Vodafone 2016 Annual Report Download - page 60

Directors’ remuneration (continued)
Remuneration outcomes during 2016
Annual bonus performance during the year was assessed against
both nancial and strategic measures. The former constituted 60%
of maximum opportunity and was comprised of service revenue,
EBITDA and adjusted cash ow (all equally weighted). Our strategic
measure was comprised of Customer Appreciation KPIs, reecting our
focus on customer experience excellence and included Net Promoter
Score and Brand Consideration, as well as consideration of other factors
such as customer churn.
During the year, performance under all of the nancial measures
exceeded target performance, with cash ow in particular
recording strong results. These results reected both a stabilisation
of performance in our European markets, with outcomes for this
region ranging from slightly below to slightly above nancial targets,
and continued strong performance in our AMAP markets where
nancial performance across all three measures was signicantly
above targets.
Performance under the Customer Appreciation KPIs element of the
bonus was slightly above on target performance highlighting that whilst
there has been a positive start to our customer experience excellence
focus, there still remain further gains to be made. We will be looking
closely at underlying local market performance to ensure that all of our
customers, regardless of where they are in the world, feel the benet
of our signicant investment in this area. Further details about how this
measure was assessed is provided on page 66.
As part of our commitment to full and open disclosure we have,
for several years, published details of the performance required
to achieve a target payout under the GSTIP for the year under review.
This year we have sought to further reect best practice by disclosing
full target ranges of which further details can also be found on page 66.
Performance against these targets during the year resulted in an overall
payout of 58.4% of maximum.
In terms of long-term incentives, the 2014 GLTI award was measured
over the three nancial years ending 31 March 2016 and was assessed
against both Free Cash Flow and TSR performance. Over the course
of the performance period, the Free Cash Flow measure exceeded
threshold performance, which was complemented by a slight
outperformance of the median of the TSR comparator group.
This resulted in a combined payout of 23.2% of maximum.
Application of policy for the year ahead
Following the Committee’s annual review of the current policy it was
agreed that no changes would be made in respect of the year ahead.
Similarly, it was determined that the current balance of performance
measures, following last year’s introduction of the Customer
Appreciation KPIs measure under the GSTIP, remains appropriate.
As part of this annual review, the Committee also contacted our top
20shareholders to consult on the proposed application of the policy for
the year ahead. This included the decision to increase the base salary
of the Chief Financial Ofcer by 2.0% in light of business performance,
salary increases for other UK employees and external market
information. The Chief Executive Ofcer requested not to be considered
for a salary increase during the year, and the Committee respected
this request.
The Committee appreciates the importance of consulting with
shareholders on matters of executive remuneration and was therefore
pleased with the high level of engagement and support shown
by investors.
During the year the Committee also completed a risk assessment of the
current incentive plans. Although such an assessment is conducted
annually, the Committee saw the review as particularly important this
year given the current external environment. Following the assessment,
the Committee remains satised that the current incentive plans do not
promote undue risk.
This will therefore constitute the third nancial year in which the
current policy has been in place – a reection of its success in providing
an effective framework which has demonstrated the exibility to meet
our changing strategic priorities over the last three years.
In line with the reporting requirements our Policy Report will be put
forward to a binding shareholder vote at the 2017 annual general
meeting. The Committee is therefore in the process of conducting a full
review of our existing arrangements to ensure that the Policy Report put
forward for shareholder approval is appropriately positioned to support
our executive remuneration programme over the next three years.
Conclusion
The success of Project Spring was always going to require more than
nancial investment. Indeed, our latest results show how our signicant
investment in infrastructure has been matched by a contribution
from all our colleagues to improving our customers’ experience.
Continuous improvement for customers will be crucial in maximising
the benets from Project Spring for years to come.
Finally, I would like to take this opportunity to welcome Dr Mathias
Döpfner to the Remuneration Committee and thank my predecessor,
Luc Vandevelde, who stepped down from both the Committee and the
Board following the 2015 annual general meeting, for his hard work and
support during his tenure. I look forward to ensuring that the Committee
continues to maintain and develop an executive remuneration
framework that supports the opportunities ahead.
Valerie Gooding
Chairman of the Remuneration Committee
17 May 2016
Vodafone Group Plc
Annual Report 2016
58