Vodafone 2001 Annual Report Download - page 18

16 BOARD’S REPORT TO SHAREHOLDERS ON DIRECTORS’ REMUNERATION continued
Vodafone Group Plc
Annual Report & Accounts
for the year ended
31 March 2001
Chris Gent’s GMR option grant made in July 2000 is over 5.4 million shares exercisable in normal
circumstances in not less than three years from the date of grant at a price of 291.5 pence per
share. The extent to which he can exercise the option is dependent upon the achievement of the
GMR performance targets. Even if these targets are met, the option only has value if and to the
extent that the share price at exercise exceeds the 291.5 pence option price.
All-employee sh are in centive sch em es an d pen sion s
Sharesave Options
UK based executive directors are eligible to participate in the Vodafone Group 1998 Sharesave
Scheme. This is an Inland Revenue approved scheme open to all UK permanent employees.
The maximum that can be saved each month is £250 and savings plus interest may be used to
acquire shares by exercising the related option. The options have been granted at up to a 20%
discount to market value. Participants can elect either a three or five year savings term.
Profit Sharing Scheme
Executive directors are also eligible to participate in the Vodafone Group Profit Sharing Scheme.
This is an Inland Revenue approved scheme open to all UK permanent employees. Eligible
employees may contribute up to 5% of their salary each month, up to a maximum of £665,
to enable trustees of the scheme to purchase shares on their behalf. An equivalent number of
shares is purchased for the employee with contributions made by the employing company.
To receive the maximum income tax relief afforded to this type of scheme, shares must be
retained by the trustees for three years.
US Share Plans
US based executive directors are eligible to participate in all employee option grants made under
the Vodafone Group 1999 Long Term Stock Incentive Plan and to participate in the Vodafone
AirTouch 1999 Employee Share Purchase Plan which permits employees to purchase shares at a
discount.
Pensions
Chris Gent, Julian Horn-Smith, Ken Hydon and Peter Bamford 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 the defined contribution Vodafone Group Funded Unapproved Retirement
Benefits Scheme to enable pension benefits to be provided on his basic salary above the Inland
Revenue earnings cap. Thomas Geitner participates in the Essener Verband Retirement Scheme.
The table on page 18 shows the pension benefits earned by the directors in the year.
GMR Performance Targets
For options granted in July 2000 there is a
dual performance target. Up to 50% of the
option is exercisable for achievement of
EBITDA targets and up to 50% is exercisable
dependent on total shareholder return (TSR)
performance relative to companies comprised
in the global peer group. Performance is
measured over three, four and five financial
years from grant.
In order to exercise the option in full,
compound pro forma proportionate EBITDA
growth in excess of 30% per annum and
TSR performance equal to or above the
90th percentile will have to be attained.
No part of the option is exercisable if EBITDA
growth is less than 15% and if TSR
performance is below median.
Long Term Incentives – changes from
prior year policy or departures from prior
year policy
Previously disclosed special bonus awards of
restricted shares granted under the Vodafone
Group 1999 Long Term Stock Incentive Plan
were made as part of the special bonus
described earlier in this report. The awards
were made to Chris Gent (£5 million), Julian
Horn-Smith (£2 million) and Ken Hydon
(£2 million) on 28 July 2000, the number of
restricted shares being determined by
reference to the share price at 14 April 2000
of 312.5p. Vesting of these awards is subject
to the achievement of stretching two year
EBITDA growth targets.
Non-execu tive directors’ remuneration
The remuneration of non-executive directors is established by the whole Board. Details of each non-executive director’s remuneration are
included in the table on page 17.
Except as detailed below, non-executive directors do not 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.
Certain non-executive directors hold share options relating to their service with AirTouch Communications, Inc., whose policy was to grant share
options to non-executive directors. No options have been granted to non-executive directors in their capacity as non-executive directors of
Vodafone.
The appointment of the Chairman is subject to the terms of an agreement between the Company and Lord MacLaurin with a three-year term that
began on 23 May 2000. The Chairman is provided with a car.
Klaus Esser was also provided with a car for the period between June and September 2000 when he was Deputy Chairman.
The other non-executive directors are engaged on letters of appointment which set out their duties and responsibilities and confirm their
remuneration. The Company may terminate each of these appointments at any time without the payment of compensation.