EasyJet 2013 Annual Report Download - page 78

Download and view the complete annual report

Please find page 78 of the 2013 EasyJet annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

easyJet plc Annual report and accounts 2013
76
Element
Purpose and
link to strategy Operation (including maximum levels)
Framework used to assess performance and
provisions for the recovery of sums paid
Annual
bonus
To incentivise and
recognise execution
of the business
strategy on an
annual basis.
Rewards the
achievement of
annual financial and
operational goals.
Compulsory and
voluntary deferral
provides alignment
with shareholders.
Maximum opportunity of 200% of salary for CEO
and 150% of salary for other Executive Directors.
One third of the bonus earned is subject to
compulsory deferral into shares (or equivalent)
typically for a period of three years and is normally
subject to continued employment. Executive
Directors can choose to voluntarily defer a further
portion of their bonus into shares for three years
which may be eligible for a Matching Share Award
under the LTIP (see below). The remainder of the
bonus is paid in cash.
Dividend equivalent payments may be made (in
cash or shares) under the Deferred Share Bonus
Plan, at the time of vesting and may assume the
reinvestment of dividends.
All bonus payments are at the discretion of the
Committee, as shown following this table.
Bonuses are based on stretching
financial, operational and, in some
cases, personal/departmental
performance measures as set and
assessed by the Committee in its
discretion. Financial measures (e.g.
profit before tax) will represent the
majority of bonus, with other
measures representing the balance.
A sliding scale of targets is set for
each measure, with 10% of each
element being payable for achieving
the relevant threshold hurdle.
Safety underpins all of the operational
activities of the Group and the bonus
plan includes an underpin that enables
the Remuneration Committee to scale
back the bonus earned in
the event that there is a safety event
which it considers warrants the use
of such discretion.
The cash and deferred elements of
bonuses are subject to clawback at
the discretion of the Committee in the
event of a misstatement of results for
the year to which the bonus relates, or
an error in determining the cash bonus
or the number of shares comprising
a deferred share award within three
years of the payment of the
cash bonus.
LTIP
Matching
Share Award
To incentivise and
recognise execution
of the business
strategy over the
longer term.
Rewards strong
financial performance
and sustained
increase in
shareholder value.
Each year, the Executive Directors can voluntarily
defer a portion of their bonus which is invested
(after tax) into shares for three years. The
maximum voluntary deferral is restricted to:
• CEO: half of bonus; and
• Other Executive Directors: one third of bonus.
The maximum voluntary investment is therefore
limited to 100 per cent of salary in the case of
the CEO and 50 per cent of the salary in case
of the CFO.
The amount they defer may be eligible for a
1:1 match, based on the number of pre-tax shares
deferred. Vesting of matching shares is dependent
on the delivery of performance goals. Awards
normally vest over a three year period.
A dividend equivalent provision exists which allows
the Committee to pay dividends on vested shares
(in cash or shares) at the time of vesting and may
assume the reinvestment of dividends.
Matching Share Awards vest based
on three year performance against a
challenging range of financial targets
and relative Total Shareholder Return
(TSR) performance set and assessed
by the Committee in its discretion.
Financial targets will determine
vesting in relation to at least 50%
of a Matching Share Award.
In order for the TSR portion of the
award to be earned, the Company’s
absolute TSR performance must
also be positive over the
performance period.
25% of each element vests for
achieving the threshold performance
target with 100% of the awards being
earned for maximum performance.
(There is straight line vesting between
these points.)
The Matching Share Awards can be
reduced (clawback) at the discretion
of the Committee within three
years of vesting, in the event of a
misstatement of the results or an
error in determining the extent to
which performance targets were met.
Governance
Directors’ remuneration report continued