Vodafone 2003 Annual Report Download - page 62

Vodafone Group Plc Annual Report & Accounts and Form 20-F 2003
60
BOARD’S REPORT TO SHAREHOLDERS ON DIRECTORS’ REMUNERATION Continued
directors are eligible to participate in the scheme and details of their participation
are given in the table on page 65.
Share Incentive Plan
The Vodafone Share Incentive Plan (“SIP”) is an Inland Revenue approved plan
open to all UK permanent employees. Eligible employees may contribute up to
£125 each month and the trustee of the plan uses the money to buy shares on
their behalf. An equivalent number of shares is purchased with contributions
from the employing company. UK based executive directors are eligible to
participate in the SIP and details of their share interests under these plans are
given in the table on page 66.
Non-executive directors’ remuneration
The remuneration of non-executive directors is established by the whole Board,
but the non-executive directors do not participate in the decision on their own
remuneration. Basic fee levels were last increased in 2000. From 1 July 2002,
an additional fee of £10,000 p.a. became payable for the responsibility of
chairing a principal Board Committee, i.e. the Audit, Remuneration or
Nominations Committee. Details of each non-executive director’s remuneration
are included in the table on the following page.
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 held 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, after an initial term that may
be of up to two years’ duration, executive directors’ contracts should thereafter
have rolling terms and be terminable on no more than one year’s notice. No
payments should normally be payable on termination other than the salary due
for the notice period and such entitlements under incentive plans and benefits
that are consistent with the terms of such plans.
Details of the contract terms of the executive directors follow:
Current
contract start date Unexpired term Notice period
Sir Christopher Gent 1 January 1997 Indefinite One year
(retires 31
December 2003)
Peter Bamford 1 April 1998 Indefinite One year
Vittorio Colao 22 July 1996 Indefinite Up to one year
Thomas Geitner 1 June 2001 To 31 May 2005 One year from
and then indefinite June 2004
Julian Horn-Smith 4 June 1996 Indefinite One year
Ken Hydon 1 January 1997 Indefinite One year
At the time of his appointment to the Board, Thomas Geitner was employed
under a fixed term five-year service contract with Mannesmann AG (now
Vodafone Holding GmbH) which was the normal contract arrangement for
Mannesmann AG board members. Mr Geitner agreed, without recompense, to
accept new terms such that from June 2004 his contract will be indefinite and
terminable on one year’s notice.
There are no specific provisions for termination payments under the terms of any
of the executive directors’ service contracts.
In accordance with the National Collective Labour Agreement for “dirigenti”for
industrial companies in Italy, Vittorio Colao is entitled to receive an end of service
indemnity.
The appointment of the Chairman is subject to the terms of an agreement
between the Company and Lord MacLaurin with an initial three-year term that
began on 23 May 2000. In March 2003, the Chairman accepted the invitation of
the Nominations Committee and the Board to continue in office. His appointment
therefore continues on the terms of the original agreement, but may now be
terminated by either party on one year’s notice. The Chairman is entitled to the
provision of a car or car allowance.
In respect of non-executive directors, the policy is for the appointments to be for
three year terms. Fees cease to be payable immediately upon termination of any
appointments for any reason and no compensation is payable in respect of such
termination.
Non-executive directors, other than the Chairman, but including the Deputy
Chairman, Paul Hazen, are engaged on letters of appointment that set out their
duties and responsibilities and confirm their remuneration in line with the policy
described above.
John Buchanan was appointed to the Board as a non-executive director with
effect from 1 April 2003 and he holds office on the same terms as other non-
executive directors.
Appointment of new Chief Executive and
retirement of current Chief Executive
On 18 December 2002, the Company announced the appointment of Arun Sarin
as the new Chief Executive from after the 2003 Annual General Meeting on
30 July 2003. He commenced employment as Chief Executive Designate on 1
April 2003.
Arun Sarin will receive a basic salary of £1.1 million and the incentives and
benefits that will form the remainder of his remuneration package will be
consistent with the existing executive director remuneration policy described
previously and comparable in quantum to that received by Sir Christopher Gent
for the year ended 31 March 2003.
Arun Sarin has entered into a service 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. He is required to give the Company one year’s notice
if he wishes to terminate the contract. There are no specific provisions for
termination payments under the terms of the service contract.
Sir Christopher Gent will formally step down as Chief Executive at the end of
the 2003 AGM on 30 July 2003 and, to enable an orderly transition, will retire
from the Company on 31 December 2003. Sir Christopher will not receive a
severance payment and his entitlements under the various incentive and
retirement plans in which he participates will be determined by
the standard rules applicable to retirement under each of these plans. All awards
under the new remuneration policy and global market-related options granted
under the previous policy provide for awards to be pro-rated for time and
performance. Sir Christopher will not receive a salary increase, performance
shares or share option awards in 2003.