EasyJet 2013 Annual Report Download - page 75

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www.easyJet.com 73
Governance
Governance
Directors’ remuneration report
Charles Gurassa
Chairman of the
Remuneration
Committee
Key pay outcomes in respect of 2013
The basic salary of the Chief Executive Officer
(CEO) will increase by 2.5% from £665,000 (as it
has been since appointment in July 2010) to
£681,600 and the salary of the Chief Financial
Officer (CFO) will similarly increase from £410,000,
to £420,250, each with effect from 1 January 2014.
Annual bonuses are based on profit before tax and
key operational targets. Bonuses of 86.7% of the
maximum were awarded to the CEO and CFO, in
respect of 2013. This reflects the strong financial
and operational results the Company has achieved.
In addition to the portion of the bonus subject to
compulsory deferral, Carolyn McCall chose to defer
the maximum 50% of her bonus into shares for
three years under the Matching Share Award
element of the Long Term Incentive Plan (LTIP) and
Chris Kennedy chose to defer the maximum one
third of his bonus.
Under the LTIP, Performance Share Awards made in
March 2011 are due to vest in March 2014. These
awards are based on ROCE performance (excluding
operating lease adjustments) for the financial year
ended 30 September 2013. The Company achieved
ROCE (excluding operating lease adjustments)
performance of 23.0% reflecting exceptional
performance over the period, resulting in 100% of
the awards being earned, subject to continued
employment to the vesting date.
Remuneration policy for 2014
The Directors’ remuneration policy is set out for
shareholder approval in the policy report on pages
74 to 81. Details on how the policy will be applied in
practice for the 2014 financial year are set out in the
Annual Report on Remuneration on page 81. Following
the changes made to the remuneration policy last year,
no structural changes are proposed for the coming
year. The Committee will be reviewing the Long Term
Incentive Plan, which reaches the end of its 10 year
term in 2015. This review will include looking at the
timeframe of the LTIP, the policy on Matching Shares
and the possibility of introducing a minimum holding
period for the after tax value of shares after vesting.
Shareholder feedback
We are committed to maintaining an open and
transparent dialogue with shareholders. The
objective of this report is to communicate clearly
how much our Executive Directors are earning and
how this is strongly linked to performance. As
always, I welcome any comments you may have.
Charles Gurassa
Chairman of the Remuneration Committee
18 November 2013
On behalf of the Board, I am pleased to
present the Directors’ remuneration report
for the year ended 30 September 2013.
Performance of the Company in 2013
easyJet has continued to deliver sustainable returns
and growth for our shareholders. The key highlights
are as follows:
• profit before tax up by 50.9% to £478 million;
• 8.5 percentage point growth in ROCE (excluding
lease adjustments) from 14.5% in 2012 to 23.0%
in 2013. ROCE (including lease adjustments)
increased from 11.3% to 17.4% in the year;
• strong, sustained on-time performance of
87.4% of arrivals within 15 minutes; and
• increasing dividend with a proposed ordinary
dividend of 33.5 pence per share and a special
dividend of 44.1 pence per share.
Aligning remuneration policy with
Company principles
Simple and cost effective approach – In line with
our low cost and efficient business model, the
Committee has chosen to set a simple pay package
against the market. For example, our Executive
Directors receive minimal benefits (see page 75).
Support the stated business strategy of growth and
returns – Performance is assessed against a range
of financial, operational and longer term returns
ensuring value is delivered to shareholders, and
participants are rewarded for the successful delivery
of the key strategic objectives of the Company.
Pay for performance – Remuneration is heavily
weighted towards variable pay, dependent on
performance. This ensures that there is a clear link
between the value created for shareholders and the
amount paid to our Directors.
ANNUAL STATEMENT BY THE CHAIRMAN
OF THE REMUNERATION COMMITTEE