Mike Turner is employed under a service contract dated 22 February 1994 (amended 30 May 1995, 3 December 1999, 8 May 2002, 15 January 2004 and 14 October 2005). It was announced on 16 October 2007 that Mike Turner would be stepping down at the end of August 2008. Under a termination agreement, he will at that time become entitled to a termination payment of £236,884 in respect of his contractual and statutory rights relating to the unserved portion of his 12-month notice period to 16 October 2008, together with any payment due in respect of his 2008 annual bonus.
As a result of the pension tax changes which came into force on 6 April 2006, Mike Turner opted out of further accrual of pension with effect from that date in return for a cash supplement of 30% of salary. His pension on retirement will be calculated in accordance with the rules of the relevant plans by reference to his Pensionable Service to 6 April 2006 and Final Pensionable Pay at retirement.
Mike Turner will not be entitled to participate in the Company’s Performance Share Plan for 2008 but, as announced on 16 October 2007, has been granted a performance-related conditional award as described on Remuneration package page.
In accordance with the termination agreement and the rules of the relevant plans, his existing options and awards will be treated as follows on retirement:
- unexercised options under the Executive Share Option Plan will be preserved, and may be exercised in full within 12 months after his retirement. Any performance condition in relation to those options that remains to be satisfied will be waived;
- PSP awards that have already vested (that is, awards granted in 2005 and earlier years) will be preserved, and may be exercised within six months of retirement;
- for unvested PSP awards (that is, awards granted in 2006 and 2007), the performance conditions will be tested (at Mike Turner’s election) either at retirement or at the end of the normal three-year performance periods. Such awards will vest to the extent that the performance conditions have been satisfied, and may be exercised within six months. The number of shares which vest will not be time prorated to reflect his actual service during the applicable three-year periods; and
- for the unvested matching award under the SMP granted in 2007 (in respect of Mike Turner’s 2006 annual bonus) and any matching award granted in 2008 should he elect to invest up to one-third of his 2007 annual bonus into the SMP, the performance conditions will be tested at his election either at retirement or at the end of the normal three-year performance periods. The awards will vest to the extent that the performance conditions have been satisfied and will not be time prorated. His linked investment shares will be released at the same time the matching shares vest.
The Committee was satisfied that these arrangements were appropriate for the purpose of ensuring that Mike Turner remains fully committed to the Company and fully incentivised in relation to share price and EPS performance until the vesting date of these options and awards. The Committee also considered that these arrangements, and the special incentive described on Remuneration package page, constituted an optimal incentive structure for Mike Turner’s remaining period of service.
