Directors’ Remuneration Report (cont’d)
1
The mid-market price on the date of award was 922.00 pence.
2
Awards will vest on 10 May 2015. The value of shares on vesting is estimated
using the average price over the last quarter of 2014 (1,204.86 pence). Awards
take the form of nil-cost options and can be exercised over a period of up to
seven years following vesting, unless reduced under the terms of an
individual’s departure.
3
Under the terms of Martin Lamb’s retirement his 2012 award of 289,850 shares
was not time pro-rated.
4
Adjusted for the February 2014 share consolidation.
Awards vesting under the Performance Share Plan
In May 2012, awards were also made to executive directors
under the Performance Share Plan (‘PSP’). The vesting of the
awards was subject to the achievement of three independent
performance conditions, measured over the three-years ending
31 December 2014. The 2012 PSP award will vest at 0%.
• EPS growth
Half of each award was subject to the achievement of an EPS
growth performance measure. Under the PSP, EPS is defined
as adjusted basic earnings per share before the post-tax
impact of any reported exceptional items, which may include
impairment losses, profit/ loss on disposal of a subsidiary,
rationalisation costs, acquired intangible amortisation and
IAS39 charges or credits for changes in the fair value of financial
instruments. EPS was chosen as an appropriate measure
because it rewards absolute growth in underlying earnings
and because the Committee believed it worked well
in combination with TSR which is an external, relative
measure of performance.
Growth of 6% per annum would trigger the minimum level of
vesting (25% of the EPS element), increasing on a straight-line
basis such that awards were eligible to vest in full for EPS growth
of 15% per annum. Over the period IMI delivered EPS growth of
2.7% per annum, increasing EPS from 64.5 pence in 2011 to
a comparable 69.8 pence at the end of 2014.
• Relative TSR
25% of each award was subject to the achievement of a
relative TSR performance measure. TSR is defined as the
movement in share price during the performance period,
measured in local currency, with adjustments to take account of
changes in capital structure and dividends, which are assumed
to be reinvested in shares on the ex-dividend date. TSR was
chosen as a measure as it is an external, relative benchmark for
performance that aligns executives’ rewards with the creation of
shareholder value.
At the end of the three-year performance period, the Company
ranked 21 in the peer group. The Committee was in agreement
that the outcome under the TSR measure was reflective of the
general underlying financial performance of the Company.
UK
BBA Aviation
Bodycote
Cobham
GKN
Halma
Johnson Matthey
Meggitt
Rotork
Spectris
Spirax-Sarco Engineering
Vesuvius
Weir Group
USA
Borgwarner
Eaton
Emerson Electric
Flowserve Corp
Honeywell
IDEX
Illinois Tool Works
Ingersoll-Rand
Manitowoc
Parker-Hannifin
Pentair
Tyco International
Japan
Amada
Fanuc
NSK
SMC
THK
Yaskawa Electric
Continental Europe
Atlas Copco
Heidelberg Druckmaschinen
Metso Corporation
Sandvik
SKF B
Sulzer AG
The 2012 peer group comprised the following companies,
adjusted to take account of merger and acquisition activity
during the performance period in line with the Committee’s
established guidelines:
Over the period IMI delivered compound annual EVA growth of 12.6% based on three-year EVA from 2012 to 2014 of £593.6m
compared to three-year EVA from 2009 to 2011 of £415.8m. The total awards vesting in March 2015 will be:
Shares
invested by the
executive
4
Initial
matching
award
Value on date
of award
1
(£000)
Number of
matching shares
vesting
Additional
dividend
equivalent
shares
Total matching
shares vesting
Value of matching
shares on vesting
2
(£000)
D M Hurt
27,827
132,512
1,222
92,758
8,022
100,780
1,214
R M Twite
25,600
121,908
1,124
85,335
7,380
92,715
1,117
M J Lamb
3
60,868
289,850
2,672
202,895
17,548
220,443
2,656
74
IMI plc
