What did the non-executive directors get paid in 2014?
The Chairman was paid a fee of £300,000. Roberto Quarta
has elected to receive 25% of his fee in shares although that
is not a Company requirement and may or may not apply to
a new Chairman. Each non-executive director received an
annualised base fee of £60,000. I received an additional
£15,000 for chairing the Remuneration Committee, with Phil
Bentley and Anita Frew receiving additional fees of £15,000
and £10,000 respectively for their duties in chairing the Audit
Committee and serving as the senior independent director.
We welcomed Ross McInnes to the board as a non-executive
director in October 2014 and he received a fee of £15,000
for his time in the role during the year. In January 2015, Ross
succeeded Phil as Chairman of the Audit Committee when
Phil stepped down from the Board at the end of last year to
focus on his new executive appointment elsewhere, and I
will replace Anita Frew as senior independent director.
What is changing for 2015?
As indicated above, 2015 will see the launch of the IMI Incentive
Plan (IIP) awards, subject to shareholder approval. As part of the
remuneration review we also updated the 2015 performance
measures under our short and long-term incentive schemes.
Health and safety will now serve as an underpin in the annual
plan reflecting its overall importance, with the removal of EPS
to place greater emphasis on Group PBT growth, organic
revenue growth, cash conversion and strategic performance.
When compared to the previous long-term arrangements,
EPS growth and organic revenue growth have been replaced
by Group PBT growth and ROCE to better measure sustainable
and efficient long-term profitable growth. EVA has been removed
entirely as we believe the new measures are more effective
in measuring performance while being significantly more
transparent to shareholders. We have retained TSR to maintain
the direct link with our shareholders’ experience, although we
have taken the opportunity to refresh the peer group to better
reflect our portfolio of businesses following the divestments
of our Retail Dispense divisions.
The targets for the long-term plan have been set with a
view to them being enduring standards and to that end the
Committee is of the view that they are not commercially
sensitive. The targets for each measure are as follows:
As part of the annual review, salaries have been increased for
Mark Selway and Roy Twite by
2.7% and 3.5% respectively in
line with the approach we have taken across the whole Group.
In addition, Roy’s bonus opportunity has increased slightly to
150% of salary to mitigate the decrease in overall compensation
opportunity brought about by the new remuneration structure.
What about staff pay?
In 2014 our average staff salary increase was 3.2%.
Approximately one million options vested in 2014 under the
Share Option Plan (these were granted in 2011 to our managers)
and the gain per share option on vesting was £4.66 each.
We continue to offer UK SAYE, UK Share Incentive Plan
and Global Employee Share Purchase Plans in USA. We are
particularly proud of the level of uptake in our all-employee plans.
Committee review
The Committee reviewed its own performance and terms of
reference and received positive feedback from the externally
facilitated evaluation exercise carried out in respect of the
Board and each of its standing committee.
Looking forward
The Committee has devoted a considerable amount of time in
reviewing the executive remuneration framework over the year.
Subject to your approval, it is our intention that this policy will
operate for at least the next three years, as the Executive team
focuses on delivering long-term value. I would like to personally
thank those investors that took the time to participate in our
consultation exercise and I hope all of our shareholders are able
to support our decisions and recommendations at the upcoming
Annual General Meeting.
Bob Stack
Chairman of the Remuneration Committee on behalf of the Board.
26 February 2015
Directors’ Remuneration Report (cont’d)
ROCE Relative TSR
PBT
Growth
Level of
vesting
Threshold
40%
Median
2.5%
25%
Maximum
50% Upper quartile
7.5% 100%
58
IMI plc
