe RPI+15% or higher and the Company’s three-year TSR would need to out-perform sector peers by 5% pa andbe ranked 20th or higher against the FTSE 100.(5)Total pay for target performance comprises basic salary, benefits, pension, 65% of maximum bonus opportunity(50% of which is deferred into Bonus Shares), a 0.5 for 1 match of Enhancement Shares (i.e. 67% of maximum)and 65% of maximum LTIP opportunity. For this level of pay, three-year EPS growth would need to be RPI+11.4%,the Company’s three-year TSR would need to out-perform sector peers by 2.5% pa and be ranked 35th against theFTSE 100.(6)Total pay for below threshold performance comprises basic salary, benefits and pension only.2.3 Indicative totalremuneration levelsThe Company’s policy results in asignificant portion of remunerationreceived by executive directors beingdependent on Company performance.Figure 3 illustrates how the total payopportunities for the current chiefexecutive and the finance director varyunder three different performancescenarios: above, target and below.These charts are indicative as shareprice movement and dividend accrualhave been excluded. All assumptionsmade are noted below the charts.GovernanceAnglo American plc Annual Report 2012 113