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OVERVIEW BUSINESS REVIEW GOVERNANCE
GROUP FINANCIAL
STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS OTHER INFORMATION
Nomination Committee Report and Directors’ Remuneration Report 59
Dear Shareholder
2013 is a year of transition for directors’ remuneration reports. We
have prepared this report before new final Government regulations
on executive remuneration disclosure are issued. However, we have
reflected as much as is practical of the direction and spirit of the
draft regulations in both the content and structure of this report.
There is more information on areas such as how we recognise risk
in our remuneration policy and our interactions with stakeholders,
including data on previous shareholder votes. We have historically
tried to make this report transparent and easy to read and in recent
years already included, for example, the single figure for Executive
Directors’ remuneration and a remuneration policy summary table.
Last year, I used this introduction to set out the key elements of this
report. This year, there is an overview at the start of the report itself.
However, I would like to highlight the following points in particular.
Executive Director remuneration at IHG has evolved during 2012:
• the measures under the Annual Bonus Plan (ABP) have been
changed for Executive Directors in 2013. To distinguish it from
the previous measures, we refer to it as the Annual Performance
Plan (APP). Although not a radical change, the APP does align
annual incentives more closely to the key elements of our
strategic priorities of Brands, People and Delivery; and
• the 2010/12 Long Term Incentive Plan (LTIP), which will vest
in 2013, is the last LTIP using the previous measures. The
2011/13 LTIP, which vests in 2014, is the first LTIP including the
new corporate performance measures of net rooms growth
and RevPAR.
Remuneration for Executive Directors in 2012 reflects another year
of strong results, as shown in the table below:
2012 2011 2010
EBIT +9.8% +25.9% +22.3%
Adjusted EPS* +21.7% +2.5% +9.6%
TSR* +28.2% +29.8% +8.0%
* Annualised three-year changes.
Remuneration has reflected these results with an ABP award just
above target for 2012 and a maximum vesting of the 2010/12 LTIP cycle.
We continually keep all aspects of remuneration under review
and listen to the views of shareholders, Government and other
stakeholders. We believe our current approach to remuneration
is responsible and appropriate as it:
• is structured to drive execution of our business strategy;
• aligns reward with the creation of shareholder value;
• allows the Company to recruit and retain talent in a competitive
global sector;
• incorporates measures and safeguards to ensure that high
rewards only follow strong, balanced results; and
• incentivises the delivery of long-term, sustainable business
growth and shareholder value, rather than the pursuit of
unsustainable short-term results.
The targets for 2013 are stretching and will require a strong corporate
performance to achieve similar levels of total remuneration.
Luke Mayhew
Chairman of the Remuneration Committee
18 February 2013
Directors’ Remuneration Report glossary of terms
ABP Annual Bonus Plan
APP Annual Performance Plan
DB Defined Benefit
DC Defined Contribution
DJGH index Dow Jones Global Hotels index
EBIT Earnings before interest and tax
EPS Earnings per share
ICETUS InterContinental Executive Top-up Scheme
IC Plan InterContinental Hotels UK Pension Plan
LTIP Long Term Incentive Plan
OPR Overall performance rating
RevPAR Revenue per available room
TSR Total Shareholder Return
Contents of Directors’ Remuneration Report
1. The Remuneration Committee
2. Policy: remuneration policy for 2013
A – Key remuneration principles
B – Link with strategy
C – Remuneration policy summary
D – Fixed and variable pay mix
E – Salary and benefits
F – APP
G – LTIP
H – Pensions
I – Executive share options
J – Clawback
3. Implementation: outcomes for 2012
A – Single figure remuneration in 2012
B – Executive shareholding requirement
C – ABP
D – LTIP
E – Pensions
4. Other matters
A – Share capital
B – Performance graph
C – Non-Executive Directors’ pay policy and structure
D – Service contracts
5. Audited information on Directors’ emoluments
Governance
Directors’ Remuneration Report