Holiday Inn 2008 Annual Report Download - page 42

This report has been prepared by the Remuneration Committee
and has been approved by the Board. It complies with the
Companies Acts and related regulations. 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 until 31 May 2008
Ralph Kugler – Chairman from 1 June 2008
David Kappler
Robert C Larson – retired on 31 December 2008
Jonathan Linen
Ying Yeh
Sir David Prosser retired from the Board and as Chairman of
the Committee on 31 May 2008. He was succeeded as Chairman
by Ralph Kugler, who previously served on the Committee from
2003 until May 2005.
Robert C Larson retired from the Board and the Committee
on 31 December 2008 and has not been replaced.
No member of the Committee has any personal financial
interest in the matters to be decided by the Committee, other
than as a shareholder. The Committee met four times in the
year. Robert C Larson and Ying Yeh were unable to attend one
meeting each.
The Committee’s remit is set out in its terms of reference, which
were last reviewed by the Board in November 2008. The Committee
agrees, on behalf of the Board, all aspects of the remuneration of
the Executive Directors and the Executive Committee members,
and agrees the strategy, direction and policy for the remuneration
of other senior executives who have a significant influence over
the Company’s ability to meet its strategic objectives.
Throughout the year, the Committee was assisted in its work
by PricewaterhouseCoopers LLP (PwC), as independent
consultants appointed by the Committee. PwC also support
management in developing and implementing remuneration
proposals. PwC also provided additional services to IHG, including
advice on employer and employee tax compliance processes for
expatriate employees and on tax withholding obligations in relation
to employee share plans. The following advisers were retained on
behalf of the Company and provide information to the Committee
on relevant matters:
• Towers Perrin provided advice on reward structures and levels
applicable in the markets relevant to the Group. Towers Perrin
did not provide any other services to the Group during 2008; and
• Linklaters LLP provided other legal services to the Group
throughout 2008.
The terms of engagement for PwC and Towers Perrin are available
from the Company Secretary’s office on request.
Committee meetings are regularly attended by the following
individuals who provide input to the Committee on remuneration
proposals:
David Webster – Chairman of the Board
Andrew Cosslett – Chief Executive
Tracy Robbins – Executive Vice President, Global Human Resources
Lori Gaytan – Senior Vice President, Global Human Resources
None of the above is in attendance when his/her own remuneration
is being discussed.
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 periodic review.
2.1 Total level of remuneration
IHG’s overall remuneration is intended to:
•attract and retain high-quality executives in an environment
where compensation levels are based on global market practice;
• drive aligned focus and reward the achievement of key strategic
objectives;
• support equitable treatment between members of the same
executive team; and
• facilitate global assignments and relocation.
The Company’s strategy is one of achieving competitive
outperformance. This is delivered through an ‘asset-light’
operating model, and a focus on core markets. The remuneration
strategy seeks to support this by providing upper quartile rewards
for achievement of challenging targets, set at levels to deliver
competitive advantage. The Committee believes that it is important
to reward management for targets achieved, provided those targets
are stretching and aligned with shareholders’ interests.
2.2 Key developments
2008
2008 was a good year for IHG, despite the tough market conditions.
Growth in operating profit from continuing operations before
exceptional items was 13% and reflected the Company’s strong
competitive performance, combining system growth, an increase
in relative revenue per available room (RevPAR) over the year
despite worsening economic conditions in the second half, and
good control of costs.
The Company’s earnings before interest and tax (EBIT)
performance resulted in a bonus outcome of 94.3% of the target
amount. Rooms growth of 34,757 net additions resulted in an
outcome of 99.1% of target on this measure. As a result of this,
IHG exceeded the three-year target of adding 50,000-60,000
net rooms by the end of 2008.
2009
The strategy of the Company remains unchanged. 2009 is expected
to be a highly challenging year in light of the global economic
climate. Consequently, there will be a stronger focus on cost
control in IHG, and on preserving profitability in the face of
industry-wide projected declines in RevPAR.
40 IHG Annual Report and Financial Statements 2008
Remuneration report