Holiday Inn 2014 Annual Report Download - page 83

Notes on DR Policy table summary
Use of discretion
The Committee reserves certain discretions under the Company’s
incentive plans. These operate in two main respects:
• enabling the Committee to ensure that outcomes under these
plans are consistent with the underlying performance of the
business and the interests of shareholders; and
• enabling the Committee to treat leavers in a way that is fair
and equitable to individuals and shareholders under the
incentive plans.
The Committee will also use its judgement as to what is appropriate
within the terms of the DR Policy to make decisions that do not
involve the exercise of discretion.
In all cases, the discretions are reserved as part of the DR
Policy in order to allow the Committee flexibility to ensure that
remuneration outcomes for Executive Directors are consistent
with business performance, at the same time as providing a high
degree of clarity for shareholders as to remuneration structure
and potential quantum. Any exercises of discretion by the
Committee will be fully disclosed and explained in the relevant
year’s Implementation of Remuneration Policy Report.
In relation to the LTIP, the Committee will review the vesting
outcomes under all of the LTIP measures at the end of each three-
year cycle against an assessment of Group earnings and the quality
of financial performance over the period, including sustainable
growth and the efficient use of cash and capital. If the Committee
determines that the vesting outcomes do not appropriately reflect
the financial performance of the Group, it may reduce the number
of shares that vest.
In relation to malus, for awards made from January 2012, the APP
and LTIP rules allow the Committee discretion to reduce the level
of unvested share awards if circumstances occur that, in the
reasonable opinion of the Committee, justify a reduction in one or
more awards granted to any one or more participants. The malus
provisions relate to unvested awards only. The circumstances
in which the Committee may consider it appropriate to exercise
its discretion include the following:
• misconduct that causes significant damage or potential damage
to IHG’s prospects, finances or brand reputation; and/or
• actions that lead to material misstatement or restatement
of accounts.
This may include, where appropriate, negligence on the part
of Executive Directors.
These features help ensure alignment between executive reward
and shareholder returns.
Policy on payment for loss of office
All current Executive Directors have a rolling service contract
with a notice period from the Company of 12 months. As an
alternative, the Company may, at its discretion, pay in lieu of that
notice. Neither notice nor a payment in lieu of notice will be given
in the event of gross misconduct.
Payment in lieu of notice could potentially include up to
12 months’ salary and the cash equivalent of 12 months’ pension
contributions, and other contractual benefits. Where possible,
the Company will seek to ensure that, where a leaver mitigates
their losses by, for example, finding new employment, there
will accordingly be a corresponding reduction in compensation
payable for loss of office.
Further details on the policy for determination of termination
payments are included in the DR Policy.
Approach to recruitment remuneration
The remuneration of any new Executive Director will be determined
in accordance with the DR Policy. In addition, the Committee may,
at its discretion, compensate a newly recruited Executive Director
for incentives from a previous employment foregone as a result
of their resignation. The Committee would seek validation of the
value of any potential incentives foregone. Awards made by way
of compensation for incentives foregone would be made on a
comparable basis, taking account of performance achieved, or
likely to be achieved, the proportion of the performance period
remaining and the form of the award. Compensation would, as
far as possible, be in the form of IHG LTIP or deferred share
awards, in order to immediately align a new Executive Director
with IHG’s performance.
Details of letters of appointment and notice periods for
Non-Executive Directors
Non-Executive Directors have letters of appointment, which are
available upon request from the Company Secretary’s office.
Patrick Cescau, Non-Executive Chairman, is subject to 12 months’
notice. All other Non-Executive Directors are not subject to notice
periods.
All Non-Executive Directors’ appointments and subsequent
re-appointments are subject to election and annual re-election
by shareholders at the 2015 AGM (see page 71).
Non-Executive Directors
Element Framework
Fixed Fees and benefits (cash) Maximum increase in annual fee in line with median FTSE 100 increases. Set by
the Chairman of the Board and Executive Directors. The Chairman’s fees are set by
the Committee. They are fixed for 12 months from 1 January. Non-Executive Directors
are not eligible to participate in any performance-related incentive plans. IHG pays
the cost of providing benefits as required.
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GROUP FINANCIAL STATEMENTS
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