Vodafone 1999 Annual Report Download - page 40

Remuneration Report of the Board
Remuneration Report of the Board
Composition of the Remuneration Committee
The Remuneration Committee of the Board is chaired by Lord MacLaurin and consists only of non-executive directors of the
Company.
Lord MacLaurin is assisted by Professor Sir Alec Broers, Penny Hughes and Sir David Scholey.
Remuneration policy
In determining the Company’s broad policy for executive remuneration, and in particular the remuneration package for each
of the executive directors, the Committee aims to provide remuneration which is competitive and appropriate in the local
markets in which the Company operates and which ensures the right rewards are given to motivate, incentivise and retain
the senior executives of the Group.
The Company requires to employ people of a calibre consistent with those at the leading edge of the telecommunications
industry. The talent needed to maximise returns for shareholders in the international business of telecommunications is in
relatively short supply and the future performance of the Company will depend upon its ability to incentivise all its
employees and to deliver remuneration packages which are competitive in value terms when measured against the best in
the industry.
When appropriate, the Committee invites the views of the Chief Executive and the Group Director of Human Resources and
commissions reports from expert remuneration consultants. The results of market surveys and other analyses from external
sources are also made available to the Committee, which has resolved to review its policy with the Board on a regular basis
to ensure it continues to meet the Company’s requirements and to comply with best practice.
Salaries and benefits
The remuneration package of the executive directors is made up of a number of elements. Each is paid an annual salary,
on which pension benefits are calculated, and is provided with a car, health care benefits and a mobile telephone. The
executive directors participate in the Company’s executive share option schemes and are entitled to participate in its all-
employee share schemes, the savings related share option scheme and the profit sharing share scheme, further details of
which are provided below and in the Directors’ Report.
In 1998, the Remuneration Committee recommended to the Board the introduction of two new incentive schemes, a Short-
Term Incentive Plan (“STIP”) and a Long-Term Incentive Plan (“LTIP”). These recommendations were put to the Company’s
shareholders at the Annual General Meeting on 21 July 1998 and were approved. Under the terms of the STIP participants
may, subject to the achievement of performance criteria for the year as set by the Remuneration Committee (for the year to
31 March 1999 the target was the achievement of Group budgeted profit), receive a provisional award of ordinary shares in
Vodafone Group Plc. The provisional award of shares is in two parts: an original award of “Initial Shares” worth up to 25%
of salary and an additional award of “Enhancement Shares”, worth 50% of the value of the original award. The Initial Shares
will normally be released, subject to the participant remaining with the Group, two years after the provisional allocation is
made. The Enhancement Shares may also be released at this time, although this is conditional upon the achievement of
additional performance criteria. In relation to awards for the year ended 31 March 1999, the condition is that the growth in
earnings per share must exceed the growth in the UK retail price index by an average of 3 per cent per year for the two
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