EasyJet 2009 Annual Report Download - page 49

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47 easyJet plc Annual report and accounts 2009
Basic salary
The basic salaries of the Executive Directors are reviewed annually and are set taking account of the salary required to deliver an overall total package that
reflects a number of factors including:
practice adopted in companies of a broadly similar size
a formal appraisal of their contribution to the business
the competitive environment
pay and employment conditions of employees elsewhere within easyJet
Annual bonus scheme
All Executive Directors participate in an annual bonus scheme. The maximum annual bonus opportunity of the Chief Executive during the year was
200% of salary, with a 100% of salary maximum for other senior executives. The maximum will remain at these levels during the financial year ending
30 September 2010.
Bonus targets are aligned with easyJet’s vision and values, with specific targets around easyJet’s key performance indicators. The performance targets that will
apply to Executive Directors’ annual bonus opportunities in the financial year ending 30 September 2010 are as follows:
Measure % maximum bonus opportunity
Profit before tax 75%
Customer targets 10%
Operating costs 10%
On time performance 5%
Descriptions of the Executive Directors’ performance against the targets set for the year under review are set out in the emoluments table on pages 50
to 51.
Long term incentive plan
The easyJet LTIP provides for annual awards of performance shares and matching shares. The plan was approved by shareholders at the AGM in 2005 and
amended at the 2008 AGM with the performance targets further amended during the year under review.
The annual award limit for performance shares is 200% of basic salary.
Matching share awards are linked to the investment of up to 50% of annual bonus into easyJet shares, which are then matched on a 1:1 gross basis.
This is the same as in the financial year ended 30 September 2008. No matching awards were granted in the financial year ended 30 September 2009.
Performance and matching share awards vest three years after grant, subject to continued employment and the Company achieving the ROE targets.
This measure was chosen as it is a fundamental measure of financial performance and is linked to the generation of shareholder returns. The Board controls
the rate of capital growth and balance sheet gearing, which ensures that ROE remains an appropriate measure of long-term performance.
The targets that applied during the year under review were amended to include short-term targets which reflected current circumstances. This was
considered appropriate due to the difficulties that existed in relation to setting robust long-term targets at a time of exceptional fuel price volatility and
uncertain economic circumstances. easyJet’s major shareholders and the shareholder protection bodies were consulted on the revisions which are set out
under the Executive Directors’ Share Awards table on page 52.