Vodafone 2006 Annual Report Download - page 66

64 Vodafone Group Plc Annual Report 2006
Board’s Report to Shareholders on Directors’ Remuneration
continued
The maximum that can be saved each month is £250 and savings plus interest may
be used to acquire shares by exercising the related option. The options have been
granted at up to a 20% discount to market value. UK based executive directors are
eligible to participate in the scheme and details of their participation are given in the
table on page 68.
Share Incentive Plan
The Vodafone Share Incentive Plan (“SIP”) is an Inland Revenue approved plan open to
all UK permanent employees. Eligible employees may contribute up to £125 each
month and the trustee of the plan uses the money to buy shares on their behalf. An
equivalent number of shares is purchased with contributions from the employing
company. UK based executive directors are eligible to participate in the SIP and details
of their share interests under these plans are given in the table on page 69.
Non-executive directors’ remuneration
The remuneration of non-executive directors is periodically reviewed by the Board,
excluding the non-executive directors. Basic fee levels were increased in April 2005 to
reflect directors’ considerably increased workload and the increased complexity of
managing an international group. The fees payable are as follows:
Fees payable from 1 April 2005
£’000
Chairman 510
Deputy Chairman and Senior Independent Director 130
Basic Non-Executive Director fee 95
Chairmanship of Audit Committee 20
Chairmanship of Remuneration Committee 15
Chairmanship of Nominations and Governance Committee 10
In addition, an allowance of £6,000 is payable each time a non-Europe based non-
executive director is required to travel to attend Board and Committee meetings, to
reflect the additional time commitment involved.
Details of each non-executive director’s remuneration are included in the table on
page 65.
Non-executive directors do not participate in any incentive or benefit plans. The
Company does not provide any contribution to their pension arrangements. The
Chairman is entitled to the provision of a fully expensed car or car allowance.
Service contracts and appointments of directors
Executive directors
The Remuneration Committee has determined that, after an initial term that may be of
up to two years’ duration, executive directors’ contracts should thereafter have rolling
terms and be terminable on no more than one year’s notice. All current executive
directors’ contracts have an indefinite term (to normal retirement date) and one year
notice periods. No payments should normally be payable on termination other than
the salary due for the notice period and such entitlements under incentive plans and
benefits that are consistent with the terms of such plans.
All the UK based executive directors have, whilst in service, entitlement under a long
term disability plan from which two-thirds of base salary, up to a maximum benefit
determined by the insurer, would be provided until normal retirement date. In the
event of disability, Thomas Geitner would receive his normal retirement pension based
on his accrued service.
Sir Julian Horn-Smith
Sir Julian Horn-Smith, the Company’s Deputy Chief Executive, will retire from the
Company following the AGM on 25 July 2006. Sir Julian will be entitled to subsisting
awards, pro-rated for both time and performance, in accordance with the standard
rules of each incentive plan in which he participates. Sir Julian will receive a pension in
line with the standard rules of the plan in which he participates, described in more
detail in “Pensions” on page 63. The Remuneration Committee agreed that he would
be offered the opportunity to purchase his company car on leaving the Company. No
severance payment will be payable to him.
Peter Bamford
Peter Bamford left the Company on 1 April 2006 and will receive salary and
compensation for loss of office in accordance with his legal entitlement. The total
payment is in the order of £1.25 million, including pension contribution. He will
receive his annual bonus for the 2006 financial year and the Remuneration Committee
has exercised discretion to allow him access to long term incentive awards, pro-rated
for time and performance.
Fees retained for non-executive directorships in other companies
Some executive directors hold positions in other companies as non-executive
directors. The fees received in respect of the 2006 financial year and retained by
directors were as follows: Fees retained by the
individual in the
Company in which non- 2006 financial year
executive directorship is held £’000(1)
Arun Sarin Bank of England 5.0
Thomas Geitner Singulus Technologies AG 61.9
Sir Julian Horn-Smith(2) Smiths Group plc 50.0
LloydsTSB Group plc 74.0
Sage Group plc 3.4
Ken Hydon(3) Reckitt Benckiser plc 20.0
Tesco PLC 18.5
Notes:
(1) Fees were retained in accordance with Company policy.
(2) An option over 400,000 shares was granted to Sir Julian in November 2005 by China Mobile (Hong Kong) Limited for his
duties as non-executive director, which are held for the benefit of the Company and will lapse on his retirement.
(3) Fees retained in the period to 26 July 2005.
Chairman and non-executive directors
In December 2005, the Company announced that Lord MacLaurin, the Company’s
Chairman, will retire from the Company following the AGM on 25 July 2006. Lord
MacLaurin will receive fees in accordance with his service contract until the end of the
2006 calendar year. The Company has entered into an agreement with Lord MacLaurin
that he will provide advisory services to the Company for a period of three years
following his retirement. During this period he will receive an annual fee of £125,000,
which he has advised the Company he intends to donate to charity.
In December 2005, Sir John Bond accepted the invitation of the Board to be appointed
as Chairman of the Company following the 2006 AGM. As Chairman, he will receive a
fee of £475,000 per annum. The appointment is indefinite and may be terminated by
either party on one year’s notice.
Non-executive directors, including the Deputy Chairman, are engaged on letters of
appointment that set out their duties and responsibilities. The appointment of non-
executive directors may be terminated without compensation.
The terms and conditions of appointment of non-executive directors are available for
inspection by any person at the Company’s registered office during normal business
hours and at the AGM (for 15 minutes prior to the meeting and during the meeting).
Philip Yea, Anne Lauvergeon and Tony Watson were appointed to the Board as non-
executive directors with effect from 1 September 2005, 1 November 2005 and 1 May
2006 respectively, and hold office on the same terms as other non-executive directors.
TSR performance
The following chart shows the performance of the Company relative to the FTSE100
index and the FTSE Global Telecommunications index, which are the most relevant
indices for the Company.
Graph provided by Towers Perrin and calculated according to a methodology that is compliant with the requirements of
Schedule 7A of the Companies Act. Data Sources: FTSE and Datastream
Note: Performance of the Company shown by the graph is not indicative of vesting levels under the Company’s various
incentive plans.
Historical TSR Performance
Growth in the value of a hypothetical
£100 holding up to March 2006
FTSE Global Telecoms and FTSE 100 comparison
based on 30 trading day average values
FTSE Global Telecoms
FTSE 100 Vodafone Group Plc
Value of hypothetical £100 holding
Mar 01 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06
20
40
60
80
100
120
140