On 16 October 2007, the Company announced that Mike Turner, the Chief Executive, will retire at the end of August 2008. The Committee agreed a 5.8% salary increase from 1 January 2008, taking account of his performance and the competitive positioning. This increases his annual base salary from £945,000 to £1,000,000. He will be eligible to participate in an annual bonus plan for 2008, with a maximum bonus unchanged at 150% of base salary, and with the following targets:
| Annual bonus as percentage of base salary | Mike Turner | |
|---|---|---|
| Measure | Base target |
Stretch target |
| Group EPS | 20% | 50% |
| Group cash | 20% | 50% |
| Ethics and safety | Up to 18% | Up to 18% |
| Other objectives supporting the Group’s strategy | Up to 32% | Up to 32% |
If performance is between the base and stretch targets, the bonus is pro-rated.
He will be eligible to invest up to one-third of his 2007 net annual bonus into the Share Matching Plan but will not be eligible to invest any of his 2008 annual bonus.
He will not be eligible to participate in the Performance Share Plan for the 2008 financial year. Instead, the Committee has implemented a tailored incentive arrangement for the period prior to his retirement as announced to shareholders on 16 October 2007.
On 16 October 2007, Mike Turner was granted a performance-related conditional award over 231,618 ordinary shares (‘Share Award’). The number of ordinary shares under the Share Award was calculated as £1,181,250 (being 1.25 times his base salary at that time) divided by 510p, being the market value of an ordinary share averaged over the three business days ending 15 October 2007.
The Share Award will vest subject to the satisfaction of certain performance targets, which the Committee will assess as at 31 August 2008. These targets relate to: continuing the successful implementation of the Company’s business strategy; satisfaction of leadership objectives set by the Committee; achieving an orderly handover of key external relationships; and facilitating an orderly succession to the Chief Executive role. Any ordinary shares which vest will be released in two equal tranches over the year following his retirement. The Share Award will be satisfied by way of a transfer of existing ordinary shares from the Company’s employee trust.
In tandem with the Share Award, he was granted a conditional cash award of £1,181,250. This will be subject to the same performance targets, and will vest and be released on the same basis, as set out above.
The Committee was satisfied that these awards were the most appropriate incentive for Mike Turner in relation to his remaining period of service and these targets are consistent with the Company’s strategy of giving emphasis to non-financial objectives in order to foster a performance culture within the Company.
As this was a special arrangement to facilitate Mike Turner’s retention and incentivisation, shareholder approval was not required under the Listing Rules. Any benefits under this arrangement will not be pensionable.
