National Grid 2014 Annual Report Download - page 28

How executive
remuneration aligns
toCompany strategy
The Remuneration Committee determines
remuneration policy and practices through which
weaim to promote the success of the Company
byattracting, motivating and retaining high-calibre
Executive Directors and other senior employees to
deliver value for our shareholders, customers and
the communities in which we operate.
Our strategy
To be a recognised leader in the development and
operation of safe, reliable and sustainable energy
infrastructure, to meet the needs of our customers
and communities and to generate value for
ourinvestors.
Our strategic objectives
Deliver operational excellence
Engage our people
Stimulate innovation
Engage externally
Embed sustainability
Drive growth
The Remuneration Committee aligns the
remuneration policy to our Company strategy and
main business objectives. Performance-based
incentives are earned through achieving demanding
targets for short-term business and individual
performance, as well as creating long-term value for
our shareholders, customers and the communities
in which we operate.
Remuneration Committee review
ofremuneration
During the year, the Remuneration Committee
undertook a detailed review of the remuneration
arrangements for Executive Directors, with the aim
of achieving further alignment between executive
reward and long-term shareholder value.
As a result of this review, the Committee is proposing
some significant changes to the arrangements for
the 2014/15 financial year, and these are set out in
detail on pages 58 to 73. Shareholders are being
asked to approve these changes at the AGM on
28July 2014.
The Committee believes that the changes will
furtherenhance the long-term alignment between
executive remuneration and the delivery of the
corporate strategy.
The information set out below describes current
rather than future policy.
Alignment to strategy
Annual Performance Plan (APP)
Our APP aims to incentivise and reward the
achievement of annual financial and strategic business
measures, and the delivery of annual individual
objectives. Performance metrics, including corporate
financial measures and individual objectives, are
agreed at the start of each performance year and
are aligned with the strategic business priorities for
that year.
The table below shows the financial measures and
their relative weightings that were included within the
APP for the Executive Directors for 2013/14:
Andrew
Bonfield
and
Steve
Holliday
Tom
King
Nick
Winser
Adjusted EPS 24% 24% 24%
Cash flow (Group or regional) 38% 28% 43%
UK RoE 14% n/a 33%
US RoE 14% 24% n/a
US capital plan delivery 10% 24% n/a
Financial measures together represent 70% of
t h e A P P.
Individual performance objectives in the APP
reflect30% of the plan and are defined in terms
oftarget and stretch performance requirements.
Theperformance objectives change each year,
depending upon business priorities. Examples
ofindividual objectives include those relating to
safety, stakeholder relations, employee engagement
and capability, and the development of Group and
financial strategy.
In order to provide balance for all our stakeholders,
at the end of the year the Remuneration Committee
has discretion to reduce APP awards to take
account of any safety, customer, service-related,
environmental or governance issues that may
haveoccurred.
Our vision
and strategy
pages 14 – 15
Remuneration
Report
pages 58 – 73
26 National Grid Annual Report and Accounts 2013/14