Unilever 2005 Annual Report Download - page 60

Report of the Directors
Unilever Annual Report and Accounts 2005 57
Report of the Remuneration Committee
(continued)
Annual incentive
The annual incentive awards for 2005 were subject to
achievement of underlying sales growth and trading contribution
targets in combination with individual key strategic business
targets. The Committee measured the results against the targets
set and determined the annual incentive amounts for 2005.
Long-term incentive arrangements
• Global Performance Share Plan
The first award under this new plan was made to Executive
Directors in 2005. The performance period of this award is
1 January 2005 to 31 December 2007 and therefore no award
vested in 2005.
• TSR Plan
Vesting of the conditional award made in 2002 was based on
the TSR performance of Unilever (when ranked against its
defined peer group with competitors) over the three-year
performance period ended 31 December 2004. For this period,
Unilever was ranked 13 in this peer group and therefore no
vesting occurred for this award in March 2005. The conditional
shares awarded in 2002 lapsed.
• Share Matching Plan
The matching shares originally granted in 2000 and 2002 on a
conditional basis vested in 2005, subject to fulfilment of the
retention conditions.
• Executive Share Options
The grants of executive share options made in 2002 became
exercisable as from 2005. As the size of the 2002 grants was
based on Unilever’s EPS performance, the options at vesting
were subject to no further conditions.
Pensions
In response to changes in the pension tax regimes in both the
Netherlands and the UK:
• The projected value of the Netherlands-based Executive
Director’s final benefit has been converted from a reasonable
expectation to a vested benefit, consistent with the treatment
adopted for other Netherlands senior executives with similar
expectations; and
• UK-based Executive Directors and other potentially affected
employees have been informed that the company will offer
them the option of capping their benefit provided by the
Unilever UK Pension Fund at their personal Lifetime Allowance
and receiving the balance of their benefit directly from the
company.
For Executive Directors appointed since 2005, the annual incentive
no longer forms part of pensionable salary.
Arrangements for former Executive Directors in 2005
At the AGMs in May 2005, Antony Burgmans stepped down as
Executive Director of the Boards of Unilever NV and PLC and
was appointed in a new role as Chairman of both Boards.
In line with the provisions of his contract, Mr Burgmans is
receiving salary and benefits until June 2006. From June 2006
he will start to receive a Chairmanship fee. While he has received
a pro-rated annual incentive payment for his service to the 2005
AGMs, he has no further annual incentive entitlements. Equally,
he received no long-term incentive awards after the AGMs in May
2005 and will receive no further new awards. His existing long-
term incentives are subject to relevant provisions in the plan rules.
Mr Burgmans’ retirement date will be June 2006, then being 59,
and from this date he will receive a full pension as if he had
retired at 60.
Clive Butler, Keki Dadiseth and André Van Heemstra stepped
down as Executive Directors at the AGMs in May 2005. Each has
received a pro-rated annual incentive payment for service to the
2005 AGMs. None received any new long-term incentive awards
for the period after May 2005 and their existing long-term
incentives are subject to relevant provisions in the plan rules. The
company is respecting its contractual obligations and has provided
for each director to be paid their base salary and benefits for the
maximum of one year. Clive Butler and Keki Dadiseth have
received their payments as lump sums. André Van Heemstra is
receiving his payments on a monthly basis. They receive their full
pension benefits at 60 as if they had retired on this date.
Non-Executive Directors
The Non-Executive Directors receive fees and (where appropriate)
an attendance allowance from both NV and PLC. No other
remuneration is given in respect of their Non-Executive duties
from either NV or PLC, such as annual incentives, share-based
incentives or pension benefits.
The level of their fees reflects their commitment and contribution
to the companies. The levels were last reviewed in 2004 against
fees payable by comparable companies in the UK and continental
Europe, to ensure Unilever’s levels reflected current market
practice and their increased responsibilities as Directors. The
current fee levels are set out below:
Non-Executive Role Fees payable by NV Fees payable by PLC
Senior Independent Director €48 000 £36 000
Committee Chairman €38 000 £29 000
Other Non-Executive Directors €32 000 £24 000