EasyJet 2012 Annual Report Download - page 57

How much could the Executive Directors earn under
the current remuneration guidelines?
As mentioned earlier in this report, a significant proportion of
remuneration is linked to performance, particularly at maximum
performance levels.
Neither Executive Director will receive an increase in the overall
opportunity as a result of the changes. The proportion of the
CEO’s pay delivered in cash will decrease.
The charts below show how much the CEO and CFO could
earn under easyJet’s remuneration guidelines under different
performance scenarios. The following assumptions have
been made:
Below threshold – There is no bonus and no vesting under
the LTIP.
Meets target – This shows the value payable for performance at
the mid point of the bonus range (giving 50% of the maximum
opportunity) and vesting at threshold under the LTIP (of 25% of
the award).
Exceeds target – There is maximum bonus and maximum vesting
under the LTIP.
The value of any matching shares has been excluded for simplicity.
What are the Executive Directors’ salaries?
The salaries of the CEO and CFO have not been increased since
they joined the Company in July 2010.
The Directors’ salaries for 2012 / 13 are as follows:
1 October 2011 salary 1 October 2012 salary
CEO £665,000 £665,000 (0%)
CFO £400,000 £410,000 (+2.5%)
What pension contributions are given?
In line with the Company’s simple and prudent approach to
remuneration, easyJet normally offers a modest 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 6.9% of the
amount exchanged).
If an Executive Director has reached the lifetime pension
limit, a cash alternative may be paid with the agreement of
the Committee.
How is successful annual performance rewarded?
The maximum annual bonus opportunity during the 2011 / 12
financial year was 200% of salary for the CEO, with a 100%
of salary opportunity for the CFO.
As stated previously, for the 2012 / 13 financial year, the maximum
bonus will remain unchanged for the CEO but will be increased to
150% of salary for the CFO (with a corresponding decrease in his
LTIP opportunity) ensuring management incentives are aligned.
The annual bonus will now be delivered as follows:
→One-third of any bonus earned will be compulsorily deferred
and subject to forfeiture. This element will be deferred into
shares for three years and will not be subject to any
further matching.
→In addition, Executive Directors can choose to invest a further
proportion of their bonus into the LTIP (CEO 50% of bonus
and CFO 33% of bonus). Matching share awards may be made
linked to this investment which may then be matched on a 1:1
pre-tax basis subject to the LTIP performance conditions.
→The remainder of the bonus will be delivered as cash.
The change in the operation of deferral means a greater
proportion of the CEO’s package will now be subject to deferral
over a three year period.
Annual performance is measured against a range of financial and
operational performance indicators as follows:
As percentage of maximum bonus
opportunity
Measure Carolyn McCall OBE Chris Kennedy
Profit before tax 70% 60%
Customer satisfaction targets 10% 10%
Total cost per seat excluding fuel
at constant currency 10% 10%
On-time performance 10% 10%
Departmental objectives – 10%
Chief Executive Officer
£‘000
2,000
0
4,000
3,000
1,000
500
3,500 3,372
Below threshold Exceeds target
2,500
1,500
Meets target
1,710
712
Salary Pension Bonus LTIP
Chief Financial Officer
£‘000
800
0
1,800
1,200
400
200
1,400
1,669
Below threshold Exceeds target
1,000
600
Meets target
900
439
Salary Pension Bonus LTIP
1,600
Governance
easyJet plc
Annual report and accounts 2012 55