EasyJet 2009 Annual Report Download - page 50

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48 easyJet plc Annual report and accounts 2009
REPORT ON DIRECTORS’ REMUNERATION CONTINUED
LTIP awards to be granted in 2010
Since the Committee now considers it possible to set robust long-term ROE performance targets there will not be a short-term performance element to
the targets that will apply during the current financial year. Instead, the conditions will mirror the structure approved by shareholders at the 2008 AGM.
Reverting to the same structure of target as operated immediately following the 2008 AGM is consistent with the future award policy communicated to our
major shareholders during the 2009 consultation with the actual target ranges reflecting current economic conditions. The targets for awards to be made in
financial year 2010 (with a base year of 30 September 2009) will be:
Awards up to 100% of salary
Threshold
(25% vests)
Target
(50% vests)
Maximum
(100% vests)
Return on equity (year ending 30 September 2012) 9.0% 12.0% 15.0%
Awards over 100% of salary
Threshold
(25% vests)
Target
(50% vests)
Maximum
(100% vests)
Return on equity (year ending 30 September 2012) 11.0% 13.0% 15.0%
ROE continues to be the Committee’s preferred long-term performance measure for a number of reasons, including:
It is a fundamental measure of easyJet’s underlying performance and is directly linked to the generation of returns to shareholders
It is directly connected to the self-sustaining growth rate of the business and incentivises management to achieve the appropriate balance between
growth and returns, to deliver the best shareholder value
The performance targets detailed above that apply to the part of an award over 100% of salary are set to be tougher due to the higher potential quantum
available.
All employee share plan participation
easyJet encourages share ownership throughout the Company by the use of a Share Incentive Plan and a Sharesave Plan. Take-up of the schemes remains
very positive with over 80% of eligible staff now participating in one or more of the plans. Executive Directors may also participate in these plans which are
summarised in the Corporate Responsibility section on page 31.
Previous share awards
Executive Share Option Scheme
The LTIP replaced the existing Approved and Unapproved Executive Share Option Schemes (the ‘ESOS’) as the primary long term incentive arrangement
for the Executive Directors and other senior employees although the ESOS was retained for flexibility (e.g. options were granted to the Chief Executive
under the ESOS on his appointment in 2005). However, there were no grants during the year and there is no current intention to make regular grants of
options under the ESOS.
Shareholding guideline
Executive Directors are required to build up a shareholding equivalent to 175% of basic salary. This was increased from 100% of salary following
the 2008 AGM.
For senior executives who report to the Executive Management Team and receive LTIP awards, a 50% share ownership guideline will apply.
Pension contributions
easyJet makes a contribution for Executive Directors, to a defined contribution pension scheme, of 7% of basic salary. While individuals are not obliged
to make a contribution, easyJet operates a pension salary sacrifice arrangement where individuals can exchange their salary for Company paid pension
contributions. Where individuals exchange salary this reduces easyJet’s National Insurance contributions. easyJet credits half of this saving to the individual’s
pension (currently 6.4% of the amount exchanged).
External appointments
Executive Directors are permitted to accept one appointment on an external board or committee so long as this is not deemed to interfere with the
business of the Group. Any fees received in respect of these appointments are retained directly by the relevant Executive Director.