Experian 2007 Annual Report Download - page 51

Experian Annual Report 2007 |49
Acxiom Fair Isaac Harte-Hanks
Alliance Data Systems Fidelity National Financial IAC/Interactive Corp
Bisys Group Fimalac Moodys
Capita Group First American Reuters Group
Choicepoint First Data Thomson
Dun & Bradstreet Fiserv Total System Services
Equifax Global Payments
(a) Base salary and benefits
Toascertain the job’s market value, external remuneration consultants annually review and provide data about market salary levels and
advise the Remuneration Committee. Executive directors’ salaries are benchmarked against a mid-market level of main board executive
directors from the comparator companies in the FTSE 100 Index and other global comparators which reflect the market in which we recruit
talent. Before making a final decision on individual salary awards, the Committee assesses each director’s contribution to the business, to
reflect individual performance and experience.
In addition to base salary, executive directors receive certain benefits in kind including a car or car allowance, private health cover and life assurance.
(b) Annual bonus and Co-investment Plan
Annual bonuses are awarded for achieving profit growth targets. We believe that linking incentives to profit growth helps to reinforce our
growth objectives. Targets are calibrated by Kepler using benchmarks that reflect stretching internal and external expectations. Benchmarks
include: broker earnings estimates; earnings estimates for competitors; straight-line profit growth consistent with median/upper quartile
shareholder returns over the next three to five years; latest projections for the current year; budget; strategic plan; long-term financial goals.
2006/07 bonus
For bonuses paid in respect of the year ended 31 March 2007, executive directors were eligible for an annual incentive with a target of 50
per cent of salary and a maximum of 100 per cent of salary for substantially exceeding targets. Actual bonuses awarded were midway
between target and maximum level. This is reflective of strong performance against targets. The executive directors will be entitled to
participate in the final cycle of the GUS Co-investment Plan as invitations to participate were issued prior to the confirmation of the
demerger. Participants in the GUS Co-investment Plan receive a matching award of shares which rises on a sliding scale up to 2:1 for
maximum performance. The matching awards will vest three years following the date of grant. There will be no further awards under the
GUS Co-investment Plan.
2007/08 bonus
As disclosed in the demerger shareholder circular, it was agreed that for annual bonuses paid in respect of the year ending 31 March 2008, the
maximum bonus opportunity for executive directors would increase to 200 per cent of base salary. This level of annual bonus would only be
paid if Experian’s financial performance surpassed stretching financial targets and hence would only be payable if exceptional results were
delivered to shareholders. The extension to the bonus opportunity for the executive directors was intended to recognise the global market in
which Experian operates and to place a larger proportion of the executive directors’ total remuneration at risk and accompanied the reduction
of the matching opportunity under the Experian Co-investment Plan to 1:1 (previously 2:1 under the GUS Co-investment Plan). Executive
directors will not participate in the Experian Co-investment Plan for the 2007/08 fiscal year and any bonus payment will be made in cash.
2008/09 bonus
For annual bonus earned in respect of the 2008/09 fiscal year, executive directors will be offered their first opportunity since the demerger
to defer receipt of their bonus and invest it in Experian shares (“invested shares”) under the Experian Co-investment Plan. The release of
the invested shares will be deferred for three years. Participants will have dividend and voting rights in respect of the invested shares. The
number of invested shares acquired on behalf of the executive will be matched with an additional award of shares (“matching shares”).
The release of these matching shares to participants will be subject to the achievement of a performance condition.
The release of these shares will be deferred for three years including the original bonus deferral. Dividends will be accrued on these awards.
If an executive resigns during the three-year period he/she will forfeit the right to the matching shares and the associated dividends.
(c) Experian Performance Share Plan
The Experian Performance Share Plan was approved by GUS shareholders at the EGM on 29 August 2006. An initial award was made to
participants, including the executive directors, on 11 October 2006. There will be no further awards to executive directors under this plan
until June 2009. Performance shares are‘free’ Experian shares for which no exercise price is payable. The award is communicated to
participants as an allocation of shares which are subject to a performance condition which is measured over a three-year performance
period with a five-year vesting period. Dividends will accrue on these awards.
For the above demerger awards granted in October 2006, the performance condition is in two separate parts; 50 per cent of the award
will be subject to achievement against a sliding scale of growth in profit before tax (PBT). The threshold for vesting will be growth in PBT of
7per cent per year at which 25 per cent of this partof the awardwill vest rising, on a straight-line basis, to 100 per cent of this partof the
awardvesting at a growth in PBT of 14% per year.
The remaining 50 per cent of the award will vest according to the performance of Experian’s total shareholder return (TSR) relative to the
following group of peer companies: