Vodafone 2009 Annual Report Download - page 64

62 Vodafone Group Plc Annual Report 2009
Directors’ remuneration continued
Other considerations
Service contracts of executive directors
The Remuneration Committee has determined that, after an initial term 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.
All current executive directors’ contracts have an indefinite term (to normal
retirement date) and one year notice periods. 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.
Date of
service agreement Notice period
Vittorio Colao 27 May 2008 12 months
Andy Halford 20 May 2005 12 months
Michel Combes and Steve Pusey, who have been appointed to the Board with effect
from 1 June 2009, will have service contracts which have a 12 month notice period.
Fees retained for external non-executive directorships
Executive directors may hold positions in other companies as non-executive
directors. In the 2009 financial year, Arun Sarin was the only executive director with
such a position, held at the Bank of England. He retained fees of £6,000 in relation
to this position over the full financial year. Fees were retained in accordance with
Group policy.
Cascade to senior management
The principles of the policy are cascaded, where appropriate, to the other members
of the Executive Committee as set out below.
Cascade of policy to Executive Committee – 2009 financial year
Total remuneration and base salary
Methodology consistent with the executive directors.
Annual bonus
The annual bonus is based on the same measures. However, in some
circumstances these are measured within a region or business area rather than
across the whole Group.
Long term incentive
The long term incentive is consistent with the executive directors, including
the opportunity to invest in the GLTI to receive matching awards. In addition,
Executive Committee members have a share ownership requirement of two
times base salary.
All-employee share plans
The executive directors are also eligible to participate in the all-employee plans.
Summary of plans
Global allshare plan
The Remuneration Committee approved a grant of 290 shares to be made
on 1 July 2008 to a significant number of permanent employees. The shares
awarded vest after two years.
Sharesave
The Vodafone Group 2008 sharesave plan is an HM Revenue & Customs
(‘HMRC’) approved scheme open to all permanently employed UK staff.
Options under the plan are granted at up to a 20% discount to market value.
Executive directors’ participation is included in the option table on page 65.
Share incentive plan
The Vodafone share incentive plan is an HMRC approved plan open to all staff
permanently employed by a Vodafone Company in the UK. Participants may
contribute up to a maximum of £125 per month, which the trustee of the plan
uses 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.
Dilution
All awards are made under plans that incorporate dilution limits as set out in the
guidelines for share incentive schemes published by the Association of British
Insurers. The current estimated dilution from subsisting awards, including executive
and all-employee share awards, is approximately 3.3% of the Company’s share capital
at 31 March 2009 (3.0% at 31 March 2008).
Funding
A mixture of newly issued shares, treasury shares and shares purchased in the market
by the employee benefit trust is used to satisfy share-based awards. This policy is
kept under review.
Other matters
The share incentive plan and the co-investment into the GLTI plan include restrictions
on the transfer of shares while the shares are subject to the plan. Where, under an
employee share plan operated by the Company, participants are the beneficial
owners of the shares, but not the registered owner, the voting rights are normally
exercised by the registered owner at the discretion of the participant.
All of the Company’s share plans contain provisions relating to a change of control.
Outstanding awards and options would normally vest and become exercisable on a
change of control, subject to the satisfaction of any performance conditions at
that time.
TSR performance
The following chart shows the performance of the Company relative to the
FTSE100 index.
Graph provided by Towers Perrin and calculated according to a methodology that is
compliant with the requirements of Schedule 7A of the Companies Act 1985
Data Sources: FTSE and Datastream.
Note: Performance of the Company shown by the graph is not indicative of vesting levels under the
Company’s various incentive plans.
Key: ― FTSE 100 ― Vodafone Group ― FTSE Global Telecoms
March 2009March 2004
75
March 2005 March 2006 March 2007 March 2008
125
150
175
100
Five year historical TSR performance growth in the value of a hypothetical £100
holding over five years. FTSE 100 and FTSE Global Telecoms comparison based
on spot values