EasyJet 2010 Annual Report Download - page 46

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easyJet plc
Annual report and accounts 2010
Report on Directors’ remuneration
continued
44
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. This is taken to be the thirty companies larger and smaller than easyJet
by reference to comparative market capitalisation;
–a formal appraisal of their contribution to the business;
–the competitive environment; and
–pay and employment conditions of employees elsewhere within easyJet.
Annual bonus
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 (pro-rata for service), with a 100% of salary maximum for other senior executives. The maximum will remain
at these levels during the financial year ending 30 September 2011.
Bonus targets are aligned with easyJet’s strategic objectives, with specific targets around its key performance indicators. Performance
targets for Executive Directors’ annual bonus opportunities in the financial year ending 30 September 2011 are as follows:
Measure % maximum bonus opportunity
Profit before tax 70%
Customer satisfaction targets 10%
Operating costs (exc fuel) per seat at constant currency 10%
On time performance 10%
The safety of our customers and people underpins all of the operational activities and is required to be achieved before any bonus would
be payable and therefore is not included in the bonus targets.
Performance against the targets set for the year under review is discussed below.
Long Term Incentive Plan
The easyJet Long Term Incentive Plan (‘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.
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 earned into easyJet shares, which are then matched
on a 1:1 gross basis.
Performance and matching share awards vest three years after grant, subject to continued employment and the satisfaction of challenging
performance conditions (which to date have largely related to ROE performance).