Vodafone 2000 Annual Report Download - page 23

Vodafone AirTouch Plc Annual Report & Accounts for the year ended 31 March 2000 21
All UK based executive directors are contributing members of the Vodafone Group Pension Scheme, which is a scheme approved by the Inland Revenue.
Peter Bamford, whose benefits under the scheme are restricted by Inland Revenue earnings limits, also participates in a defined contribution funded
unapproved retirement benefits scheme in order to bring his benefits into line with those of the other executive directors. Details of the salaries and
benefits of all the directors are set out in the table on page 22. A separate table on page 22 shows the pension benefits earned by the directors in
the year.
Annual salaries are reviewed each year with effect from 1 July and the Remuneration Committee takes into account not only the individual performances
and contributions of each of the executive directors but also the overall performance of the Group, the earnings per share of the Group, the level of
increases awarded to staff throughout the Group and information provided to it on the salaries for similar roles in comparable companies. If the
responsibilities of executive directors change during the year, the Remuneration Committee meets to discuss and review remuneration packages,
including salaries, at that time.
Thomas Geitner, appointed to the Board as an executive director on 15 May 2000, is an employee of Mannesmann AG and has a remuneration package
comprising salary, annual cash bonus, pension, a car and other benefits normally provided to executives of his status in Germany. He will also participate
in the Company’s executive share option scheme.
Bonuses
The Remuneration Committee has not historically approved the payment of special bonuses and it is not its policy to do so. However, the last eighteen
months have included several quite exceptional transactions which have been significant to the successful development of the Group’s strategy.
These transactions have resulted in the Company quadrupling in size and the Remuneration Committee has, therefore, on two occasions authorised
special bonus payments to a small number of the most critical senior executives whose outstanding commitment and effort led to the successful
completion of these transactions and the opportunity to substantially increase shareholder value.
The first bonuses were awarded in July 1999 following the merger with AirTouch. The payments were up to six months’ basic salary. Later in the year, in
the course of the remuneration policy review mentioned earlier, the Committee recognised that the remuneration of senior executives was not set at
internationally competitive levels and, therefore, the opportunity for due reward from the success of acquisitions such as that of Mannesmann AG would
not be provided until the new global remuneration policy was implemented for the future. The Remuneration Committee decided to make special bonus
awards, which were paid in April 2000 after completion of the acquisition, to key executives. For the three executive directors who received the largest
amounts, 50 per cent of the award will be paid in shares which will only be transferred to the executives in two years’ time on the achievement of
significant EBITDA growth performance targets. The cash bonus payments to the three executive directors were £5 million, £2 million and £2 million,
respectively. The other two executive directors each received a cash bonus of £1 million. It is intended that the new global remuneration policy will be the
vehicle to deliver all forms of reward in future and that no further special bonus payments will be made.
Service contracts
The Remuneration Committee has determined that in the cases of UK based executive directors their appointments to the Board will be on the terms of a
contract which can be terminated by the Company at the end of an initial term of two years or at any time thereafter on one year’s notice. Contracts on
such a basis were granted to Julian Horn-Smith on 4 June 1996, to Chris Gent and Ken Hydon on 1 January 1997 and to Peter Bamford on 1 April
1998, each of which is now, therefore, terminable by the Company on one year’s notice. The service contracts of these executive directors contain a
provision increasing the period of notice required from the Company to two years in the event that the contract is terminated by the Company within one
year of a change of control of the Company. The directors are required to give the Company one year’s notice if they wish to terminate their contracts.
Thomas Geitner is employed by Mannesmann AG and he has a fixed term five year contract from 15 May 2000. This is the normal contract arrangement
for Mannesmann AG board members.
Non-executive directors
The remuneration of the non-executive directors, including the Chairman, is established by the Board of directors as a whole and details of each
individual non-executive director’s remuneration are included in the table below. The UK based non-executive directors do not presently participate in any
of the Company’s share schemes or other employee benefit schemes, nor does the Company make any contribution to their pension arrangements.
The appointment of the Chairman is subject to the terms of an agreement between the Company and Ian MacLaurin with a three year term commencing
on 23 May 2000. The Chairman is provided with a car. The appointment of Sam Ginn, during his tenure as Chairman, was subject to the terms of an
agreement under which, in addition to his fee, Sam Ginn was provided with a car and certain other benefits.
The other non-executive directors are engaged on letters of appointment which set out their duties and responsibilities and confirm their remuneration.
Each of these appointments may be terminated at any time by the Company without the payment of compensation.
Remuneration Report of the Board continued