Experian 2009 Annual Report Download - page 65

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63Experian Annual Report 2009
Introduction
2 – 7
Governance
Report on directors’ remuneration Financial statements
73 – 148
Business review
8 – 43
Business review
8 – 43
In addition, it is intended to increase
the maximum match under the CIP
from 1:1 to up to 2:1. The CIP is used as
part of a suite of long-term incentive
arrangements and the increase in
potential match has been factored
into market-based remuneration
benchmarking that has been carried
out on behalf of the committee. The fair
value of total remuneration, including
the increased match, remains within
competitive levels.
The match of 1:1 will be awarded for
the achievement of a target level of
growth in PBT, increasing on a straight
line basis to up to a 2:1 match for the
achievement of stretching levels of
performance. The nal targets will be
determined shortly before the awards
are made in June 2010 and will be fully
disclosed at the appropriate time.
However, the committee undertakes
to ensure that any targets, whilst they
must be seen as achievable to retain
and motivate executives during the
deferral period, must be sufciently
stretching to deliver signicant
shareholder value.
Experian performance share plan
(‘Experian PSP’)
The Experian PSP was approved
by GUS plc shareholders at the
Extraordinary General Meeting (‘EGM’)
held on 29 August 2006. An initial award
was made to participants, including
the executive directors, on 11 October
2006. Performance shares are ‘free’
Experian shares for which no exercise
price is payable. Shares are allocated
subject to a performance condition
which is measured over a three-year
performance period with a ve-year
vesting period. Dividend equivalents
accrue on these awards.
For the above demerger awards
granted in October 2006, the
performance condition is in two
separate parts; 50% of the award is
subject to achievement against a
sliding scale of growth in PBT, which
the committee considers to be an
appropriate measure as this represents
one of the key drivers of the business.
The threshold for vesting is growth in
PBT of 7% per annum at which 25% of
this part of the award will vest, rising
on a straight-line basis to 100% of this
part of the award vesting if PBT grows
at a rate of 14% per annum.
The remaining 50% of the award will
vest according to the performance of
Experian’s total shareholder return
(‘TSR’) (dened as share price
movement plus reinvested dividends)
relative to the following group of peer
companies as set at the award date:
Acxiom
Alliance Data Systems
Bisys Group
Capita Group
Choicepoint
Dun & Bradstreet
Equifax
Fair Isaac
Fidelity National Financial
Fimalac
First American
First Data
Fiserv
Global Payments
Harte-Hanks
IAC/Interactive Corp
Moodys
Reuters Group
Thomson
Total System Services
This bespoke comparator group
consists of Experian’s main
competitors in the business areas
and countries in which the Group
operates. This part of the award will
not vest if Experian’s TSR is below
the median return for the comparator
group. Once Experian achieves median
performance, 25% of this portion
of the award may vest, rising on a
straight-line basis to 100% of this part
of the award vesting for upper quartile
performance or better.
Performance conditions for
future awards under the Experian
performance share plan will be decided
in advance of grant. For awards to be
made in 2009/10, it is intended that
75% of any award will be subject to a
growth in PBT performance condition
and 25% will be subject to a relative
TSR performance condition. This is to
ensure that greater line of sight exists
between participating executives and
the performance measures employed.
For the element of an award which
is subject to the PBT performance
condition, 25% will vest for growth in
PBT of 4% per annum on average rising
to 100% vesting for growth in PBT
of 8% per annum on average, which
is expected to be broadly equivalent
to median and upper quartile
performance respectively. For the TSR
element of the awards, vesting will be
according to the percentage extent to
which Experian’s TSR outperforms the
TSR of the FTSE 100 Index. 25% of the
award would vest at threshold, rising
to 100% where Experian outperforms
the FTSE 100 Index by at least 25% over
the three-year performance period.
This equates to approximately 7.7%
per annum. In addition, vesting of these
awards will be subject to satisfactory
return on capital employed (’ROCE’)
performance.