Unilever 2009 Annual Report Download - page 73

70 Unilever Annual Report and Accounts 2009
Report of the Directors Governance
Directors’ Remuneration Report (continued)
Proposed changes from 2010 onwards
Annual Bonus
For Executive Directors, we are replacing underlying sales growth
and trading contribution with underlying volume growth,
underlying operating margin and trade working capital
improvement as drivers for the business performance for the
Annual Bonus from 2010 onwards. This brings their performance
measures in line with those for the other managers in Unilever.
Global Share Incentive Plan
The performance measures attached to GSIP awards will be:
• underlying sales growth (as now)
• underlying operating margin improvement (a new measure);
• operating cash flow (instead of ungeared free cash flow); and
• relative total shareholder return (as now) but with a revised
reference group as set out earlier.
The structure of vesting will remain the same as for previous
awards except that for Executive Directors and the Unilever
Executive the four measures will be equally weighted. In addition,
the minimum of the performance range for both underlying sales
growth and underlying operating margin must be reached before
any shares subject to either metric can vest. At the end of the
three-year performance period the Committee will also assess
Unilever’s performance against the internal measures relative to
the performance of peer group companies. Dividends will also be
re-invested in respect of the shares under award but will only be
paid out to the extent that the underlying shares vest.
It is also proposed that, with respect to GSIP awards made in
2008 and 2009, these performance measures will apply to those
years of the performance period that have yet to be completed.
For example, for GSIP awards made in 2009, this means that
the original performance conditions will apply for 2009 and
the updated performance measures for 2010 and 2011. The
Remuneration Committee is satisfied that the new measures
are no easier to satisfy. This is confirmed by independent advice.
Shareholding commitment
The Committee has decided that, with effect from 1 January
2010, the shareholding commitment should be increased to
400% of base salary for the Chief Executive Officer and to
300% for other Executive Directors and the Unilever Executive.
New Management Co-Investment Plan
At the 2010 AGMs, shareholders will be asked to approve a new
Management Co-Investment Plan. The Plan is being introduced to
support Unilever’s drive for profitable growth by encouraging
Unilever’s managers to take a greater financial interest in the
performance of the Company and the value of Unilever shares
over the long term. Under the new plan, Unilever’s senior
managers will have the opportunity to invest up to 60% of their
annual bonus in Unilever shares and to receive a corresponding
award of performance shares. The performance shares will vest
after three years, depending on Unilever’s performance, continued
employment and maintenance of the underlying investment. The
performance measures for the new Plan will be the same as we
are proposing to introduce for the Global Share Incentive Plan (as
set out earlier in this report) to ensure alignment with the drive for
profitable growth. As under the GSIP, the maximum vesting level
will be 200% for outstanding performance. Although Executive
Directors will be eligible, technically, to participate in the new Plan,
the Remuneration Committee has determined that participation
in the new Plan is unnecessary for the time being given the
additional alignment provided through the amended GSIP
performance measures and the increased share ownership
requirements. Further details on the new Plan are available in
the Notices of Meeting to the AGMs.
Arrangements for Jim Lawrence
Jim Lawrence left Unilever in December 2009. His salary has been
paid until 31 December 2009 and his annual bonus for 2009 has
been paid in full. The matching shares of his 2007 Share Matching
award have vested. The final tranche of the 2007 restricted share
award will vest later in 2010 and the 2007 GSIP performance
award will also vest later this year but will be time-proportioned.
The shares awarded in 2008 and 2009 both under the Share
Matching Plan and the GSIP have lapsed in full.
Arrangements for Jean-Marc Huët
Jean-Marc Huët joined Unilever in February 2010 as Chief Financial
Officer. He will be proposed for election to the Boards of NV and
PLC at the AGMs in May 2010. Given Unilever’s objective of
balancing remuneration more clearly towards performance-linked
variable pay, the agreed package follows this policy direction. His
salary in 2010 has been set at £680,000 per annum; the maximum
annual bonus opportunity for 2010 will be 150% of salary and the
grant value in 2010 under the GSIP will be 180% of salary. He will
be in a defined contribution plan with a similar value to that of
Unilever’s in the Netherlands, his home country.
To compensate for the forfeiture of incentives from his former
employer he has received a cash bonus of £680,000 and a
restricted share award with a value of £2.6 million. The shares will
vest in instalments of one-third of the total number of restricted
shares on each anniversary of the grant date over the next three
years, provided that he remains an employee of the company
through each vesting date.
Jean-Marc Huët has purchased 23,000 NV ordinary shares and
23,000 PLC ordinary shares.