Vodafone 2010 Annual Report Download - page 61

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Governance
Vodafone Group Plc Annual Report 2010 59
The remuneration package
The table below summarises the plans used to reward the executive directors in the 2010 financial year.
Summary Grant policy
Base salary
Set by the Remuneration Committee as part of the overall benchmarking
process (see previous page).
Benchmark assumed to be the market level for the role.
Base salaries set annually on 1 July.
Annual bonus
Remuneration Committee reviews performance against targets over the
financial year. Actual results measured against the budget set at the start of
the year.
Summary of the plan in the 2010 financial year
2010 performance measures:
Three key financial measures: operating profit (25%), service revenue (25%)
and free cash flow (35%); and
Customer delight (15%) – customer satisfaction is a key component in the
Group’s success.
Changes for the 2011 financial year
Performance measures for the 2011 financial year:
Rebalance of weightings to focus on service revenue to stimulate top
line growth;
Introduction of a competitive performance assessment to include customer
satisfaction; and
Split of measures for the 2011 financial year: operating profit (20%), service
revenue (30%), free cash flow (20%) and competitive performance
assessment (30%).
Bonus levels reviewed annually. Mix of
performance measures and the performance
targets also reviewed.
Annual bonus paid in cash in June each year for
performance over the previous financial year.
Target bonus is 100% of base salary earned over
the financial year.
Maximum bonus is 200% of base salary earned
and is only paid out for exceptional performance.
Group Short-Term Incentive
Plan (‘GSTIP’)(1)
Long-term incentives (details on page 60)
Global Long-Term Incentive
Plan (‘GLTI’) base awards
Long-term incentive all delivered in performance shares.
Base award has vesting period of three years, subject to a matrix of two
performance measures over this period:
Firstly, an operational performance measure (free cash flow); and
Secondly, an equity performance multiplier (relative TSR).
Performance details set out in more detail on page 60.
Base award set annually and made in June.
The Chief Executive’s base award will have a
target face value of 137.5% of base salary
(maximum 550%) in June 2010.
The base award for other executive directors will
have a target face value of 110% of base salary
(maximum 440%) in June 2010.
Co-investment
matching awards Individuals may purchase Vodafone shares and hold them in trust for
three years in order to receive additional performance shares in the form
of a GLTI matching award.
Matching awards made under the GLTI plan have the same performance
measures as the base award.
Matching award used to encourage increased share ownership and
supports the share ownership requirements set out below.
Matching award made annually in June in line with
the investment made.
Executive directors can co-invest up to two times
net base salary.
Matching award will have a face value equal to
50% of the equivalent multiple of gross basic
salary invested.
Share ownership
requirements Option to co-invest into the GLTI plan designed to encourage executives
to meet their share ownership requirements.
Ownership against the requirements must be met after five years.
Progress towards this requirement reviewed by the Remuneration
Committee before granting long-term awards.
The Chief Executive is required to hold four times
base salary.
Other executive directors are required to hold
three times base salary.
Other remuneration
Defined benefit pension The Chief Financial Officer is a member of the UK defined benefit scheme
for pensionable salary up to the scheme cap of £110,000. Details of this are
set out in the pensions table on page 63. He receives the cash allowance set
out below on pensionable salary over the scheme cap.
The Chief Financial Officer is the only executive
director to receive this benefit.
The UK defined benefit scheme closed to future
accrual by existing members on 31 March 2010.
Defined contribution
pension/cash allowance The pension contribution or cash allowance is available for the executives
to make provisions for their retirement.
30% of basic salary taken either as a cash
payment or a pension contribution.
Benefits
Company car or cash allowance worth £19,200 per annum.
Private medical insurance.
Chauffeur services, where appropriate, to assist with their role.
Benefits reviewed from time to time.
Note:
(1) GSTIP targets are not disclosed as they are commercially sensitive.