Experian 2009 Annual Report Download - page 61

59Experian Annual Report 2009
Introduction 2 – 7
Governance Report on directors’ remuneration Financial statements
73 – 148
Business review 8 – 43 Business review 8 – 43
The remuneration committee:
members, role and frequency of
meetings
Details of the committee members,
the scope of their role and frequency of
meetings can be found in the corporate
governance statement.
Working with advisers
In making its decisions, the committee
consults with the Chairman, the
Chief Executive Ofcer, the Group
HR Director and the Global Head
of Reward who are invited to attend
meetings of the committee as
appropriate. The Chief Financial
Ofcer is also consulted in respect
of performance conditions attaching
to short and long-term incentive
arrangements.
The committee has access to
independent consultants to ensure
that it receives objective advice.
In 2007, Deloitte LLP (‘Deloitte’)
were appointed by the committee as
advisers and they continued to act
during the year under review. Deloitte
also provided unrelated advisory and
tax services to the Group during the
year. Kepler Associates (‘Kepler’) were
also appointed by the committee in
2007 and, during the year under review,
provided advice and valuation data
for Experian’s current and proposed
executive remuneration arrangements
and also provided independent advice
on target calibration for the short and
long-term incentive plans. Linklaters
LLP provided legal advice in respect of
share plan design and interpretation.
Remuneration philosophy
Experian’s remuneration philosophy
is that reward should be used to drive
business performance. In this regard,
the remuneration committee aims to
have in place a remuneration policy for
Experian which is consistent with its
business objectives and is designed to:
pay market-competitive base salary
–
levels;
provide competitive performance-
–
related compensation which
inuences performance and helps
attract and retain executives
by providing the opportunity to
earn commensurate rewards for
outstanding performance, leading
to long-term shareholder value
creation;
apply demanding performance
–
conditions to deliver sustained
protable growth in all our
businesses, thereby aligning
incentives with shareholders’
interests, setting these conditions
with due regard to actual and
expected market conditions;
provide a balanced portfolio of
–
incentives - both cash and share-
based - which align both short-
term (one year) and longer-term
(three year) performance such that
sustainable growth and value are
delivered for our shareholders;
drive accountability and
–
transparency and align remuneration
with the interests of shareholders;
and
deliver competitive benets to
–
underpin the other components of
the remuneration package.
Consistent with the policy, the
committee compares the Experian
remuneration arrangements with
those of other relevant organisations
and companies of similar size and
scope to Experian. The remuneration
arrangements are also reviewed in
light of changing market conditions,
which have become increasingly more
challenging over the year under review.
Performance-related incentives are
targeted at upper quartile levels for
outstanding performance to produce
a highly leveraged package if the
Group’s growth objectives are attained.
Experian is committed to performance-
related pay at all levels within the
organisation.
The committee undertook a review of
remuneration arrangements during the
year. This review concluded that, while
the key elements of our arrangements
are still aligned with the principles of
remuneration policy and long-term
strategy, certain changes should be
made to better align arrangements
with the creation of future shareholder
value. The key elements of
remuneration arrangements going
forward are summarised below.
The remuneration committee is
mindful of the current environment and
especially the need to link pay closely
to performance. In light of current
economic conditions and the desire to
link executive salaries more closely to
policy elsewhere in the organisation,
coupled with the committee’s desire to
ensure a greater emphasis on variable
pay going forward, the committee has
decided to freeze base pay levels for
the coming year for executive directors
and senior management. In the case of
the chief executive ofcer (‘CEO’) this
means his base pay will be frozen for a
second consecutive year.
The revised arrangements take into
account the need to align incentives
with market practice and conditions
and to strike the right balance between
short-term and long-term performance.
The proposed incentive arrangements
will provide a stronger focus on
absolute share price growth (through
the use of options and delivery of
all long-term incentives in shares),
balanced with relative share price
growth (in the Performance Share
Plan (‘PSP’)) and a balance between
internal and external measures
of performance. In addition, by
encouraging executives to invest in and
hold Experian shares through the co-
investment plan (‘CIP’) arrangements,
their interests will be further aligned
with those of our shareholders over the
longer term.
The proposed total compensation
package has a similar expected value
to the arrangements currently in place
and is driven by the need to replace the
reinvestment plan which was a one off
plan and will cease next year.
Further details of how remuneration
arrangements will operate going
forward are set out in the following
pages.
Report on directors’ remuneration