Vodafone 2014 Annual Report Download - page 86

Annual report on remuneration (continued)
2015 remuneration
Subject to shareholder approval at the 2014 AGM, we intend to implement the remuneration policy as set out on pages 71 to 76.
For the 2015 nancial year the details are as follows:
2015 base salaries
The Remuneration Committee considered business performance, salary increases for other UK employees and external market information and
decided to increase the annual base salaries of the Chief Executive (Vittorio Colao) and the Chief Technology Ofcer (Stephen Pusey) by 3.6%
and 4.3% respectively from 1 July 2014. The last salary increase that was received by these individuals was three years ago in July 2011. The average
salary increase for Executive Committee members will be 1.7%; this compares to the salary increase budget in the UK of 2%.
The annual salaries for 2015 (effective 1 July 2014) are as follows:
a Chief Executive: Vittorio Colao £1,150,000;
a Chief Financial Ofcer: Nick Read (from 1 April 2014) £675,000; and
a Chief Technology Ofcer: Stephen Pusey £600,000.
2015 annual bonus (‘GSTIP’)
The performance measures and weightings for 2015 are as follows:
a Service revenue (25%);
a EBITDA (25%);
a adjusted free cash ow (25%); and
a competitive performance assessment (25%). This is an assessment encompassing both net promoter score (‘NPS’) and market share against the
competitors in each of our markets.
Annual bonus targets are commercially sensitive and therefore will be disclosed in the 2015 remuneration report following the completion of the
nancial year.
Long-term incentive (‘GLTI’) awards for 2015
As described in our policy on pages 72 to 74 the performance conditions are a combination of adjusted free cash ow and TSR performance.
The details for the 2015 award will be as follows (with linear interpolation between points):
Adjusted free cash ow measure
TSR out performance
£bn1
0%
(Up to median)
5%
(65th percentile equivalent)
10%
(80th percentile equivalent)
Below threshold <3.4 0% 0% 0%
Threshold 3.4 50% 75% 100%
Target 5.1 100% 150% 200%
Maximum 6.8 125% 187.5% 250%
TSR peer group
Bharti Orange
BT Group Telecom Italia
Deutsche Telekom Telefónica
MTN
Note:
1 When considered on a like-for-like basis with targets for previous years (e.g. excluding the impact of Project Spring) the adjusted cash ow target is £12.3 billion.
The combined vesting percentages are applied to the target number of shares granted.
We have made the following changes to the long-term incentive since the last award:
a the maximum vesting level has reduced from three times to two and a half times the target vesting level;
a a mandatory holding period has been introduced where 50% of the post-tax shares are released after vesting, a further 25% after the rst
anniversary of vesting, and the remaining 25% will bereleased after the second anniversary; and
a AT&T has been removed from the peer group, Bharti and MTN have been added as stand alone comparators and the remaining emerging market
proxy company (Turkcell) has also been removed.
Long-term incentive (‘GLTI’) awards vesting
As discussed elsewhere in the annual report, Project Spring involves signicant organic investment over the next two years to enhance network
and serviceleadership further. This investment will have a signicant impact on adjusted Free Cash Flow (‘FCF’), which is the primary performance
condition for the GLTI and we expect an initial drop in FCF that will then build again as the investment pays off over the longer term. The impact
is predicted as follows:
Financial year of award Performance period end Impact
2013 March 2015 Targets for the 2013 and 2014 awards were set prior to the announcement of Project
Spring therefore we will remove the impact on FCF when calculating the vesting
results following the end of each performance period.
2014 March 2016
2015 onwards March 2017 onwards The 2015 awards (and all future years) will have the full impact of Project Spring
included in the targets and no further adjustments will be necessary.
Vodafone Group Plc
Annual Report 201484
Directors’ remuneration (continued)