Holiday Inn 2012 Annual Report Download - page 62

60 IHG Annual Report and Financial Statements 2012
Overview
Report structure
In June 2012, the UK Government Department for Business, Innovation & Skills (BIS) published draft regulations setting out the proposed
content of a new two-part Directors’ Remuneration Report to consist of:
• a forward-looking remuneration policy report that sets out the parameters for directors’ pay, on which shareholders will have
a binding vote; and
• an implementation report that explains how the agreed policy has been implemented and the resulting payments, on which
shareholders will have an advisory vote.
Although the new regulations do not apply to IHG’s Directors’ Remuneration Report until 2013, we have reflected as much as is practical
of the direction and spirit of the draft BIS regulations, including the proposed structure, addressing firstly remuneration policy for 2013,
and then the 2012 outcomes.
IHG, and a number of other FTSE 100 companies, worked with the Financial Reporting Council’s Financial Reporting Lab in making
recommendations on the composition of the single figure disclosure that will be required under the new regulations.
This report has been prepared by the Remuneration Committee and has been approved by the Board. It complies with the Companies Act 2006
and related regulations. It will be put to shareholders for approval at the 2013 Annual General Meeting (AGM).
Summary of IHG’s Executive Director remuneration policy for 2013
Fixed remuneration Variable remuneration
Salary
Pension
Benefits
Annual incentive – APP
50% cash and 50% shares deferred for three years
Linked to individual and company achievement using
performance measures relating to:
– Brands;
– People; and
– Delivery.
Long-term incentive – LTIP
Share awards vest after three years if performance
conditions are met:
– 25% relative net rooms growth;
– 25% relative RevPAR growth; and
– 50% relative TSR v the DJGH index.
Minimum shareholding requirement
Approach for members of the Executive Committee
Members of the Executive Committee are rewarded on the same
basis as the Executive Directors, participating in the same incentive
plans and with a similar split between fixed and variable
remuneration, and between cash and shares.
Key executive remuneration principles
Executive remuneration should drive delivery of strategic objectives by:
• attracting and retaining high-quality executives in an
environment where compensation is based on global market
practice;
• aligning rewards for executives with the achievement of
business performance targets, strategic objectives and returns
to shareholders;
• supporting equitable treatment between members of the same
senior executive team; and
• facilitating critical global assignments and relocations.
Factors taken into account in determining pay
In making decisions in relation to 2012 pay, the Committee took
into account:
• the achievement of corporate performance targets under the
ABP and LTIP (see pages 71 and 72);
• an appropriate mix of fixed and variable pay, with an emphasis
on driving performance through approximately two-thirds of
total pay being variable (see page 66);
• pay and conditions elsewhere in the Group, including the
average budgeted salary increase for the employee population
in the table below; and
• the corporate performance indicators in the table below.
Key changes in 2012
Changes to the annual incentive for senior executives, including the
Executive Directors, were approved by the Committee for 2013, with
the objective of more closely aligning reward to the delivery of our
strategic objectives of Brands, People and Delivery.
Corporate performance indicators 2012 2011 2010
Operating profit before exceptional items +9.8%
$614m†
+25.9%
$559mt
+22.3%
$444m
Full-year dividend (excluding any special dividends and capital returns) 64 cents
(41.2p) per share
55 cents
(34.5p) per share
48 cents
(30.0p) per share
Three-year total TSR (annualised) +28.2% +29.8% +8.0%
Three-year adjusted EPS (annualised) +21.7% +2.5% +9.6%
Budgeted salary increase (US and UK corporate employees) 3.0% 3.0% 2.9%
Governance: Directors’ Remuneration Report continued
†
Includes one significant liquidated damages receipt in 2012 of $3m in The Americas.
t
Includes two significant liquidated damages receipts in 2011; $10m in The Americas and $6m in Asia, Middle East and Africa.