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Directors’ Remuneration Report
45
Directors’ Remuneration Report
Executive Directors’ Elements of Remuneration
The Executive Directors’ total remuneration consists of salary,
annual bonus, long term incentives, pensions and other
benefits such as company car allowance and health care.
Salary
The Board agreed to pay all its Executive Directors a salary of
£125,000 in the year. The salary is lower than that of
executives paid in companies of comparable size and
complexity. The Committee feels that it is appropriate to
increase salary levels towards market levels over a period of
years and to reward executives through the variable pay
arrangements. For 2011 the committee has reviewed salary
levels and awarded a salary of up to £200,000 for Executive
Directors for the current year ahead.
Annual Bonus
The Remuneration Committee has reviewed bonus
arrangements in relation to the new salaries for Executive
Directors and potential amounts under the new incentive plan
and determined that bonus payments are now based on
exceptional performance . The maximum bonus level is 100%
of base salary, of which 75% is based on the attainment of
financial objectives and 25% is based on the attainment of
other corporate operational objectives such as business wins,
fleet utilisation, health and safety and efficiency savings.
Stobart Executive Equity Incentive Plan (SEEIP)
The rules for the SEEIP were approved by shareholders in
September 2007 and the Group made awards under the SEEIP
to Ben Whawell of 300,000 options in March 2008 and of
125,000 options in August 2009. Awards under the SEEIP are
also made to certain other senior management and seek to
reward performance measured over a three year period.
The awards under SEEIP are conditional based on performance
measured over a period to a fixed point in time. There are two
performance measures associated with the SEEIP, chosen to
align with the best interests of the Group and its shareholders.
These are an Earnings Per Share (EPS) test and a Total
Shareholder Return (TSR) test.
The performance period for the EPS based options is for the
year to 28 February 2011 (July 2008 options), to 28 February
2012 (August 2009). The performance period for the TSR
based options is a three year period from the date of grant
of the options.
The vesting of 50% (March 2008 award), 40% (July 2008
award) and 40% (August 2009 award) are dependent on the
Company’s TSR performance against the constituents of the
FTSE small cap index (excluding investment trusts) over the
three year period from the date of the grant. No award vests
for below median performance. At median performance
awards vest in proportion to full vesting for upper quartile
performance.
The vesting of the remaining 60% (July 2008 award) and 60%
(August 2009 award) are dependent on EPS growth targets:
EPS Growth July 2008 Award
<9.3p
0% vests
Between 9.3p and 12.9p Pro rata between 0% and 100%
>12.9p
100%
EPS Growth August 2009 Award
<10.2p
0% vests
Between 10.2p and 13.3p Pro rata between 0% and 100%
>13.3p
100%
The EPS targets for the March 2008 awards are not shown
because these have already vested in the year.
The EPS measure will be a normalised EPS basis as determined
by the Remuneration Committee but excluding any charge in
relation to the options under the SEEIP.
Share Option Schemes
At the year end 2.8% of shares of the Company’s issued share
capital has been allocated under share option schemes.
New Incentive Plan
After the year end the Group has implemented a new senior
executive incentive plan which covers up to 38 million Ordinary
Shares and aligns managers’ interests more closely with
shareholders’ interests.
Service Contracts
The Committee’s policy on service contracts is that they should
contain a maximum notice period of one year and all Directors’
contracts comply with this policy.
The Executive Directors’ service contracts are dated 8 May
2009. The Non-Executive Directors’ service contracts are dated
as follows: Rodney Baker Bates: 21 September 2007, Michael
Kayser: 13 August 2008, Jesper Kjaedegaard: 1 July 2009, Alan
Kelsey: 23 May 2011, Paul Orchard-Lisle: 23 May 2011,and
David Beever: 23 May 2011.
The notice periods are 12 months for Executive Directors and
one month for Non-Executive Directors. There are no provisions
for further compensation on early termination.
Rodney Baker-Bates, Michael Kayser, and Jesper Kjaedegaard,
will all retire and be proposed for re-election at the forthcoming
Annual General Meeting on 30 June 2011.