Unilever 2012 Annual Report Download - page 77

74 Unilever Annual Report and Accounts 2012Report of the Directors overnance
DIRETORS’ REMUNERATION REPORT continued
Following the demerger announced by Sara Lee in January 2011,
the TSR comparator group for all outstanding awards was
adjusted with effect from 1 October 2012 to discontinue their
participation and to include Estée Lauder as a replacement.
Following the demerger announced by Kraft in August 2011,
as no suitable comparator could be established, the Committee
considered it appropriate to exclude, and not replace, Kraft from
the TSR comparator group for outstanding awards granted in
2011 and 2012 and for awards granted from 1January 2013.
The TSR comparator group will therefore consist of 19
companies with effect from 1 January 2013. Kraft is included
in the comparator group for 2010 awards which vest based
on performance to 31 December 2012.
Unilever TSR performance is therefore compared to the
performance of 19 other companies (20 including Unilever).
No shares in the portion of the award subject to TSR vest if
Unilever is ranked below position 10 in the peer group at the
end of the three-year period, 60% vest if Unilever is ranked 10th
(which is 53rd percentile performance against the peer group),
100% vests if Unilever is ranked 7th and 200% (150% under the
MCIP) vests if Unilever is ranked 3rd or above. Straight-line
vesting occurs between these points.
Dvdend re-nvestment
Both GSIP and MCIP provide that dividends will be re-invested
in respect of the conditional shares under award but will only
be paid out to the extent that the underlying shares vest.
Ultmate remedy
Grants under the GSIP and MCIP 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.
Following a thorough evaluation of performance in respect of
awards vesting based on performance to 31 December 2012 the
Committee considered it appropriate not to exercise its discretion
to adjust awards either upwards or downwards.
lawback
The Committee is authorised to reclaim or ‘claw back’
performance-related payments to Executive Directors in the
event of a significant downward revision of the financial results
of the Group. This includes the annual bonus together with any
awards that have been made and/or vested shares under the
Share Matching Plan, the GSIP and the MCIP.
Share Matchng Plan
Prior to their participation in the MCIP, Executive Directors were
required to invest 25% of their bonus into shares and hold them
for a minimum period of three years under the Share Matching
Plan. The Executive Directors would then receive a corresponding
matching award in the form of NV and PLC shares. The matching
shares would normally vest after three years provided the
underlying shares have been retained during this period and the
Executive Director has not resigned or been dismissed. The last
award made under the Share Matching Plan was made in 2011,
relating to the annual bonus earned for 2010, and will vest in
March 2014 (see page 78 for details).
Payments to former Drectors
There have been no payments to former Directors during the year.
Mnmum shareholdng requrement
The Articles of Association of NV and PLC do not require
Directors of NV or Directors of PLC to hold shares in NV or PLC.
However, the remuneration arrangements applicable to our
Executive Directors require them to build and retain a personal
shareholding in Unilever (by the later of 2015 or five years from
the date of appointment) to firmly align their interests with those
of Unilever’s long-term shareholders as outlined below.
On 31 December 2012, the Executive Directors’ share ownership
against guidelines were:
Share
ownershp
gudelne
as % of
base salary
Have
gudelnes
been met
Actual
share
ownershp
(as a % of
base salary)1
Paul Polman 400% Yes 1,041%
Jean-Marc Huët 300% Yes 353%
1 Includes bonuses invested in shares under the Share Matching Plan
and the MCIP, including accrued dividends. Unvested GSIP awards and
matching shares under the Share Matching Plan and the MCIP that are
subject to performance metrics do not count. Based on 30 day average
share prices to 31 December 2012.
The other members of the ULE are required to build a
shareholding of 300% of base salary. This requirement is 150%
of base salary for the ‘top 100’ management layer below.
Servng as a non-executve on the board of
another company
Executive Directors serving as non-executive directors
on the board of other companies are permitted to retain all
remuneration and fees earned from outside directorships
subject to a maximum of one outside listed directorship
(see outside appointments on page 50 for further details).
Paul Polman is a non-executive director of The Dow Chemical
Company and received an annual fee of €89,627 (US $115,000
based on the average exchange rate over the year €1 – US $1.2831).
In addition he received a restricted award of 3,150 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 dividends thereon. The shares cannot be sold or
transferred until Paul Polman leaves the board of directors of
TheDow Chemical Company, and in any case not earlier than
5March 2014. Jean-Marc Huët was appointed as a non-executive
director of Delta Topco Limited on 25 May 2012 and will receive
a fee of €109,111 (US $140,000) in respect of his directorship
for 2012.