Holiday Inn 2003 Annual Report Download - page 21

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This Report has been prepared by the Remuneration
Committee and has been approved by the Board. It complies
with Schedule 7A to the Companies Act 1985, which incorporates
the Directors’ Remuneration Report Regulations 2002, and
also with the Combined Code. Although compliance with the
recently revised Code is not yet required, this Report, which
will be put to shareholders for approval at the forthcoming
Annual General Meeting, has regard to the changes, as far
as possible.
1 THE REMUNERATION COMMITTEE
Since listing, the Committee has comprised the following
non-executive directors:
David Prosser – Chairman
Ralph Kugler Sir Howard Stringer
Robert C Larson+David Webster
Reflecting the revised Code requirements, David Webster
stepped down from the Committee upon his appointment as
Chairman of the Board on 1 January 2004. No member of the
Committee has any personal financial interest, other than as
a shareholder, in the matters to be decided by the Committee.
The Committee advises the Board on overall remuneration
policy. The Committee also determines, on behalf of the
Board, and with the benefit of advice from external consultants
and members of the Human Resources department, the
remuneration packages of the executive directors and other
members of the Executive Committee.
Those who provided material advice or services to the
Committee during the period since its formation were:
Jim Larson+– Executive Vice President Human Resources
David House – Senior Vice President & Head of Reward
Sir Ian Prosser – Chairman
Richard North – Chief Executive
Linklaters
Towers Perrin Inc.
+ No family relationship between Robert C Larson and Jim Larson.
The Executive Vice President Human Resources has direct
access to the Chairman of the Committee. Messrs J Larson
and House, who are Human Resource professionals and
employees, have advised the Committee on all aspects of
the Group’s reward policies and structures. Towers Perrin Inc.,
an external consultancy, advised the Committee on reward
structures and levels applicable in the markets relevant to the
Group. Towers Perrin Inc. did not provide any other services
to the Group. Linklaters provided other legal services to
the Group.
Messrs J Larson and House, Linklaters and Towers Perrin Inc.
were originally appointed by the Group.
2 POLICY ON REMUNERATION
OF NON-EXECUTIVE DIRECTORS
Non-executive directors, including the Chairman, have letters of
appointment. Their appointment and subsequent reappointment
is subject to election and re-election by shareholders.
Non-executive directors are paid a fee which is approved by
the Board on the recommendation of the executive directors,
having taken account of the fees paid in other companies of
a similar size, and the skills and experience of the individual.
Remuneration levels were last reviewed in 2002. In view of the
significant increased demands on non-executive directors as
a result of new corporate governance requirements, a review
of non-executive directors’ remuneration is currently being
undertaken.
3 POLICY ON REMUNERATION OF EXECUTIVE DIRECTORS
AND SENIOR EXECUTIVES
The following policy has applied since listing and will apply
in future years, subject to ongoing review.
3.1 TOTAL LEVEL OF REMUNERATION
The Committee aims to ensure that remuneration packages
are offered which:
• attract high quality executives in an environment where
compensation levels are based on global market practice;
• provide appropriate retention strength against loss of key
executives;
• drive aligned focus and attention to key business initiatives
and appropriately reward their achievement;
• support equitable treatment between members of the same
executive team; and
• facilitate global assignments and relocation.
The Committee is aware that, as a UK listed company, IHG PLC’s
incentive arrangements may be expected to recognise UK
investor guidelines. However, given the global nature of the
Hotels business, an appropriate balance needs to be drawn
in the design of relevant remuneration packages between
domestic and international expectations.
3.2 THE MAIN COMPONENTS
The Group operates performance-related reward policies.
These are designed to provide the appropriate balance
between fixed remuneration and variable ‘risk’ reward, which is
linked to the performance of both the Group and the individual.
Group performance-related measures are chosen carefully
to ensure a strong link between reward and true underlying
financial performance, and emphasis is placed on particular
areas requiring executive focus.
Individual performance is measured through an assessment
of comprehensive business unit deliverables, demonstrated
leadership behaviours, modelling the Group values and the
REMUNERATION REPORT