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REPORT OF THE REMUNERATION COMMITTEE ON DIRECTORS’ REMUNERATION Aer Lingus Group Plc
ANNUAL REPORT 2012
50
Consistent with this approach, there was also no change to the Chairman’s
fee or Non-Executive Directors fees during 2012. The decision to leave
Board fees unchanged should also be viewed against a backdrop of a
substantial increase in Board activity following the third hostile offer from
Ryanair in July.
2012 Annual Bonus
The performance of Aer Lingus in 2012 means that the annual bonuses
earned by the Executive Directors are at the upper end of the range between
target and maximum. Further details are set out in the Remuneration
Report.
Transformational Performance Scheme
The deferred bonuses earned in 2011 under the Transformational
Performance Scheme were paid in 2012. This special bonus scheme was
outlined in the Remuneration Reports of the last two years. The Chief
Financial Officer and other senior managers earned bonuses for delivering
Greenfield savings during 2011 which were ahead of target. In 2012, we
achieved new savings under our Greenfield cost reduction programme
with an annual value of €19.9 million. When combined with the €84.3
million of annual cost savings already achieved at the start of 2012, we
have now achieved a total annual cost saving of €104.2 million which
exceeds our initial planned annual operating cost saving of €97 million
from the three year programme. No further awards will be made under the
Transformational Performance Scheme.
Long Term Incentive Plan
The 2010 Long Term Incentive Plan award (covering the performance
period 1 January 2010 to 31 December 2012) vested on 6 February 2013.
This is the first award of shares that has vested under the scheme since its
introduction in 2007 and reflects the significant transformation that has
been achieved since 2009. Measuring Total Shareholder Return (TSR) over
the performance period, Aer Lingus ranked second of 10 companies in the
comparator group of European airlines and sixth of 38 in the comparator
group of companies in the ISEQ General Index. See Note 32.
Conclusion
Aer Lingus’ performance in 2012 has been very strong and the variable
components of executive remuneration reflect that strong performance.
Remuneration at Aer Lingus is, as it should be, aligned with shareholders’
interests and primarily weighted to performance. Consistent with this
approach, and a desire to exercise (and be seen to exercise) pay restraint,
there were no changes to the fixed components of executive remuneration
in 2012. Throughout the following report, we have tried to provide
shareholders with greater clarity and transparency on remuneration at Aer
Lingus and through the vote on this report at our Annual General Meeting,
to afford shareholders the opportunity to have a “Say-on-Pay”.
Yours sincerely,
Danuta Gray
Chair of the Remuneration Committee
7 March 2013
Report of the Remuneration Committee on Directors’ Remuneration
Unaudited information