Peachtree 2013 Annual Report Download - page 81

The Committee may also alter the performance measures, performance
period and vesting period of the annual bonus or long-term incentive,
subject to the rules of the plan, if the Committee determines that the
circumstances of the recruitment merit such alteration. The rationale will
be clearly explained.
In determining appropriate remuneration arrangements on hiring a new
executive director, the Committee will take into account relevant factors;
this may include the calibre of the individual, local market practice,
the existing remuneration arrangements for other executives and the
business circumstances. We seek to ensure that arrangements are
in the best interests of both Sage and its shareholders and seek not
to pay more than is appropriate.
The Committee may make awards on hiring an external candidate
to buy out remuneration arrangements forfeited on leaving a previous
employer. In doing so the Committee will take account of relevant
factors including any performance conditions attached to these awards,
the form in which they were granted (e.g. cash or shares) and the
timeframe of awards. We will generally seek to structure buyout awards
on a comparable basis to awards forfeited.
The rules of The Sage Group Performance Share Plan permit the grant
of two awards in the first year of employment; the individual limit from
the plan rules would apply to each award.
In order to facilitate the awards mentioned above, the Committee may
therefore rely on exemption 9.4.2. of the Listing Rules which allows for
the grant of awards to facilitate, in exceptional circumstances, the
recruitment of a director.
The remuneration package offered to new directors may include buyout
remuneration and other remuneration components included in the
remuneration policy (as per the policy table above), including: base
salary/fees, pension, benefits, annual bonus and long-term incentives.
The maximum level of variable pay which may be awarded to new
executive directors, excluding buy-out arrangements and awards
in the first year of employment detailed above, would normally be in line
with the maximum level of variable pay that may be awarded under the
annual bonus plan and performance share plan, but in any event the
Committee would not make an award of annual variable pay above
500% of base salary.
Loss of office payments
There are no pre-determined special provisions for directors with regard
to compensation in the event of loss of office; compensation is based
on what would be earned by way of salary, pension entitlement and
other contractual benefits over the notice period.
In the event that a contract is to be terminated, and a payment in lieu
of notice made, payments to the executive director may be staged over
the notice period, at the same interval as salary would have been paid.
During that period the executive director must take all reasonable
steps to obtain alternative employment and payments to the executive
director by the Company will be reduced to reflect payments received
in respect of that alternative employment.
There is no automatic entitlement to annual bonus. Executive directors
may receive a bonus in respect of the financial year of cessation, based
on performance against pre-determined targets. Where an executive
director leaves by reason of death, disability or ill-heath they would
receive a pro-rata bonus for the year of cessation.
The treatment of leavers under our long-term incentive plans is determined
by the rules of the relevant plans. The Committee will determine when
awards vest and the period during which awards may be exercised.
Deferred shares will be generally at risk of forfeiture if the executive
director leaves within the deferral period.
Performance shares lapse if the participant leaves employment in
case of termination for cause or resignation. In other cases, normally
including death and ill health, injury or disability, redundancy and
retirement, the Committee would decide that awards vest at the end
of the performance period and be pro-rated for time. Performance
conditions would apply. However, the Committee has the discretion
to allow the award to vest on cessation of employment (on a pro-rata
basis or otherwise) if, in the Committee’s view, the performance
conditions are met at that point. The Committee may vest the award
on any other basis if it believes there are exceptional circumstances
which warrant that. For example, it can be in the interest of the
Company for the Board to proactively organise succession and manage
an executive’s departure. When determining the treatment of outstanding
awards in those cases, the Committee will take into account the
executive’s level of performance and contribution to the transition.
Change of control
The rules of the performance share plan provide that, in the event of
a change of control, awards/options would vest to the extent that the
performance conditions (where applicable) are satisfied at the date of such
event. Any such early vesting would generally be on a time pro-rata basis.
The Committee may vary the level of vesting, if it believes that exceptional
circumstances warrant this, taking into account any other factors it
believes to be relevant in deciding to what extent an award will vest.
The directors may exchange their awards over Company shares for
awards in shares of the acquiring company if the terms of the offer
allow this.
Deferred bonus shares will vest in full upon a change of control.
Awards held under all-employee plans would be expected to vest on a
change of control and those which have to meet specific requirements
to benefit from permitted tax benefits would vest in accordance with
those requirements.
Executive director service contracts
All current executive directors have service contracts, which may be
terminated by the Company for breach by the executive or by giving
12 months’ notice by the Company or the individual.
Service contacts for new directors will generally be limited to 12 months’
notice. However, the Committee may agree a longer period, of up to
24 months initially, reducing by one month for every month served until
it falls to 12 months.
Terms and conditions for non-executive directors
The appointment of the non-executive directors is for a fixed term
of three years, during which period the appointment may be terminated
by the Board on six months’ notice. The Chairman’s term of appointment
is five years. There are no provisions on payment for early termination
in letters of appointment.
The letters of appointment of non-executive directors and service
contracts of executive directors are available for inspection at the
Company’s registered office during normal business hours and will
be available at the Annual General Meeting.
79The Sage Group plc | Annual Report & Accounts 2013
Financial statementsGovernanceStrategic report GovernanceStrategic report