Vodafone 2002 Annual Report Download - page 64

Vodafone Group Plc Annual Report & Accounts and Form 20-F Board’s Report to Shareholders on Directors’ Remuneration62
Board’s Report to Shareholders on Directors’ Remuneration continued
awarding share options to employees who had not previously participated in the
Company’s share incentive arrangements. Executive directors do not receive GEM
options. It is intended that a similar option grant be made in July 2002.
Sharesave Options
The Vodafone Group 1998 Sharesave Scheme 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. UK based executive directors are eligible
to participate in the scheme and details of their participation are given in the
table on page 66.
Profit Sharing Scheme
The Vodafone Group Profit Sharing Scheme is an Inland Revenue approved
scheme, which was open to all UK permanent employees until 31 March 2002.
Eligible employees were able to contribute up to 5% of their salary, up to a
monthly maximum of £665, to enable trustees of the scheme to purchase shares
on their behalf. An equivalent number of shares was purchased for the employee
with contributions made by the employing company. To receive the maximum
income tax relief afforded to this type of scheme, the trustees are requested to
retain shares for three years. As a consequence of new legislation, this scheme
was terminated at 31 March 2002 and has been replaced by the Vodafone
Group Share Incentive Plan from 1 April 2002 under which eligible employees
may contribute up to £125 each month, but which otherwise operates in a
similar way to the Profit Sharing Scheme. UK based executive directors were
eligible to participate in the Profit Sharing Scheme and are eligible to participate
in the Share Incentive Plan and details of their share interests under these plans
are given in the table on page 67.
Non-executive 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 63.
Non-executive directors are not eligible to receive awards under 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. No options have been granted to non-executive directors in their
capacity as non-executive directors of the Company.
Service contracts and appointments of directors
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 that 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 this basis
were granted to Julian Horn-Smith on 4 June 1996, to Sir Christopher 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 executive directors are required to give the Company one year’s notice if
they wish to terminate their contracts.
Thomas Geitner entered into a fixed term five-year contract with Vodafone AG
(formerly Mannesmann AG) on 15 May 2000. This is the normal contract
arrangement for Vodafone AG board members. Mr Geitner agreed to replace this
contract, without recompense, with a new contract that is for an initial three-year
term from June 2001 and which then is indefinite until terminated by either
party. The period of notice for termination is one year and termination notice may
not be given until the end of the initial three years.
Vittorio Colao entered into a contract with Omnitel Pronto Italia S.p.A. (now
operating as Omnitel Vodafone) on 22 July 1996. This contract is in accordance
with the National Collective Labour Agreement for “dirigenti”for industrial
companies in Italy, under which employees are required to give up to four
months notice to terminate and the employing company must give up to
12 months’ notice. Prior to Mr Colao’s appointment to the Board on 1 April
2002, the notice period for termination by Omnitel Vodafone was increased to
one year and the notice period from Mr Colao, in the event that he wishes to
leave to join a competitor of Omnitel Vodafone, was also increased to one year.
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 entitled to the provision of a car.
The other non-executive directors are engaged on letters of appointment
that 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.
Remuneration for the Year to 31 March 2002
The aggregate compensation paid by Vodafone to its directors and senior
management* as a group for services in all capacities for the year ended
31 March 2002, is set out below. The aggregate number of directors and senior
management in the year ended 31 March 2002 was 23, compared to 25 in the
year ended 31 March 2001**.
2002 2001
£000 £000
Salaries and fees 7,329 5,986
Bonuses –13,589
Incentive schemes*** 6,541 3,033
Benefits 925 767
Compensation for loss of office –10,272
14,795 33,647
* Aggregate compensation for senior management is in respect of those
individuals who were members of the Executive Committee as at, and for the
year ended, 31 March 2002, other than executive directors.
** 10 of the 23 (2001: 14 of the 25) directors are non-executive directors.
*** Comprises the incentive scheme information given in the table on page 63
with equivalent basis disclosures given for senior management. Details of
share incentives awarded to directors and senior management are included
in footnotes to the Short Term Incentive, Long Term Incentives and Share
Options tables on pages 64 and 65.