Aer Lingus 2011 Annual Report Download - page 48

Annual Report 2011
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REPORT OF THE REMUNERATION COMMITTEE ON DIRECTORS’ REMUNERATION Aer Lingus Group Plc
Report of the Remuneration Committee on Directors’ Remuneration (continued)
Unaudited information
The Remuneration Committee
The Remuneration Committee of the Board is composed of three
independent non-executive directors. From January 2011 - May 2011
the Committee members were Ms Danuta Gray (Chair), Mr Colm
Barrington, Mr Tom Corcoran and Ms Nicola Shaw. Mr Corcoran
ceased to be a member of the Remuneration Committee upon his
retirement on 6 May 2011. The Chairman, who was independent on
appointment, is deemed to be an independent member of this
Committee.
The Committee determines, within the agreed terms of reference, the
remuneration policy in respect of the executive directors, the
Chairman of the Board, the Company Secretary and the other
members of senior management and monitors and approves these total
remuneration packages within the terms of the agreed policy. The
Committee is also required to approve the design of, and determine
targets for, any performance-related pay schemes operated by the
Company and approve the total annual payments made under such
schemes.
In making its decisions the Committee can seek advice from the Chief
Executive and the Chief People & Change Officer who are invited to
attend meetings of the Committee as and when appropriate. The
Remuneration Committee can obtain external advice from
independent firms of remuneration consultants where necessary.
The remuneration of non-executive directors is a matter for the
Chairman and the executive directors. No individuals are involved in
any decisions on their own remuneration.
Remuneration Policy
The overriding aim of the Company’s remuneration policy is to ensure
that executive directors and senior managers are provided with
appropriate incentives and rewarded for delivering shareholder value
and contributing to the success of the Company in a fair and
responsible manner.
Remuneration arrangements are designed to enhance the focus of
executive directors and senior managers on the achievement of the
Company’s strategy and to align their interests with those of
shareholders. The incentive structures are designed to reinforce both
short-term and long-term behaviour to align with the strategic plan and
the long-term success of the business. The incentive structures are also
designed to be aligned with the Company’s policy with regard to risk.
During the year, remuneration of executive directors and senior
management was benchmarked against both publicly quoted and
private companies in Ireland and the design of our remuneration was
benchmarked against peer group airlines.
In 2011, the Remuneration Committee retained Towers Watson as its
external remuneration consultants and continued to review the
Company’s executive remuneration strategy for 2011 and beyond.
Towers Watson also provided the Company with market remuneration
data for other senior management roles. Apart from the provision of
these services, Towers Watson does not provide other services to the
Company.
Remuneration Committee meetings during 2011
The Remuneration Committee met five times during 2011. Attendance
at meetings held is set out in the table on page 42. The following is a
summary of the principal work undertaken by the Remuneration
Committee in 2011:
• considered and approved executive directors’ and other senior
managers remuneration arrangements for 2011;
• assessed and agreed the level of achievement against annual
performance related pay scheme targets for 2010 for executive
directors and other senior managers;
• assessed and agreed the level of achievement against Greenfield
cost Reduction Program target for 2010 for employee gainsharing
incentives;
•reviewed and approved the 2011 share award grants under the
Company’s Long Term Incentive Plan (LTIP) to executive directors
and other senior managers;
•considered the outcome of the performance conditions for the
LTIP share awards granted in 2008;
• considered and approved the Remuneration Report for the
financial year 2010 Annual Report;
•considered and approved the remuneration arrangements for new
executives appointed in 2011;
• considered and agreed the basis of an additional short-term bonus
payment in 2011 based upon the achievement of a stretching in-
year Greenfield Cost Reduction Program target in order to
incentivise and further support the Company’s recovery.
• developed an executive remuneration policy and design for 2012.
Executive Directors
Mr Christoph Mueller (Chief Executive Officer) was an executive director
throughout 2011. The remuneration package for Mr Christoph Mueller
(Chief Executive Officer) as executive director consists of basic salary,
annual performance related bonus, a pension contribution, a conditional
share award over shares in the Company which was agreed in 2009 as
part of his recruitment arrangements and which vested in 2011,
premium-priced share options over shares in the Company (also agreed
as part of his recruitment arrangements), shares awarded under the
Company’s LTIP, health insurance and a car allowance. Mr Mueller does
not receive any additional fees for serving as a director of the Company.
While Mr Mueller’s basic salary is subject to annual review, he has
voluntarily agreed to permanently freeze it at ¤475,000 per annum.