Holiday Inn 2004 Annual Report Download - page 34

3.6 Contracts of service
a) Policy
The Remuneration Committee’s policy is for executive directors
to have rolling contracts with a notice period of 12 months.
Prior to the Separation of Six Continents PLC Richard Hartman,
Richard North, Stevan Porter and Richard Solomons entered into
service agreements with a notice period of 12 months. Following
the year end, Andrew Cosslett entered into a service agreement
with an initial notice period of 24 months, reducing month by
month to 12 months after 12 months. All new appointments are
intended to have 12 month notice periods. However, on occasion,
to complete an external recruitment successfully, a longer initial
period reducing to 12 months may be used, following guidance in
the Combined Code.
No provisions for compensation for termination following change
of control, or for liquidated damages of any kind, are included in
the current directors’ contracts. In the event of any early
termination of an executive director’s contract the policy is to seek
to minimise any liability.
David Webster took over as interim Chief Executive on
15 September 2004 following announcement that Richard North
would resign as a director of the Company on 30 September 2004.
David Webster’s remuneration in his capacity as interim
Chief Executive is exclusive of his remuneration in his capacity
as non-executive Chairman of the Company, which is the subject
of a letter of appointment, with effect from 1 January 2004.
David Webster’s appointment as Chairman is subject to six
months’ notice.
Non-executive directors, Ralph Kugler, Robert C Larson,
David Prosser and Sir Howard Stringer signed letters of
appointment effective from the listing of IHG PLC. David Kappler
signed a letter of appointment effective from 21 June 2004. All
non-executive directors’ appointments are subject to re-election
at the Annual General Meeting at which they retire by rotation.
b) Directors’ contracts
Contract Unexpired Term/
Directors Effective Date Notice Period
Andrew Cosslett 3.2.05 23 months
Richard Hartman 15.4.03 12 months
Stevan Porter 15.4.03 12 months
Richard Solomons 15.4.03 12 months
Richard North 15.4.03 Terminated
Richard North’s service contract provided for a notice period of
12 months. The severance arrangements which were entered into
following his resignation on 30 September 2004 provided for him
to receive a payment of one month’s basic salary in each month
up to September 2005, subject to mitigation in the event of his
taking up an alternative appointment. Details of his entitlements
in respect of the Executive Share Option Plan, the Short Term
Deferred Incentive Plan, the Performance Restricted Share Plan,
and pension, are contained in the appropriate tables in the
audited part of this report.
3.7 Policy regarding pensions
UK-based executive directors and senior employees participate
on the same basis in the executive section of the InterContinental
Hotels UK Pension Plan and, if appropriate, the InterContinental
Executive Top-Up Scheme. Stevan Porter and senior US-based
executives participate in US retirement benefits plans. Executives
in other countries, who do not participate in these plans, will
participate in local plans, or the InterContinental Hotels Group
International Savings & Retirement Plan.
The Company is considering its detailed response to the new
pension regime resulting from the Finance Act 2004 and applying
from April 2006. Currently, the pension arrangements for UK-based
executive directors and other senior employees provide benefits
from both the tax-approved InterContinental Hotels UK Pension
Plan and the unfunded InterContinental Executive Top-Up
Scheme. After 2006 it may be possible to amend these plans to
continue to provide, tax efficiently, similar benefits in total, but in
some cases with a different split of benefits between the two
plans. The Company’s approach will be finalised during 2005.
The information provided in the following pages of this report has
been audited by Ernst & Young LLP.
Remuneration report
32 InterContinental Hotels Group 2004