Unilever 2006 Annual Report Download - page 53

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50 Unilever Annual Report and Accounts 2006
Report of the Directors (continued)
Report of the Remuneration Committee (continued)
Asignificant proportion of the Executive Directors’ total reward
is linked to a number of key measures of Group performance
to create alignment with the strategy and business priorities.
Depending on the level of performance the variable component
could vary between 0% and around 70% of the total reward
package (excluding pensions).
Unilever’s reward policy is benchmarked regularly against
arrangements of other global companies based in Europe. This
ensures that Executive Directors’ reward levels remain competitive.
An internal comparison is made with the reward arrangements for
other senior executives within Unilever to support consistent
application of Unilever’sexecutive reward policies.
In setting targets for the performance measures, the Committee
is guided by what needs to happen to drive underlying
performance. This is reflected in both the short-term and
long-term performance targets.
Unilever reward policy table 2006
Indicative levels at face
Element Payment vehicle value as % of base pay Plan objectives/Key drivers Performance measures
Base salary Cash Market competitive Attraction and retention of Individual performance
key executives
Annual incentive Cash (75%) Executive Director: 60% Delivery of trading Trading contribution
on target contribution (Unilever’s (Executive Director: 40%,
Shares (25%) (range of 0% – 100%) primary internal measure of Group Chief Executive: 50%)
economic value added –
Group Chief Executive: see page 51)and top-line Underlying sales growth
90% on target growth targets (Executive Director: 40%,
(range of 0% – 150%) Group Chief Executive: 50%)
Individual responsibility for
key Unilever business Individual contribution to
objectives Unilever business strategy
(Executive Director: 20%,
Group Chief Executive: 50%)
Global Shares Grant level: around 25% Ungeared Free Cash Flow Ungeared Free Cash Flow (50%)
Performance as the basic driver of Unilever
Share Plan Vesting level: 0% – 200% shareholder returns Underlying sales growth
of grant (50%)
Top-line growth as
essential to Unilever’s
long-term value creation
TSR Long-Term Shares Grant level: around 60% Shareholder return at upper Relative total shareholder
Incentive Plan half of peer group with return
Vesting level: 0% – 200% 20 other companies
of grant
ShareMatching Shares 25% of annual Alignment with shareholders’
Plan incentive earned in interests
returnfor the deferral
of 25% of bonus earned
Short-term (one year)Long-term (three years)