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Report & Accounts 2005

Directors' Remuneration Report

Unaudited information
Overview of current remuneration elements for executives including Executive Directors
The Committee consists of:

Rick Braddock (Chairman of the Committee)
Roger Carr  
Wolfgang Berndt (appointed 2 December 2005)
David Thompson  
Rosemary Thorne  

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All are independent Non-Executive Directors, and all were members of the Board and Committee at the year-end. No other person was a member of the Committee at a time when any matter relating to the Executive Directors' remuneration for 2005 was considered.

The Committee met four times and passed two written resolutions in 2005 to consider and approve, amongst other things:
  • the Directors' Remuneration Report for 2004;
  • proposed salary increases and changes to other compensation elements of the Executive Directors' remuneration;
  • AIP and share based grants to the Executive Directors and members of the Chief Executive's Committee;
  • a review of our share plans and pension arrangements; and
  • performance measures, weights, targets and allocation guidelines for share based remuneration.
No Committee member has any personal financial interest (other than as a shareowner), conflicts of interest arising from cross-directorships, or day-to-day involvement in running the business. Other Directors and employees who attended some or all of the meetings and who provided material advice or services to the Committee during the year were:

John Sunderland Chairman
Todd Stitzer Chief Executive Officer
Bob Stack Chief Human Resources Officer
Ken Hanna Chief Financial Officer
Mike Clark Group Secretary and Chief Legal Officer (until 30 June 2005)
Hester Blanks Group Secretary (from 1 July 2005)
Don Mackinlay Group Remuneration and Benefits Director
John Mills Director of Group Secretariat and Secretary to the Committee

Mike Clark, Hester Blanks, Don Mackinlay and John Mills were appointed by the Company and have the appropriate qualifications and experience to advise the Committee on relevant aspects of our policies and practices, and on relevant legal and regulatory issues. The Company appointed, and the Committee sought advice from, Slaughter and May and the Committee appointed and sought advice from Towers, Perrin, Forster & Crosby, Inc. Representatives from the latter have attended meetings of the Committee and in addition have provided advice, primarily in the area of remuneration matters, to the Group's operations in Europe and North America. This advice included information on the remuneration practices of consumer products companies of a size and standing similar to those of the Company, including competitors and other businesses which trade on a worldwide basis. Slaughter and May have advised the Committee on legal and regulatory issues and have also provided advice on a broad range of legal issues for the Group during 2005.

Overview of current remuneration elements for executives including Executive Directors


Element Objective Performance Period Performance Conditions
Base Salary
(see Salaries and benefits in kind for Executive Directors)		 Reflects market value of role and individual's skills and experience Not applicable Reviewed annually, following external benchmarking and taking into account individual performance and the increases awarded to other employees
Annual Incentive Plan (AIP) Incentivises delivery of performance goals for the year One year Award subject to achievement of Revenue and underlying economic profit (UEP) targets for the year
Bonus Share Retention Plan (BSRP)
Note: This is a voluntary investment programme 		Incentivises sustained annual growth Three years Basic award (subject to continued employment) and an additional match subject to achievement of compound annual growth in aggregate underlying economic profit
Supports and encourages share ownership  
Long Term Incentive Plan (LTIP) Incentivises long-term value creation Three years Half of award subject to total shareowner return (TSR) ranking relative to an international peer group (see page 48)

Half of award subject to achievement of compound annual growth in aggregate Underlying Earnings per Share (UEPS)
Discretionary Share Option Plans
(to be discontinued with effect from 2006)		 Incentivises earnings growth Three to five years Vesting subject to achievement of compound annual growth in (point to point) UEPS. First test at end of three years, further test available at end of five years
Incentivises increasing share price Three to ten years Value of award comes from share price growth at time of exercise
Whether particular performance conditions are met is assessed with reference to our annual accounts or to external data which is widely available. These methods have been chosen as they are or can be independently audited. Remuneration received in respect of each of these elements by the Executive Directors is shown in the Directors’ remuneration tables.