Holiday Inn 2007 Annual Report Download - page 38

Remuneration report
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 applicable for the 2007 financial year. This report
will be put to shareholders for approval at the forthcoming Annual
General Meeting.
1 The Remuneration Committee
During the year, the Committee comprised the following
Non-Executive Directors:
Sir David Prosser – Chairman
David Kappler
Robert C Larson
Jonathan Linen
Ying Yeh (from 1 December 2007)
Sir David Prosser will retire from the Board and as Chairman
of the Committee on 31 May 2008. He will be succeeded as
Chairman by Ralph Kugler, who previously served on the
Committee from 2003 until May 2005.
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 met six times in the year. All
meetings were fully attended by Committee members.
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 of the Executive
Directors and other members of the Executive Committee.
During 2007, with the assistance of PricewaterhouseCoopers LLP
(PWC), the Committee also undertook a review of executive
remuneration arrangements and, as a consequence of this,
made some changes which are described later in this report.
Those who provided material advice or services to the Committee
during the year were:
David Webster – Chairman
Andrew Cosslett – Chief Executive
Tracy Robbins – Executive Vice President, Global Human Resources
Lori Gaytan – Senior Vice President, Global Human Resources
Linklaters
Towers Perrin
PricewaterhouseCoopers LLP
The Executive Vice President, Global Human Resources has
direct access to the Chairman of the Committee. Ms Robbins
and Ms Gaytan, who are human resource professionals and
employees, advised the Committee on all aspects of the Group’s
reward policies and structures. PWC advised the Committee on
remuneration issues, having been formally appointed by the
Committee in May 2007. PWC also provided additional services
to IHG with regard to employer and employee tax compliance
processes for expatriate employees and on tax withholding
obligations in relation to employee share plans. Towers Perrin,
an external consultancy, also advised the Committee on reward
structures and levels applicable in the markets relevant to the
Group. Towers Perrin did not provide any other services to the
Group. Linklaters provided other legal services to the Group.
Ms Robbins and Ms Gaytan, Linklaters and Towers Perrin were
originally appointed by the Group. PWC were appointed by the
Committee. The terms of engagement for PWC and Towers Perrin
are available from the Company Secretary’s office on request.
2 Policy on remuneration of Executive Directors
and senior executives
The following policy has applied throughout the year and, except
where stated, will apply in future years, subject to regular review.
2.1 Total level of remuneration
The Committee aims to ensure that overall remuneration is
offered which:
• attracts high-quality executives in an environment where
compensation levels are based on global market practice;
• provides appropriate retention strength against loss
of key executives;
• drives aligned focus and attention to key business initiatives
and appropriately rewards their achievement;
• supports equitable treatment between members of the
same executive team; and
• facilitates global assignments and relocation.
The Committee is aware that, as its primary listing is on the
London Stock Exchange, IHG’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 between
domestic and international expectations.
2.2 Key developments
During 2007, the Committee undertook a major review of the
executive remuneration structure. The purpose of the review
was to ensure that executive remuneration arrangements are
simple, relevant to participants and easily understood.
The review resulted in two main amendments to the executive
incentives:
• restructuring of the Short Term Incentive Plan and the
Short Term Deferred Incentive Plan into a single plan,
renamed the Annual Bonus Plan; and
• a change to the Total Shareholder Return (TSR) performance
measure linked to the Performance Restricted Share Plan,
which has been renamed the Long Term Incentive Plan.
Further details of the changes are included in the relevant
sections below.
The Committee believes that the changes will enhance the
effectiveness of the arrangements in support of the aims of
attracting, retaining, and motivating high-quality executives in
the highly competitive global environment in which the Company
operates. The greater simplification introduced will make overall
reward more transparent and motivational to executives. The
changes to the performance measures are intended to generate
a more robust alignment between reward and performance.
36 IHG Annual Report and Financial Statements 2007