Experian 2016 Annual Report Download - page 88

Annual bonus
Performance metrics
Annual bonus outcomes depend on the Group’s growth in Benchmark PBT at constant currency relative to stretching targets set
at the start of the financial year. We use Benchmark PBT because:
• as a profit growth metric, it reflects one of Experian’s key performance indicators;
• in line with Experian’s business strategy, it incentivises executives to generate returns for the business; and
• it is simple to understand and to measure.
For the purposes of the annual bonus, we measure Benchmark PBT growth on a constant currency basis, to strip out the effects of
exchange rate fluctuations which are outside of management’s control. This is consistent with the approach we take for our long-
term incentive plans.
The target setting process
Each year when setting bonus targets, the Committee undertakes a rigorous exercise to ensure the targets are sufficiently
stretching. Before finalising them, it considers the strategic context and the targets at three separate meetings between January and
May. Targets are set in the context of the Group’s strategic plan and approved budget. The Committee takes into account a number
of factors when setting the targets:
Internal expectations External expectations
Strategic plan
Budget for the forthcoming year
Current year performance
Brokers’ earnings estimates
Wider economic expectations
Competitors’ earnings estimates
Targets are structured as a sliding scale, with maximum awards only payable for achievement of significant levels of performance.
Performance target disclosure
As our Benchmark PBT growth targets are set with reference to our strategic plan and budget, disclosing them could be useful to
our competitors and may allow them to build up a picture of our strategic intentions, for example in terms of future areas of growth
or acquisitions. This could be potentially damaging to the Company and therefore not in the interests of our shareholders. As a
result, the Committee has historically taken the view not to disclose specific bonus target ranges. However, following discussions
with our key shareholders and major UK investor bodies, the Committee has reviewed its position and has decided in future to
disclose the annual bonus targets one year following the completion of the relevant performance period. This new approach will
apply for the year commencing 1 April 2016 and these targets will be disclosed in the following year’s Report.
We believe that delaying disclosure by one year strikes an appropriate balance between protecting the commercial interests of
Experian and its shareholders, and providing shareholders with greater transparency in respect of our targets.
Annual bonus outcomes
The table below sets out our growth in Benchmark PBT for bonus purposes relative to our targets, and the resulting executive
director annual bonus outcomes:
Benchmark
PBT growth
Achievement
% of maximum
Bonus payout
’000
Bonus payout
% of salary
% of bonus
deferred under
the CIP1
Brian Cassin £1,750 200% 100%
Lloyd Pitchford 5.3% 100% £1,080 200% 100%
Kerry Williams US$1,850 200% 100%
1 Bonus will be deferred into Experian shares under the CIP for a three-year period. Deferred bonus shares are not subject to any further conditions. The
deferred bonuses may be matched with an award of shares of up to two times the value of the gross bonus deferred, subject to the performance conditions
set out in the CIP awards section below being met as well as continued service.
Annual report on remuneration continued
86 Governance •Report on directors’ remuneration