Vodafone 2016 Annual Report Download - page 74

Annual Report on remuneration (continued)
2017 remuneration
Details of how the remuneration policy will be implemented for the 2017 nancial year are set out below.
2017 base salaries
The Remuneration Committee considered business performance, salary increases for other UK employees and external market information and
decided to increase the salary of the Chief Financial Ofcer by 2.0% which is in line with the average salary increase budget for all employees
across the UK. The Chief Executive requested not to be considered for a salary increase during the review. The average salary increase for Executive
Committee members will be 2.5%; this compares to a budget of 2.4% which is based on an average of the relevant local market budget for each
Executive Committee member.
The annual salaries for 2017 (effective 1 July 2016) are as follows:
a Chief Executive: Vittorio Colao £1,150,000; and
a Chief Financial Ofcer: Nick Read £714,000.
2017 annual bonus (‘GSTIP’)
The performance measures and weightings for 2017, which remain unchanged from 2016, are as follows:
a service revenue (20%);
a EBITDA (20%);
a adjusted free cash ow (20%); and
a customer appreciation KPIs (40%). This includes an assessment of net promoter score (‘NPS’) and brand consideration measures.
In respect of the measures included under the customer appreciation KPIs, net promoter score is used as a measure of the extent to which
our customers would recommend us, whilst brand consideration acts as a measure of the percentage of people who would consider using
a certain brand as their telecoms provider. Both measures utilise data collected in our local markets which is validated for quality and consistency
by independent third party agencies. The data is sourced from studies involving both our own customers and customers of our competitors for
the NPS measure, and both Vodafone users and non-users for the brand consideration measure. In formulating a nal assessment of performance
under the customer appreciation KPIs, the Committee will also consider other relevant customer factors such as churn, customer growth and
service levels.
Due to the potential impact on our commercial interests, annual bonus targets are considered commercially sensitive and therefore will be disclosed
in the 2017 remuneration report following the completion of the nancial year.
Long-term incentive (‘GLTI’) awards for 2017
As described in our policy on pages 60 to 62 the performance conditions are a combination of adjusted free cash ow and TSR performance.
The details for the 2017 award are provided in the table below (with linear interpolation between points). Following the annual review of the
performance measure, the Committee decided that for the 2017 award the TSR outperformance range should remain unchanged. The Committee
will keep thecalibration of the range under review and continue to only make changes where there is sufcient evidence to suggest this
is appropriate.
Adjusted free cash ow measure
TSR outperformance
£bn1
0.0%
(Up to median)
4.5%
(65th percentile equivalent)
9.0%
(80th percentile equivalent)
Below threshold <9.95 0% 0% 0%
Threshold 9.95 50% 75% 100%
Target 11.80 100% 150% 200%
Maximum 13.65 125% 187.5% 250%
TSR peer group
Bharti Orange
BT Group Telecom Italia
Deutsche Telekom Telefónica
MTN
Note:
1 In line with the decision to change the Group’s reporting currency to euros from pounds sterling, as outlined in the Chairman’s statement on page 3, the equivalent targets in euros, based
on internal foreign exchange rate assumptions, including €1.38 : £1, will be a threshold of €13.75bn, a target of €16.30bn and a maximum of €18.85bn.
The combined vesting percentages are applied to the target number of shares granted.
2016 remuneration for the Chairman and Non-Executive Directors
For the 2016 review, the fees for our Chairman and non-executives have been benchmarked against a comparator group of the FTSE 30 companies
(excluding Financial Services). Following the review it was agreed that the additional fee for the Senior Independent Director should be increased
by £5,000 which brings it in line with other fees for additional responsibilities.
Position/role
Fee payable £’000
From 1 April 2016
Chairman1625
Non-Executive Director 115
Additional fee for Senior Independent Director 25
Additional fee for Chairmanship of Audit, Remuneration and Risk Committees 25
Note:
1 The Chairman’s fee also includes the fee for the Chairmanship of the Nominations and Governance Committee.
Directors’ remuneration (continued)
Vodafone Group Plc
Annual Report 2016
72