Annual Report and Accounts 2012 - Speedy Hire plc

Benefits under the Performance Plan and the Co-Investment Plan
are non-pensionable.
Performance Plan
The key features of the Performance Plan are as follows:
> > the normal maximum award that can be made each year is over
shares worth up to 100% of salary. However, in FY2011, FY2012
and again for FY2013, the Committee agreed that the maximum
award should be capped at 70% of salary;
> > 2012 awards will vest subject to (i) TSR performance measured
over a three-year period beginning with the date of the grant
and (ii) continued employment;
> > 20% of each award will vest if the Company ranks at the median
compared to the FTSE 250 (excluding investments trusts)
measured over the three-year performance period,
with full vesting at the upper quartile (and straight-line
vesting between these points); and
> > an underpin also applies to the primary TSR measure, under
which the Committee may reduce the number of shares that
provisionally vest by reference to performance against the
relative TSR condition if this performance is not considered to be
truly representative of the Company’s underlying performance
over the relevant period. When considering the Company’s
underlying performance, the Committee will take account of
performance against a range of targets including operating
cash flow, profit against targets, working capital management
and share price progression.
Page 48 sets out details of performance conditions applying to
earlier awards.
TSR has been used again as the primary performance measure for
the Performance Plan awards as it is currently considered a robust
measure of the Company’s long-term performance. The Committee
will ensure that appropriate verification from our independent
remuneration consultants is sought as to the extent to which these
performance conditions are satisfied.
The Performance Plan awards granted in 2009 are not expected to
vest in 2012 due to performance being below the threshold levels.
Co-Investment Plan
The key features of the Co-Investment Plan are as follows:
> > Executive Directors are required to defer any annual bonus over
50% of basic salary into Company shares (they can choose to
defer and invest the rest of their bonus);
> > deferral is for three years;
> > matching shares are awarded by the Committee, which vest at
the end of the three-year deferral period if (i) pre-determined
performance criteria are satisfied (ii) the deferred shares are
retained and (iii) the individual remains employed by the
Company. The maximum matching, which is only awarded for
exceptional performance, could be on a 2:1, or 200% basis, by
reference to the gross amount of bonus deferred; and
Governance 45
> > to date, performance has been based on EPS growth over the
deferral period. For the last awards made, to obtain the
maximum match, EPS growth of greater than Consumer Price
Index (CPI) plus 12.5% per annum, calculated on a compound
basis, was required. A match of 1:1 would be earned if EPS
growth were greater than CPI plus 7.5% per annum, also
calculated on a compound basis (with no awards vesting
if EPS growth equalled CPI plus 7.5% per annum or less and
straight-line vesting between 7.5% and 12.5% per annum).
As there was no annual bonus payable to the Executive Directors
for FY2012, there will be no Co-Investment Plan award in 2012.
Dilution
The Performance Plan, Co-Investment Plan and SAYE share option
schemes provide that overall dilution through the issuance of new
shares for employee share schemes should not exceed an amount
equivalent to 10% of the Company’s issued share capital over a ten
year period. Within this 10% limit, dilution through the Performance
Plan and Co-Investment Plan is limited to an amount equivalent to
5% of the Company’s issued share capital over a ten year period.
Both limits are in line with institutional shareholder guidelines.
The Committee monitors the position prior to making awards under
these schemes to ensure that the Company remains within this
limit. As at the date of this Report, 3.25% of the 5% limit and 4.86% of
the 10% limit have been used.
Share ownership guidelines
Executive Directors are expected to build and maintain a
shareholding of 100% of salary. Steve Corcoran and Mike McGrath
are meeting this requirement in full. Lynn Krige currently has shares
with a value equal to approximately 8% of her salary due to her
having been only appointed on 29 September 2011.
Benefits in kind
The Group operates a policy whereby Executive Directors and
senior management are offered a car or cash alternative, as
appropriate, health insurance and life cover and pension
contributions or cash in lieu of pension contributions (further
details of which are set out on page 47). Lynn Krige may also claim
relocation costs incurred up to a pre-agreed limit although no
amounts had been claimed by 31 March 2012.
The Group does not operate a defined benefit pension scheme
and has no plans to introduce such a scheme.
Speedy Hire Plc Annual Report and Accounts 2012
Governance