Directors' Remuneration Report
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Unaudited information
Long Term Incentive Plan (LTIP)Around 100 senior executives (including the Executive Directors) are granted a conditional award of shares under the LTIP. This award recognises the significant contribution they make to shareowner value and is designed to incentivise them to strive for sustainable long-term performance. In 2005, awards for the 2005 - 2007 performance cycles were made to senior executives, including the Executive Directors. Details of the Directors' LTIP interests are set out in table five of the Directors' remuneration tables. One half of the conditional shares that vest are transferred immediately. The transfer of the remaining half is deferred for two years and is contingent on the participant's employment with us not being terminated for cause during that period. Participants accumulate dividend equivalent payments both on the conditional share awards (which will only be paid to the extent that the performance targets are achieved) and during the deferral period. |
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The current LTIP has been in place since 1997. In 2004, the Committee made a number of changes to the Plan, and the table opposite sets out the key features of the LTIP. As explained above, from 2006, performance ranges for the growth in Underlying Earnings Per Share (UEPS) will be expressed in absolute rather than post-inflation terms. The TSR measure is a widely accepted and understood benchmark of a company's performance. The TSR is measured according to the return index calculated by Datastream on the basis that a company's dividends are invested in the shares of that company. The return is the percentage increase in each company's index over the performance period. UEPS is a key indicator of corporate performance. It is measured on a real basis (absolute from 2006) after allowing for inflation, based on a weighted average inflation index computed using the published annual Consumer Price Index inflation rates for the UK, USA, Euro Zone and Australia. The real growth rates are aggregate per annum compound and sustained performance is therefore required over the performance cycle as each year counts in the calculation. back to topHow the LTIP operates
The following companies were selected as comparator companies (the "Comparator Group") to reflect the global nature of our business:
*indicates a company dropped from the Comparator Group in 2004 +indicates a company added to the Comparator Group for 2004 onwards #indicates a company dropped from the Comparator Group in 2005, due to its no longer being a publicly quoted company Awards under the LTIP (both before and after 2004) will vest in full following a change in control, but only to the extent that performance targets have been met at the time of the change in control. The status as at 1 January 2006 of each LTIP cycle in respect of which awards could vest is shown to the right, showing our performance against the measures explained above. The actual vesting of awards will be based on performance over the full vesting period and future results will be reflected in the outcome. LTIP awards received by Executive Directors are shown in table five of the Directors' remuneration tables.
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