The way ahead? - Vodafone

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72 Vodafone Group Plc Annual Report 2013 Directors’ remuneration (continued) Summary of our compensation policies and approach for the 2014 financial year In this forward-looking section we describe our principal reward policies along with a description of the elements of the reward package and an indication of the potential future value of this package for each of the executive directors. In addition we describe our policy applied to the nonexecutive directors. These policies, as well as the individual elements of the reward package, are reviewed each year to ensure that they continue to support our Company strategy. Pay for performance A high proportion of total reward will be awarded through short-term and long-term performance related remuneration. This is demonstrated in the charts below where we see that at target payout 70% of the package is delivered in the form of variable pay, which rises to over 86% if maximum payout is achieved. Fixed pay comprises base salary, benefits and pension contributions, while variable pay comprises the annual bonus and the long-term incentive opportunity assuming maximum co-investment and no movement in current share price. Cash in lieu of GLTI dividends is not included in the charts below. Fixed Variable Chief Executive Target 28.1% 71.9% Maximum 12.6% 87.4% Other Executive Directors Target 30.1% 69.9% Maximum 13.8% 86.2 % Fixed (Base salary + pension + benefits) Variable (Bonus + LTI) Alignment to shareholder interests Share ownership is a key cornerstone of our reward policy and is designed to help maintain commitment over the long-term, and to ensure that the interests of our senior management team are aligned with those of shareholders. Executives are expected to build and maintain a significant shareholding in Vodafone shares as follows: a Chief Executive – four times base salary; a other executive directors – three times base salary; a other Executive Committee members and the large market CEOs – two times base salary; a other market CEOs – one times base salary; and a other senior leaders (approximately 220 members) – one-half of base salary. The CEO, other executive directors, Executive Committee members and the CEO’s of our largest markets have been given five years to achieve their goals; others were given up to six years to achieve their goals. Current levels of ownership by the executive directors, and the date by which the goal should be or should have been achieved, are shown below and include the post-tax value of any vested but unexercised options. The values are calculated using a share price at 31 March 2013 of 186.60 pence. These values do not include the value of the shares that will vest in June. Goal as a % of salary Current % of salary held % of goal achieved Number of equivalent shares Value of shareholding (£m) Date for goal to be achieved Vittorio Colao 400% 1,170% 292% 6,959,472 13.0 July 2012 Andy Halford 300% 609% 203% 2,285,440 4.3 July 2010 Stephen Pusey 300% 445% 148% 1,372,594 2.6 June 2014 Collectively the Executive Committee including the executive directors own 17.8 million Vodafone shares, with a value of £33.3 million, whilst the full senior leadership team own approximately 43.7 million Vodafone shares with a value of £81.5 million at 31 March 2013.
Overview Business review Performance Governance Financials Additional information Service contracts of executive directors The Remuneration Committee has determined that after an initial term of up to two years executive directors’ contracts should thereafter have rolling terms and be terminable on no more than 12 months notice. The table below summarises the key elements of their service contract: Provision Detailed items Notice period 12 months Remuneration Salary, pension and benefits Company car or cash allowance Participation in the GSTIP, GLTI and the employee share schemes Termination payment Up to 12 months salary Entitlements under incentive plans and benefits that are consistent with the terms of such plans Non-competition During employment and for 12 months thereafter Date of service agreement Vittorio Colao 27 May 2008 Andy Halford 20 May 2005 Stephen Pusey 1 June 2009 Additionally, all of the Company’s share plans contain provisions relating to a change of control. Outstanding awards and options would normally vest and become exercisable on a change of control to the extent that any performance condition has been satisfied. The Remuneration Committee may also decide that the extent to which an award will vest will be further reduced pro-rata to reflect the acceleration of vesting. Fees retained for external non-executive directorships Executive directors may hold positions in other companies as non-executive directors and retain the fees. Andy Halford is a non-executive director of Marks and Spencer Group plc and in accordance with Group policy he retained fees for the year of £17,500. Michel Combes also held positions at Assystem SA and ISS Group and, in accordance with Group policy, he retained fees for his services until he left Vodafone on 31 October 2012 of €14,315 from Assystem SA and DKK 233,333 from ISS Group (£38,474 in total). Cascade to senior management The principles of the reward policy for executive directors are cascaded where appropriate throughout the organisation. Principles for the other members of the Executive Committee and large market CEOs, and members of the senior leadership team are set out below. Executive Committee and large market CEOs a Total remuneration and base salary Methodology consistent with that of the executive directors. a Annual bonus The annual bonus is based on the same metrics. For those executives leading a region, performance on these metrics is measured at region level as well as Group level. a Long-term incentive The long-term incentive is consistent with that which is offered to the executive directors including the performance metrics and the opportunity to invest in the GLTI to receive matching share awards. Senior leadership a Total remuneration and base salary Methodology consistent with that of the executive directors. a Annual bonus The annual bonus is based on the same metrics. For those senior leadership team members leading a local market, performance on these metrics is measured at local market level as well as Group level. a Long-term incentive The long-term incentive is delivered partly in performance shares and partly in restricted shares. The performance shares vest based solely on Vodafone’s adjusted free cash flow performance over a three-year period. This is the same metric which governs vesting of the LTI offered to executive directors and executive committee members. 73 Vodafone Group Plc Annual Report 2013
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Vodafone Group Plc Annual Report fo
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Overview This year’s report: Over
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