Experian 2012 Annual Report Download - page 71

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Governance Financial statementsBusiness reviewBusiness overview
Explanation of remuneration
Introduction
This report has been drawn up in line with the UK Corporate Governance Code, Schedule 8 of the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008 and the UK Financial Services Authority Listing Rules.
The Remuneration Committee: members, role and frequency of meetings
Details of the Committee members, the scope of their role and frequency of meetings can be found in the corporate governance statement.
Working with advisers
In making its decisions, the Committee consults with the Chairman, the Chief Executive Officer and the Group HR Director. Other senior
members of Experian’s reward function are also invited to attend meetings of the Committee as appropriate. The Chief Financial Officer is also
normally consulted in respect of performance conditions applying to short and long-term incentive arrangements. No executives are present
when their own remuneration arrangements are being discussed.
The Committee has access to independent consultants to ensure that it receives objective advice. In 2007, Deloitte LLP (‘Deloitte’) were
appointed by the Committee as independent advisers and they continued to act in this role during the year ended 31 March 2012. Deloitte also
provided unrelated advisory and tax services to the Group during the year. In addition, Kepler Associates (‘Kepler’) provided remuneration data,
incentive plan award valuations and supporting data for the target calibration process. Kepler does not provide any other services to the Group.
Linklaters LLP provided legal advice in respect of incentive plan design and interpretation in addition to other legal services to the Group during
the year.
Remuneration philosophy and principles
Experian’s remuneration philosophy is that reward should be used to drive long-term, sustainable business performance. In this regard, the
Committee aims to have in place remuneration principles for Experian which are consistent with its business objectives and are designed to:
•drive accountability and transparency and align remuneration with the interests of shareholders;
•provide a balanced portfolio of incentives which align both short-term (one-year) and longer-term (three-year) performance such that
sustainable growth and value are delivered for our shareholders;
•apply demanding performance conditions to deliver sustained profitable growth across the Group, thereby aligning incentives with
shareholders’ interests, setting these conditions with due regard to actual and expected market conditions;
•pay base salaries that are market-competitive and appropriate in the context of the individual’s performance and experience as well as the
remuneration arrangements throughout the Group;
•provide competitive performance-related compensation which influences performance and helps attract and retain executives by providing
the opportunity to earn commensurate rewards for the achievement of outstanding performance, which leads to long-term shareholder value
creation; and
•deliver competitive benefits to underpin the other components of the remuneration package.
Consistent with these principles, the Committee compares the Experian remuneration arrangements with those of other relevant organisations
and companies of similar size and scope to Experian. The remuneration arrangements are also reviewed in light of changing market conditions,
which continue to be challenging. Performance-related incentives are targeted at upper quartile levels for the achievement of stretching
objectives. Experian is committed to performance-related pay at all levels within the organisation and the Committee takes into consideration
the remuneration arrangements throughout Experian when determining those for the executive directors.
The performance measures used in Experian’s incentive plans are all financial, with growth in profit being the key measure used. This measure
was selected as it reflects one of Experian’s key strategic objectives (driving profitable growth). The performance management process, which
is used throughout Experian, assesses executives against both financial and non-financial performance objectives. Performance against these
individual objectives ultimately supports growth in profit and so the Committee believes it is appropriate that this remains the key measure for
the Group’s incentive plans. For the long-term incentive plans, external consultants are used to calculate whether, and the extent to which, the
performance conditions have been met.
The management of the Group’s specific business risks is governed by its risk management framework and is inherent in the way in which
Experian operates. As a result of this operational focus on risk management, the Committee is satisfied that the incentive arrangements do not
encourage excessive risk taking and therefore it is not considered necessary to have a direct link to risk in the performance measures used.
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