Future policy table – executive directors (cont’d)
Component
Purpose
Operation
Variable components of executive remuneration
Annual Incentive Bonus
Drives and rewards performance against annual financial, strategic
and operational goals, which are consistent with the medium to
long-term strategic goals of IMI, also taking into account individual
behaviours and contributions.
Payment of awards is determined by the Committee based on
annual performance relative to set targets which are reviewed
at the end of the year.
If the executive has not achieved their share ownership
guideline, up to half of any bonus is mandated to be invested
into IMI shares for at least three years. Otherwise, the executive
can elect whether to receive their bonus in cash and/or shares.
Dividends (or equivalent value payments) accrue and are
payable in cash or shares when shares are released.
Malus and clawback are included in the plan rules.
IMI Incentive Plan (‘IIP’)
Incentivises long-term value creation, aligning the interests of
executives and shareholders through the delivery of awards in
shares. The selected performance metrics support the long-term
strategy of IMI and the plan and time horizon serves as a retention
tool for key executives.
The Committee can make annual share-based awards.
Dividends (or equivalent value payments) accrue and are
payable in cash or shares in respect of vested awards.
Malus and clawback are included in the plan rules.
Directors’ Remuneration Report (cont’d)
Additional notes to the future policy table
Legacy plans
Awards made under the SMP and PSP prior to the approval of this Remuneration
Policy will be permitted to vest in accordance with the terms approved in the prior
Remuneration Policy. The final awards under these plans were made in 2014.
Setting of performance measures and targets
The Committee reviews and selects performance measures annually, taking
account of the economic conditions and IMI’s priorities at the time. In particular,
the Committee considers the strategic plan and the key performance indicators
associated with it. Details of the performance measures are included in the
Annual Report each year. At the time of selecting performance measures, the
Committee determines the performance targets that will apply in respect of each
measure. Factors that the Committee may consider include the strategic plan,
the annual budget, analysts’ forecasts, economic conditions, individuals’ areas
of responsibilities and the Committee’s expectations over the relevant period.
Depending on the nature of the measure e.g. health and safety, the Committee may
exercise judgement in assessing performance and determining the level of vesting.
Principles for the impact of corporate transactions
The Committee has established principles that determine the way in which
corporate transactions will impact remuneration. It is clear that any corporate
transaction, which is in the best interests of IMI and its shareholders, should not
have an adverse impact on remuneration. The principles include the need for
management to be treated in a manner consistent with shareholders in respect to
the rights to equity, that performance should be measured on a like-for-like basis,
that there should be no compensation for adverse or favourable tax consequences
and that any changes to performance computations will be reviewed by the
Company’s auditors.
Recovery provisions
The Committee has the power to operate malus and/or clawback provisions in
the event that the Company misstated financial results and if there was an error
or miscalculation in determining the size of the award and/or gross misconduct.
The provisions enable the Committee to reduce future annual bonus payments,
reduce the number of shares under any form of share award, and/or require an
individual to make a payment to the Company on terms deemed to be fair and
reasonable by the Committee.
Differences in the remuneration policy for executives relative to the broader
employee population
The remuneration framework in place for the executive directors is informed by the
structure that sits beneath it for the broader employee population. While absolute
levels and the provision of certain components, benefits and allowances vary by
geography and level, the overarching themes are:
• salaries are reviewed annually with any increases made on a discretionary basis
and informed by factors such as those set out in the policy table;
• consistent with executive directors, the leadership group participates in
annual bonus plans with measures linked to corporate, divisional and/or local
performance depending on their level;
• the leadership group can be considered for awards under the IIP. At lower
levels, employees can also be considered for discretionary share awards with
a pre-grant performance test. IMI’s share plans are intended to encourage share
ownership at all levels of the Group. The all-employee plans described in the
policy table are offered on consistent terms to all employees in the geographies
where the plans operate; and
• eligibility for and provision of benefits and allowances varies by level and local
market practice. For senior managers, it is standard to receive a company car
allowance. Pension contributions below the Board are set at a lower rate, and
can take the form of a cash allowance.
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IMI plc
