Holiday Inn 2013 Annual Report Download - page 85

Pensions
Enhanced Early Retirement Facility (EERF)
Under the EERF, executive participants of the defined benefit
section of the IC Plan have an option, with the Company’s
agreement, to retire without reduction to their pension if they are
within five years of their normal retirement date. Approximately 42
executives are eligible to participate in this facility.
As set out in the Remuneration Committee Chairman’s statement,
this facility will be phased out commencing in 2014, with the effect
that any participant currently aged 50 or below would only take an
unreduced pension from age 60, the contractual retirement age.
For those currently over 50, an unreduced pension will be available
at a point between age 55 and age 60, depending on how close the
participant is to age 55 at the time the phasing out commences in
2014. As a result of the phasing out of the EERF, Richard Solomons
could retire, with no reduction in his pension, from approximately
age 58 and no earlier.
This provision only applies on the consent of the Company.
InterContinental Executive Top-Up Scheme (ICETUS)
In 2014, the Company is looking to reduce the risks and volatility
from the remaining unfunded ICETUS pension arrangements by
offering members anopportunity to cash-out the ICETUS element
of their pension onabasis that is fair and reasonable, both to them
and to shareholders. Currently, 11 employed UK executives
participate inthe ICETUS arrangement.
This is part of the process of redrawing IHG’s pension
arrangements and minimising the future risks to the Company.
Approach to recruitment remuneration
The remuneration of any new Executive Director will be
determined in accordance with the Directors’ Remuneration Policy
on pages 78 to 86 and the elements that would be considered by the
Company for inclusion are:
• salary and benefits, including defined contribution
pensionparticipation;
• participation in the APP with 50% cash and 50% IHG deferred
share elements:
– pro-rated for the year of recruitment to reflect
theproportion of the year remaining after the date
of commencement ofemployment; and
– if commencement date is after 1 October in the year,
noaward would normally be made for that year.
• participation in the LTIP:
– pro-rated awards would be made in relation to LTIP cycles
outstanding at the time of recruitment; but
– no pro-rated award would be made for an LTIP cycle that has
less than nine months to run at the date of commencement
of employment.
In addition, the Committee may, in its discretion, compensate
a newly recruited Executive Director for incentives forgone
from a previous employment as a result of their resignation.
The Committee would seek validation of the value of any potential
incentives forgone.
Awards made by way of compensation for incentives forgone
would be made on a comparable basis, taking account of
performance achieved (or likely to be achieved), the proportion
of the performance period remaining and the form of the award.
Compensation would, as far as possible, be in the form of IHG
LTIP or deferred share awards, in order to immediately align
a new Executive Director with IHG performance.
The maximum annual level of variable remuneration that may be
granted to a newly-recruited Executive Director would be in line
with that of the existing Executive Directors:
• APP award: 200% of salary, of which 50% of any award will be
paid in cash and 50% in the form of IHG shares deferred for
three years; and
• LTIP award: 205% of salary for a full LTIP cycle commencing
after appointment, plus pro-rated awards in relation to LTIP
cycles outstanding at the time of recruitment (up to a further
205% of salary).
This excludes any remuneration that constitutes compensation
for incentives forgone and any relocation and expatriate or
international assignment costs.
Governance 83
OVERVIEW STRATEGIC REPORT GOVERNANCE
GROUP FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION