EasyJet 2011 Annual Report Download - page 58

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Report on Directors’ remuneration
Continued
Achievement of bonus for 2011
60
86
C
26
D
60
E
B
A
100
A Profit before tax
B On time performance
C Customer satisfaction targets
D Operating costs (excluding fuel) per seat at constant currency
E Departmental objectives
Achievement
%
The results for the year ended 30 September 2011
were above budget and expectations in spite of
demanding circumstances, achieving 60% of the
maximum profit related bonus. Performance against
the operational targets was also above expectations –
with 100% of available maximum achieved for record
On Time Performance and 86% for customer
satisfaction. The Committee believes that this
performance is in line with general improvements in
the strength of the business.
LTIP awards granted in 2011
Awards granted in the year under review were subject
to the following performance targets relating to
easyJet’s ROCE in the year ending 30 September
2013:
Awards up to 100% of salary
Threshold Target Maximum
(25%
vests)
(50%
vests)
(100%
vests)
Return on capital
employed
7.0% 8.5% 12.0%
Awards between 100% and 200% of salary
Threshold Target Maximum
(25%
vests)
(50%
vests)
(100%
vests)
Return on capital
employed
10.0% 12.0% 13.0%
The lower levels of performance targets for awards
up to 100% of salary take account of the retention
objective of the plan.
Although the annual award limit of Performance
Shares is 200% of salary, the maximum award was
restricted to 175% of salary in the year under review.
The performance targets applying to the part of an
award over 100% of salary were set to be tougher in
lieu of the higher potential quantum available.
A full summary of the performance targets applying
to all subsisting LTIP awards are set out on page 61.
Employee share plan participation
easyJet encourages share ownership throughout the
Company by the use of Free Shares, a Share Incentive
Plan and a Sharesave Plan. Take up of the schemes
remains very positive with over 80% of eligible staff
now participating in one or more of the plans.
Executive Directors may also participate in these plans.
They are summarised in the Corporate responsibility
section on page 36.
Executive Director shareholding
requirement
Executive Directors are required to retain all the shares
acquired on the vesting of LTIP awards (net of tax)
until they have a holding equivalent to 175% of salary.
Any shares owned will count towards this requirement,
as do shares bought by participants as “Investment
Shares” under the Matching Shares element of the
LTIP and any shares held on through participation in
the Company’s all-employee share plans. Any
unvested performance shares or matching shares
granted under the LTIP will not count since they are
subject to future performance.
The same requirements apply to members of the
Executive Management Team. For senior executives
who report to the Executive Management Team and
receive LTIP awards, a 50% share ownership guideline
applies.
56
easyJet plc
Annual report
and accounts 2011
Accordingly, Carolyn McCall will be paid a bonus
of £840,000 (126% of salary) and Chris Kennedy
£253,000 (63% of salary) in the year ending
30 September 2012. They have both decided to defer
the maximum 50% of the above bonuses into the
Long Term Incentive Plan.
No bonuses were paid to Executive Directors for the
year ended 30 September 2010. The Executive
Management Team (including Carolyn McCall and
Chris Kennedy who joined the Company in July 2010)
informed the Board and the Committee that, in view
of operating problems over the summer in 2010 and
the resulting difficulties experienced by customers
and staff, they did not consider it appropriate for its
members to receive bonuses. Accordingly £474,000
which might have otherwise been paid to Executive
Directors for bonuses was not awarded in that year.
Long Term Incentive Plan
The Long Term Incentive Plan (“LTIP”) provides for
annual awards of performance shares and matching
shares. The plan was approved by shareholders at the
AGM in 2005 and amended at the 2008 AGM.
The annual award limit for performance shares is
200% of basic salary.
Matching share awards are linked to the investment
of up to 50% of annual bonus earned into easyJet
shares, which are then matched on a 1:1 gross of tax
basis.
Performance and matching share awards vest three
years after grant, subject to continued employment
and the satisfaction of performance conditions (which
are now based on ROCE and until this year largely
related to return on equity).