The policy framework
The Group operates in a highly competitive, international market. Its business is complex, technologically advanced and has long time horizons. The Group is committed to achieving sustained improvements in performance and this depends crucially on the individual contributions made by the executive team and by employees at all levels. The Board therefore believes that an effective remuneration strategy plays an essential part in the future success of the Group.
Accordingly the Board has adopted, on the recommendation of the committee, a remuneration policy reflecting the following broad principles which it will continue to apply in 2009:
When determining remuneration, the committee takes into account pay and employment conditions elsewhere in the Group.
The committee regularly reviews both the competitiveness of the Group’s remuneration structure and its effectiveness in incentivising executives to enhance value for shareholders over the longer term. It considers that a successful remuneration policy needs to be sufficiently flexible to take account of future changes in the Group’s business environment and in remuneration practice.
For 2009, to ensure that executives are appropriately incentivised towards the achievement of stretching performance, a number of changes are being made to the Group’s annual and long-term incentives (as described in the relevant pages). Following these changes, executive director’s total incentive package opportunity will be positioned between the lower quartile and the median of FTSE 100 practice.