Holiday Inn 2004 Annual Report Download - page 31

This report has been prepared by the Remuneration Committee
and has been approved by the Board. It complies with
Schedule 7A to the Companies Act 1985, which incorporates
the Directors’ Remuneration Report Regulations 2002, and also
with the Combined Code applicable for the 2004 financial year.
This report will be put to shareholders for approval at the
forthcoming Annual General Meeting.
1 THE REMUNERATION COMMITTEE
During the year, the Committee comprised the following
non-executive directors:
David Prosser – Chairman
David Kappler (from 21.6.04)
Ralph Kugler
Robert C Larson+
Sir Howard Stringer
No member of the Committee has any personal financial interest,
other than as a shareholder, in the matters to be decided by
the Committee. The Committee met six times in the year.
Messrs Kugler and Larson and Sir Howard Stringer were unable
to attend one meeting each.
The Committee advises the Board on overall remuneration policy.
The Committee also determines, on behalf of the Board, and
with the benefit of advice from external consultants and members
of the Human Resources department, the remuneration of the
executive directors and other members of the Executive Committee.
Those who provided material advice or services to the Committee
during the year were:
Jim Larson+– Executive Vice President, Human Resources
David House – Senior Vice President & Head of Reward
David Webster – Chairman
Richard North – Chief Executive
Linklaters
Towers Perrin Inc.
+No family relationship between Robert C Larson and Jim Larson.
The Executive Vice President, Human Resources has direct
access to the Chairman of the Committee. Messrs J Larson and
House, who are Human Resource professionals and employees,
have advised the Committee on all aspects of the Group’s reward
policies and structures. Towers Perrin Inc., an external
consultancy, advised the Committee on reward structures
and levels applicable in the markets relevant to the Group.
Towers Perrin Inc. did not provide any other services to the
Group. Linklaters provided other legal services to the Group.
Messrs J Larson and House, Linklaters and Towers Perrin Inc.
were originally appointed by the Group. The terms of reference
of Towers Perrin Inc. are available from the Company Secretary’s
office on request.
2 POLICY ON REMUNERATION
OF NON-EXECUTIVE DIRECTORS
Non-executive directors, including the Chairman, have letters of
appointment. Their appointment and subsequent reappointment is
subject to election and re-election by shareholders.
Non-executive directors are paid a fee which is approved by the
Board on the recommendation of the executive directors, having
taken account of the fees paid in other companies of a similar
complexity, and the skills and experience of the individual. Higher
fees are payable to the Chairman of the Remuneration Committee
and to the Senior Independent Director, who chairs the Audit
Committee, reflecting the additional responsibilities of these roles.
Remuneration levels were reviewed during 2004. In view of the
significant increased demands on non-executive directors as a
result of increasing corporate governance requirements, including
in respect of US obligations, non-executive directors’
remuneration was increased with effect from 1 January 2005.
3 POLICY ON REMUNERATION OF EXECUTIVE DIRECTORS
AND SENIOR EXECUTIVES
The following policy has applied throughout the year and will
apply in future years, subject to ongoing review.
3.1 Total level of remuneration
The Committee aims to ensure that remuneration packages are
offered which:
• attract high quality executives in an environment where
compensation levels are based on global market practice;
• provide appropriate retention strength against loss of key
executives;
• drive aligned focus and attention to key business initiatives
and appropriately reward their achievement;
• support equitable treatment between members of the same
executive team; and
• facilitate global assignments and relocation.
The Committee is aware that, as a UK listed company, IHG PLC’s
incentive arrangements may be expected to recognise UK
investor guidelines. However, given the global nature of the Hotels
business, an appropriate balance needs to be drawn in the
design of relevant remuneration packages between domestic
and international expectations.
3.2 The main components
The Group has performance-related reward policies. These are
designed to provide the appropriate balance between fixed
remuneration and variable ‘risk’ reward, which is linked to the
performance of both the Group and the individual.
Group performance-related measures are chosen carefully to
ensure a strong link between reward and true underlying financial
performance, and emphasis is placed on particular areas
requiring executive focus.
InterContinental Hotels Group 2004 29
Remuneration report