Unilever 2008 Annual Report Download - page 66

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Unilever Annual Report and Accounts 2008 63
Report of the Directors
Report of the Remuneration Committee continued
The vesting of the final 30% of the shares in the award is
conditional on cumulative ungeared free cash flow performance
which is the basic driver of the returns that Unilever is able to
generate for shareholders.
For the business performance-focused parts of an award there will
be no vesting if performance is below the minimum of the range,
25% vesting for achieving minimum, and 200% vesting only at or
substantially above the top end of the range.
Performance for each condition will be assessed independently
from the other conditions over the performance period. Shares
will only vest if and to the extent that the respective performance
conditions are satisfied. There will be no re-testing.
The grant level as a percentage of salary agreed by the
shareholders for the Chief Executive Officer is a maximum of
200%, for the current Chief Financial Officer a maximum of
340% and for any other Executive Director a maximum of just
below 180%. The vesting will range between 0% and 200% of
grant level.
Share Matching Plan (linked to the annual incentive)
The Share Matching Plan enhances the alignment with
shareholders’ interests and supports the retention of key
executives. In addition, the necessity to hold the shares for
a minimum period of three years supports the shareholding
requirements.
The Executive Directors receive 25% of their annual incentive
in the form of NV and PLC shares. These are matched with an
equivalent number of matching shares. The matching shares will
vest after three years provided that the underlying shares have
been retained during this period and the Executive Director has
not resigned or been dismissed.
The Remuneration Committee considers that there is no need for
further performance conditions on the vesting of the matching
shares because the number of shares is directly linked to
the annual incentive (which is itself subject to demanding
performance conditions). In addition, during the three-year
vesting period the share price of NV and PLC will be influenced
by the performance of Unilever. This, in turn, will affect the
ultimate value of the matching shares on vesting.
Executive Directors’ pensions
The policy is that Executive Directors will be members of the
all-employee pension arrangement in their home country (or an
alternative of similar value) and will pay employee contributions
at the same rate as other employees in that arrangement.
Other benefits and allowances
Executive Directors enjoy similar benefits to those enjoyed by
many other employees of Unilever.
Serving as non-executive on the Board of another company
It is recognised that Executive Directors may be invited to become
Non-Executive Directors of other companies and that these
appointments, subject to the approval of the Chairman and
the Chief Executive Officer, may broaden their knowledge and
experience to the benefit of the Group (see page 18 for details in
the biographies). From 2008, if Executive Directors are serving on
the Board of other companies they have been permitted to retain
all remuneration and fees earned from outside directorships
subject to a maximum of one outside directorship. (see Other
appointments on page 47 for further details). Patrick Cescau, who
retired from Unilever on 31 December 2008, received an annual
fee of £70 000 from Pearson plc as a non-executive director. Of
that, 25% of the basic fee (totalling £15 000) was paid in Pearson
plc shares. Jim Lawrence was a non-executive director of Avnet
Inc up to 15 July 2008 in respect of which he received a fee of
$53 750 and a stock award in that company to the value of
$120 000. He is also a non-executive director of British Airways
Plc and received an annual fee of £40 000.
Future developments
The Remuneration Committee continues to monitor trends and
changes in the market. It keeps a watching brief on the
continuing alignment between Unilever’s strategic objectives and
the reward policy for Executive Directors. Due to the
unprecedented economic turmoil and the impact of the economic
downturn the salaries for 2009 will be frozen at the 2008 level.