Unilever 2011 Annual Report Download - page 57

54
DIRECTORS’ REMUNERATION REPORT continued
As per 2011 the current TSR peer group is:
Avon Heinz Nestlé
Beiersdorf Henkel PepsiCo
Campbell Kao Procter & Gamble
Coca-Cola Kellogg Reckitt Benckiser
Colgate Kimberly-Clark Sara Lee
Danone Kraft Shiseido
General Mills L’Oréal
See below under the section headed ‘Proposed changes from
2012 onwards’ for the policy for 2012.
To allow shareholders more transparency (rear view mirror)
around the performance conditions related to our long-term
incentives the Committee committed to disclose, after the vesting,
where each performance condition ended up on a range from
threshold to maximum. The GSIP vesting outcomes for 2011 and
2012 are set out below.
2011 outcomes
In 2008, Paul Polman was granted a conditional award of
performance shares under the GSIP. His target award (as a %
ofbase salary) was 189%. The performance period ran from 1
January 2008 to 31 December 2010. The award was based on:
• USG (underlying sales growth): 30% of the award
• UFCF (ungeared free cash flow performance): 30% of the
award and
• TSR: 40% of the award.
The vesting range is between 0% and 200% of grant level.
In assessing Unilever’s performance the Committee noted that:
• USG was just below target at 5% with a vesting of 97%;
• UFCF was just below target at €12.6 billion, with a vesting
of97%; and
• Unilever was ranked 8th amongst its peer group in terms of
TSR with a vesting of 88%.
The total overall vesting was 93%.
2012 outcomes
In 2009, Paul Polman was granted a conditional target award of
190% under the GSIP. The performance period ran from 1 January
2009 to 31 December 2011. The award was based on the same
performance conditions as set out above for the GSIP 2008 award.
These were changed by the Committee with effect from 2010 as
follows:
• USG: 25% of the award;
• OCF (operating cash flow): 25% of the award;
• UOMI (underlying operating margin improvement): 25% of the
award; and
• TSR: 25% of the award (whereas in 2009 the weighting % was
40%).
In addition, the conditions USG and UOMI must reach the
threshold of the performance range for both performance
conditions before any shares subject to either performance
condition can vest. The vesting range is between 0% and 200% of
grant level.
Due to the change of the performance targets effective in 2010,
the GSIP maturing at the end of 2011 comprised two parts: the
first for 2009, the results for which had already been reviewed and
approved by the Committee in 2010 as follows:
• USG was just below target at 3.5% with a vesting of 76%; and
• UFCF significantly exceeded the maximum performance level
at €5.2 billion, with a vesting of 200%.
The second part for the period 2010 through 2011 the Committee
determined that:
• USG was just above target at 5.3% with a vesting of 118%;
• OCF was just below target at €7 billion with a vesting of 85%;
• UOMI was just above threshold at 4bps with a vesting of 40%;
and
• in terms of TSR which was measured over the full
performance period (2009-2011) Unilever was ranked 10th
amongst its peer group with a vesting of 63%.
In combination with the results for the 2009 period these
outcomes resulted in a overall vesting of 87%. This grant will vest
on 19 March 2012.
The Committee reviewed the above vesting outcomes for the GSIP
2008 and 2009 awards and considered that both were appropriate
and in line with the underlying performance of the business and
against key peers.
Ultimate remedy
Grants under the MCIP and GSIP are subject to ultimate remedy.
Upon vesting of an award, the Committee shall have the
discretionary power to adjust the value of the award if the award,
in the Committee’s opinion taking all circumstances into account,
produces an unfair result. In exercising this discretion the
Committee may take into account Unilever’s performance against
non-financial measures. The Committee will only adjust the value
of a vesting award upwards after obtaining shareholder consent.
Dividend reinvestment
Both MCIP and GSIP provide that 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.
Serving as non-executive on the board of another company
Executive Directors serving as a non-executive director on a
board of another company are permitted to retain all
remuneration and fees earned from outside directorships subject
to a maximum of one outside listed directorship (see Other
appointments on page 34 for further details). Paul Polman is a
non-executive director of The Dow Chemical Company and
received an annual fee of €82,408 (based on the average exchange
rate over the year: €1 = US $1.3955). In addition he received a
restricted award of 2,850 ordinary shares with a nominal value of
US $2.50 per share in the capital of The Dow Chemical Company.
The shares include the rights to vote and to receive dividend
thereon. The shares cannot be sold or transferred until Paul
Polman leaves the board of directors of The Dow Chemical
Company, but not earlier than 7 March 2013.
Unilever Annual Report and Accounts 2011
Report of the Directors Governance