Unilever 2011 Annual Report Download - page 53

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DIRECTORS’ REMUNERATION REPORT
Remuneration review
As we communicated in last year’s Report, the Committee has
now taken a close look at the competitive position of our Executive
Directors’ salaries. Following consultation with shareholders, the
Committee intends to increase the CEO’s salary by 6% to £975,200
during the course of 2012. The CFO’s salary will also be increased
by 5% to £714,000. It is the Committee’s intention that these
increases will not be implemented immediately but rather will be
implemented (with no backdating) at a time when the Committee
determines appropriate for the business. These salary increases
are in line with the salary increases that have been awarded to
other high performing UK/European employees at Unilever. The
Committee also made some changes to the structure of pension
and benefits in order to increase transparency for the individual
and for shareholders.
Further details on the proposed changes are provided in the
section entitled ’Proposed changes from 2012 onwards’.
2011 reward outcomes
2011 was another year of growth for Unilever despite difficult
markets and the external challenges facing the business. We
delivered a good set of financial results, growing sales and
earnings, particularly in emerging markets. We have also made
significant progress in the implementation of our strategy.
We set challenging bonus targets for 2011 reflecting our ambitious
growth objectives. The Committee considered performance
against these stretching targets as well as the quality of
performance delivered and the Executive Directors’ contribution
to the sustainability of the business. Taking these factors into
account the Committee determined that the CEO should be
awarded a bonus of 135% of base salary with the CFO being
awarded a bonus of 90% of base salary.
Global Share Incentive Plan awards granted in 2009 are due to
vest in March 2012 based on performance to 31 December 2011.
The Committee assessed financial performance against the
relevant metrics, TSR performance against peers and the
underlying quality of performance and determined that 87% of
the initial award (out of a maximum vesting of 200%) would vest.
The Committee considered that this level of vesting is appropriate
given the sustained delivery of performance against key strategic
metrics and our performance against peers in the challenging
economic climate.
Further details on performance and vesting levels are provided
below.
Long-term performance conditions
During 2012, the Committee intends to review performance
conditions to ensure they remain appropriate for the business and
are aligned with our strategy and the long-term creation of
shareholder value and in particular our desire to build a long-
term sustainable business. To the extent that the review results in
proposed changes to performance measures for long term
incentive plans, the Committee will consult with shareholders in
advance.
Paul Walsh
Chairman of the Remuneration Committee
Ann Fudge
Kees Storm
Michael Treschow
Remuneration Committee
The role of the Remuneration Committee is to make proposals to
the Boards for decisions on:
• the remuneration and benefits of Directors;
• the remuneration policy for the ULE and the Chief Auditor,
Group Controller, Chief Legal Officer and Group Secretary; and
• the design and terms of all share-based incentive plans.
The Committee’s key responsibilities in respect of Executive
Directors include making proposals to the Boards on:
• the remuneration policy;
• individual salary levels, bonuses, long-term incentive awards
and other benefits;
• performance frameworks, targets setting and performance
review; and
• determining contractual terms.
The Committee’s Terms of Reference are contained within
‘The Governance of Unilever’, which can be found at
www.unilever.com/investorrelations/corp_governance. Details of
Committee meeting attendance are contained in the section on
Corporate Governance on page 40.
During 2011 the Committee comprised Paul Walsh, who became
Committee Chairman in May 2011 on the retirement of Jeroen van
der Veer, Michael Treschow, Ann Fudge and from May 2011 Kees
Storm.
While it is the Committee’s responsibility to exercise independent
judgement, the Committee does request advice from
management and professional advisers, as appropriate, to ensure
that its decisions are fully informed given the internal and external
environment. The Committee appointed Deloitte LLP to provide
independent advice on various matters it considered in 2011.
During the year, Deloitte also provided specific tax, technology
consultancy and corporate finance services to Unilever. The
Committee reviewed the potential for conflicts of interest and
judged that there were appropriate safeguards against such
conflicts.
Unilever Annual Report and Accounts 2011
Report of the Directors Governance