National Grid 2015 Annual Report Download - page 66

Corporate Governance
Directors’ Remuneration Report continued
Annual
Performance Plan
Purpose and link to strategy: to incentivise and reward the achievement of annual nancial
andstrategic business targets and the delivery of annual individual objectives.
Operation Maximum levels
Performance metrics, weighting
and time period applicable
Performance metrics and targets are agreed at the start of
each financial year. Performance metrics are aligned with
strategic business priorities. Targets are set with reference
to the budget. Awards are paid in June.
For APP awards made in 2013/14, 50% of any award was
deferred into shares in the Deferred Share Plan (DSP). The
DSP has no performance conditions and vests after three
years, subject to continued employment. These shares are
subject to forfeiture for leavers in certain circumstances.
The DSP has been discontinued for APP awards made in
respect of years from 2014/15. Instead 50% of awards are
paid in shares, which (after any sales to pay tax) must be
retained until the shareholding requirement is met, and in
any event for two years after receipt.
Awards are subject to clawback and malus provisions.
The maximum award is 125%
ofsalary.
A significant majority of the APP
isbased on performance against
corporate financial measures,
withthe remainder based on
performance against individual
objectives. Individual objectives
arerole specific.
The Committee may use its
discretion to set measures that
itconsiders appropriate in each
financial year and reduce the
amount payable, taking account
ofsignificant safety or customer
service standard incidents,
environmental and governance
issues.
The payout levels at threshold,
target and stretch performance
levels are 0%, 50% and 100%
respectively.
Long Term
Performance Plan
Purpose and link to strategy: to drive long-term performance, aligning Executive Director incentives
to key strategic objectives and shareholder interests.
Operation Maximum levels
Performance metrics, weighting
and time period applicable
Awards of shares may be granted each year, with vesting
subject to long-term performance conditions.
The performance metrics have been chosen as the
Committee believes they reflect the creation of long-term
value within the business. Targets are set each year with
reference to the business plan.
Awards are subject to clawback and malus provisions.
Notwithstanding the level of award achieved against the
performance conditions, the Committee may use its
discretion to reduce the amount vesting, and in particular
will take account of compliance with the dividend policy.
The maximum award for the CEO
is 350% of salary and it is 300%
of salary for the other Executive
Directors.
For awards made between
2011and 2013, the maximum
award for the CEO was 225%
ofsalary and 200% for the other
Executive Directors.
For awards between 2011 and
2013 the performance measures
and weightings were:
• adjusted EPS (50%) measured
over three years;
• TSR relative to the FTSE 100
(25%) measured over three
years; and
• UK or US RoE relative to allowed
regulatory returns (25%)
measured over four years.
From 2014, the performance
measures are:
• value growth and Group RoE
(forthe CEO and Finance
Director); and
• value growth, Group RoE and
UK or US RoE (for the UK and
US Executive Directors
respectively).
LTPP table continued opposite
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