EasyJet 2014 Annual Report Download - page 73

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www.easyJet.com 71
Governance
Directors’ remuneration report
ANNUAL STATEMENT BY THE CHAIR
OF THE REMUNERATION COMMITTEE
Performance of the Group in the 2014 financial year
easyJet has continued to deliver sustainable returns
and growth for its shareholders. The key highlights are
as follows:
• profit before tax up by 21.5% to £581 million;
• 3.1 percentage point growth in return on capital
employed (ROCE) (including lease adjustments) from
17.4% in 2013 to 20.5% in 2014. ROCE (excluding lease
adjustments) increased from 23.0% to 28.6% in the year;
• on-time performance of 85% for arrivals within 15
minutes; and
• increased ordinary dividend with a proposed ordinary
dividend of 45.4 pence per share.
Aligning remuneration policy with Company principles
Simple and cost-effective approach – In line with our
low-cost and efficient business model, the Committee
has chosen to set a simple pay package against the
market. For example, our Executive Directors receive
minimal benefits (see page 74).
Support the stated business strategy of growth and
returns – Performance is assessed against a range of
financial, operational and longer-term targets ensuring
value is delivered to shareholders, and participants are
rewarded for the successful delivery of the key strategic
objectives of the Company.
Pay for performance – Remuneration is heavily weighted
towards variable pay, dependent on performance.
This ensures that there is a clear link between the value
created for shareholders and the amount paid to our
Executive Directors.
Key pay outcomes in respect of the 2014 financial year
The basic salary of the Chief Executive and Chief Financial
Officer will increase by 2.5%, which is in line with the typical
rate of increase being awarded across the Group. This
will result in the Chief Executive’s salary increasing from
£681,600 to £698,600, and the Chief Financial Officer’s
salary increasing from £420,250 to £430,800. Both
increases will be effective from 1 January 2015.
Annual bonuses are based on profit before tax and key
operational and financial targets. Bonuses of 76% of the
maximum were awarded to the Chief Executive and the
Chief Financial Officer in respect of the 2014 financial year.
This reflects the strong financial and operational results
the Group has achieved.
In addition to the portion of the bonus subject to
compulsory deferral, Carolyn McCall has chosen to defer
the maximum 50% of her bonus into shares for three years
under the Matching Share Award element of the Long
Term Incentive Plan (LTIP), and Chris Kennedy has chosen
to defer 22% of his bonus.
Under the LTIP, Performance Share Awards made in
January 2012 are due to vest in January 2015. These
awards are based on average ROCE performance
(excluding lease adjustments) for the three financial
years ended 30 September 2014. The Group achieved
average ROCE performance (excluding operating lease
adjustments) of 22%, reflecting exceptional performance
over the period, resulting in 100% of the awards
being earned, subject to continued employment
to the vesting date.
Remuneration policy for the 2015 financial year
As a result of the forthcoming expiry of the LTIP in
September 2015, the Committee has undertaken a
review of remuneration. The key conclusion was that the
Company’s remuneration policy should continue to be
Charles Gurassa
Chair of the Remuneration Committee
“ On behalf of the Board, I am
pleased to present the Directors’
remuneration report for the year
ended 30 September 2014.”