National Grid 2016 Annual Report Download - page 71

Key
LTPP – share appreciation
and dividend equivalents
LTPP – face value
APP
Fixed
32%
27%
13%
Andrew
Boneld
Steve
Holliday
Dean
Seavers
John
Pettigrew
28%
35%
24%
13%
28%
42%
32%
9%
17%
61%
39%
salary was not increased in 2015. John Pettigrew’s salary
was increased by 7% to move his salary closer towards
market as Executive Director, UK in 2015. In line with
regional managerial pay budgets in 2016, salary
increases in 2016 are 2% for Andrew Bonfield and
2.5% for Dean Seavers.
Impact of the expected sale of a majority
interest in the UK Gas Distribution business
Ahead of the expected sale of a majority interest in the
Gas Distribution business in 2016/17, the Committee is
considering the impact on inflight LTPP and APP awards,
and will make appropriate adjustments to relevant metrics
within both the parameters and the spirit of the remuneration
policy following any such sale. We will report this to you
in next year’s remuneration report.
Conclusion
As I reported last year, remuneration continues to be
in a transitional phase since the APP maximum has been
lowered to 125% of salary from 150% while the LTPP
represents previous bases of measurements, timescales
and policy limits. This transition will continue for a further
year when the final element of the 2013 LTPP vests in 2017
and the 2014 LTPP (the first awarded under the current
remuneration policy) matures.
As with last year, we are not seeking any changes to the
current remuneration policy, which will expire at the 2017
AGM. The Committee has begun to address whether the
current policy should be proposed without any material
changes or whether some modification may be required
to reflect changes in the market and the evolution of the
Company. I will report on the outcome of this review next
year when we will seek your authority for a new three-year
policy mandate.
Regarding the 2015/16 year, the Committee believes
that it has correctly implemented the approved policy and
that the remuneration earned last year by senior executives
properly reflects the performance of the Company and the
value generated for shareholders. Accordingly, I commend
this remuneration report to you on behalf of the Committee,
and ask for your support for the resolution to approve the
report at the AGM.
Jonathan Dawson
Committee chairman
following the results for the year ending March 2017. I
reported last year that, at the end of the first performance
year, Group RoE and Value Growth were on target in
relation to the parameters set by the Committee, with UK
RoE around stretch and US RoE below threshold. For this
year the position is broadly comparable in respect of both
the 2014 and 2015 LTPP grants. Taking account of
performance to date of the 2014 and 2015 LTPP awards,
the Committee has decided to make no changes to the
performance metrics and targets for the 2016 LTPP award.
Executive Director shareholdings
Two years ago, we introduced high levels of shareholding
requirements for our Executive Directors, in order to further
align them to our shareholders. At 31 March 2016, both
Andrew Bonfield and Steve Holliday have exceeded these
shareholding requirements. As John Pettigrew and Dean
Seavers were appointed to the Board relatively recently,
neither of them has yet met their shareholding requirements
and will therefore not be given permission to sell shares
until they have done so, other than to pay tax on receipt
of the vested shares or in exceptional circumstances.
Changes to the Board
Following the announcement of Steve Holliday’s retirement
as CEO, John Pettigrew was promoted to CEO with
effect from 1 April 2016. John’s salary has been set at
£825,000. His APP opportunity remains at 125% of salary,
and his LTPP opportunity has increased to 350% of salary
from 2016 onwards. Steve stepped down as CEO on
31 March 2016 but will remain on the Board until 22 July
to facilitate a successful transition. In March, we announced
that Nicola Shaw will join the Board as our new UK
Executive Director on 1 July 2016, succeeding John.
Nicola’s salary has been set at £450,000. Her APP
opportunity is 125% of salary and her LTPP opportunity
is 300% of salary. Nicola will be eligible to receive a 2016
LTPP award. In addition, she will receive a cash payment
of up to £485,000 to compensate her for incentive cash
awards that were due to vest in June 2016 that she has
foregone on leaving her former employer. Subject to their
individual performance, the Committee intends to increase
each of John’s and Nicola’s salaries towards market level
by way of future phased increases from 2017 in excess of
those awarded to other Company employees. All of these
arrangements are in line with the approved policy on
recruitment remuneration and have already
been announced.
Annual salary review
Steve Holliday’s and Andrew Bonfield’s annual salaries
were increased by approximately 1% in 2015. In line with
the US managerial pay budget, Dean Seavers’ annual
Performance
A comparison of the total 2015/16 single total figure of remuneration to the maximum remuneration if variable pay
had vested in full is set out below.
At a glance
Total remuneration
Executive Director
Maximum
remuneration
£’000
2015/16 single figure
remuneration
£’000
Andrew Bonfield 4,077 3,228
Steve Holliday 6,478 5,151
John Pettigrew 1,815 1,569
Dean Seavers 1,883 1,684
69National Grid Annual Report and Accounts 2015/16
Corporate Governance
At a glance