Holiday Inn 2006 Annual Report Download - page 36

3.5 Contracts of service
a) Policy
The Remuneration Committee’s policy is for Executive Directors
to have rolling contracts with a notice period of 12 months. Andrew
Cosslett, Richard Hartman, Stevan Porter and Richard Solomons
have service agreements with a notice period of 12 months. All
new appointments are intended to have 12-month notice periods.
However, on occasion, to complete an external recruitment
successfully, a longer initial period reducing to 12 months may
be used, following guidance in the Combined Code.
No provisions for compensation for termination following change
of control, or for liquidated damages of any kind, are included in the
current Directors’ contracts. In the event of any early termination
of an Executive Director’s contract, the policy is to seek to minimise
any liability.
David Webster’s appointment as Non-Executive Chairman, effective
from 1 January 2004, is subject to six months’ notice. All other
Non-Executive Directors’ appointments are subject to three months’
notice. The dates of appointment of the other Non-Executive
Directors are set out on page 27.
b) Directors’ contracts
Contract Unexpired term/
Director effective date1notice period
Andrew Cosslett 03.02.05 12 months
Richard Hartman 15.04.03 7 months2
Stevan Porter 15.04.03 12 months
Richard Solomons 15.04.03 12 months
1 Each of the Executive Directors signed a letter of appointment, effective
from completion of the June 2005 capital reorganisation of the Group on the
same terms as their original service agreements.
2 Richard Hartman is due to retire in September 2007. Having given contractual
notice, his unexpired term of office as at the date of this report is seven months.
3.6 Policy regarding pensions
Andrew Cosslett, Richard Solomons and other senior UK-based
employees participate on the same basis in the executive section
of the InterContinental Hotels UK Pension Plan and, if appropriate,
the InterContinental Executive Top-Up Scheme. The latter is an
unfunded arrangement, but with appropriate security provided via
a fixed charge on a hotel asset. Currently, pensions benefits are
provided from both the registered InterContinental Hotels UK
Pension Plan and the unfunded InterContinental Executive Top-Up
Scheme.
In response to the new pension regime resulting from the Finance
Act 2004, from 2006 these plans were amended to continue to
provide, tax efficiently, similar benefits in total, but with a different
split of benefits between the two plans. As an alternative to these
arrangements, a cash allowance may be taken.
Stevan Porter and senior US-based executives participate in
US retirement benefits plans.
With effect from 30 January 2006, Richard Hartman ceased to be an
active member of the InterContinental Hotels UK Pension Plan and
InterContinental Executive Top-Up Scheme, and from that date
participates in the InterContinental Hotels Group International
Savings and Retirement Plan. Executives in other countries
participate in these plans or local plans.
Remuneration report
34 IHG Annual report and financial statements 2006
3.4 Performance graph
Throughout the year, the Company has been a member of the FTSE 100 index. Accordingly, the Committee believes that this is the
most appropriate market index against which to test the Company’s performance. The graph below measures the TSR performance of
Six Continents PLC up to Separation, and subsequently the performance of InterContinental Hotels Group PLC, assuming dividends
are reinvested, compared with the TSR performance achieved by the FTSE 100 companies.
400
0
Source: Datastream
IHG shares listed 15.4.03
InterContinental Hotels Group PLC – Total Shareholder Return Index
(Six Continents PLC up to 14 April 2003)
FTSE 100 – Total Shareholder Return Index
350
300
250
200
150
100
50
Total Shareholder Return: InterContinental Hotels Group PLC v FTSE 100
Oct 2001 Oct 2002 Jan 2004 Jan 2005 Jan 2007Jan 2006
(Mean average index for the month – October 2001=100)