Vodafone 2007 Annual Report Download - page 83

Vodafone Group Plc Annual Report 2007 81
Options have a ten year term and will vest after three years, subject to
performance achievement. To the extent that the performance target is not
met, the options will lapse. Re-testing of performance is not permitted.
The price at which shares can be acquired on option exercise will be no
lower than the market value of the shares on the day prior to the date of
grant of the options. Therefore, scheme participants only benefit if the
share price increases and vesting conditions are achieved.
In July 2006, the Chief Executive received an award of options with a face
value of 735% of base salary, while other executive directors received
awards of options with a face value of 588% of their base salary.
Share ownership guidelines
Executive directors participating in long term incentive plans must comply
with the Company’s share ownership guidelines. These guidelines, which
were first introduced in 2000, require the Chief Executive to have a
shareholding in the Company of four times base salary and other executive
directors to have a shareholding of three times base salary.
It is intended that these ownership levels will be attained within five years
from the director first becoming subject to the guidelines and be achieved
through the retention of shares awarded under incentive plans.
Pensions
The Chief Executive, Arun Sarin, is provided with a defined contribution
pension arrangement to which the Company contributes 30% of base
salary.
Vittorio Colao has elected to take a cash allowance of 30% of base salary in
lieu of pension contributions.
Andy Halford, being a UK based director, was a contributing member of the
Vodafone Group Pension Scheme, which is a UK defined benefit scheme
approved by HM Revenue & Customs. The scheme provides a benefit of
two-thirds of pensionable salary after a minimum of 20 years’ service. The
normal retirement age is 60, but directors may retire from age 55 with a
pension proportionately reduced to account for their shorter service but
with no actuarial reduction. Andy Halford’s pensionable salary is capped
in-line with the Vodafone Group Pension Scheme Rules at £110,000. The
Company has paid a cash allowance of 30% of base salary in excess of
pensionable salary.
Sir Julian Horn-Smith elected to receive his pension from 6 April 2006, prior
to his actual retirement from the Company, in accordance with the new UK
pension rules effective from April 2006. Sir Julian retired at the end of the
2006 AGM in July. In addition to his pension, the Remuneration Committee
authorised a pension allowance of 30% of base salary for the four months
from the date he took his pension to the date of his retirement.
Thomas Geitner was entitled to a defined benefit pension of 40% of salary
from a normal retirement age of 60. On early retirement, the pension may
be reduced if he has accrued less than ten years of Board service.
Percentage vesting
Annualised EPS growth
2006/07
EPS range
2007/08
EPS range
0% 3% 6% 9% 12% 15%
0%
20%
40%
60%
80%
100%
EPS Peformance measure
Thomas Geitner left the Company on 31 December 2006 with a contractual
entitlement to a pension, representing 30% of his final base salary. This
pension can be paid in full with effect from 1 January 2008 providing
Mr Geitner does not commence employment with a competitor. Should he
commence employment with a competitor, then, in accordance with his
employment contract, the above pension will be suspended until his
55th birthday, at which point the pension payments will recommence.
The increase in the transfer value amount of Mr Geitner’s pension between
31 March 2006 and 31 March 2007 is to take account of the fact that he has
chosen to retire before the standard retirement age of 60. According to the
terms of his contract, his “stepped” pension promise is completely
protected and payable immediately, without reduction. In previous years the
pension promise was valued on the basis of a retirement age of 60, a
pension of 40% of final base salary and that his whole pension would accrue
uniformly over the period to his 60th birthday. These factors combined have
resulted in the increase in the transfer value that is now disclosed. There
have been no enhancements awarded in the last year beyond the
contractual promise. The valuation of his pension promise to date follows
normal actuarial practice in Germany.
All the plans referred to above provide benefits in the event of death in service.
Further details of the pension benefits earned by the directors in the year
ended 31 March 2007 can be found on page 84. Liabilities in respect of the
pension schemes in which the executive directors participate are funded to
the extent described in note 25 to the Consolidated Financial Statements,
“Post employment benefits”.
All-employee share incentive schemes
Global All Employee Share Plan
As in the 2006 financial year, the Remuneration Committee has approved
that an award of shares based on the achievement of performance
conditions be made to all employees in the Vodafone Group. The 2007
award will be made on 2 July 2007.
Sharesave
The Vodafone Group 1998 Sharesave Scheme is a HM Revenue & Customs
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. UK
based executive directors are eligible to participate in the scheme and
details of their participation are given in the table on page 86.
Share Incentive Plan
The Vodafone Share Incentive Plan (“SIP”) is a HM Revenue & Customs
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 are
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 87.
Non-executive directors’ remuneration
The remuneration of non-executive directors is periodically reviewed by the
Board, excluding the non-executive directors. The fees payable are as follows:
Fees payable
from 1 April 2006
£’000
Chairman 475
Deputy Chairman and Senior Independent Director 130
Basic Non-Executive Director fee 95
Chairmanship of Audit Committee 20
Chairmanship of Remuneration Committee 15
Chairmanship of Nominations and Governance Committee 10
GovernanceGovernance