Directors' Report: Governance - British American Tobacco

REMUNERATION REPORT
CONTINUED
Table 6: Executive Directors’ (1) Long-Term Incentive Plan awards; (2) Deferred Share Bonus Scheme share interests; and (3) share
options – ordinary shares of 25p in British American Tobacco p.l.c. – audited continued
Nicandro Durante
Shares – Long-Term Incentive Plan
At At Illustrative
1 Jan Awarded Vested Lapsed 31 Dec Value value
2009 in 2009 in 2009 in 2009 2009 vested vesting
Performance Award Number Number Number Number Number in 2009 Vesting 2010
LTIP plan period date of shares of shares of shares of shares of shares £ date £
2007 2008/2010 15 May 08 74,962 – – – 74,962 – 15 May 11 –
2007 2009/2011 27 Mar 09 – 94,996 – – 94,996 – 27 Mar 12 –
Total 74,962 94,996 – – 169,958 – –
Notes:
a In March 2006, Nicandro Durante received from the Company a cash-based award equivalent in value to 31,380 shares, subject to the same performance conditions and
vesting terms as awards made under the 1998 LTIP plan. This award vested on 15 March 2009 and is now exercisable; it will be cash settled by the Company upon exercise.
b In May 2007, Nicandro Durante received from the Company a cash-based award equivalent in value to 34,416 shares, subject to the same performance conditions and
vesting terms as awards made under the 2007 LTIP plan. This award will vest on 15 May 2010 and will be cash settled by the Company upon exercise. Based on the share
price on 22 February 2010 (the latest practicable date prior to publication) of 2,200.0p, he will receive a cash payment of £757,152.
Shares – Deferred Share Bonus Scheme
At 1 Jan Awarded Released At 31 Dec
2009 in 2009 in 2009 2009
Award Number Number Number Number
date of shares of shares of shares of shares
13 Mar 07 10,566 – – 10,566
13 Mar 08 6,028 – – 6,028
27 Mar 09 – 29,164 – 29,164
Total 16,594 29,164 – 45,758
Note:
a In March 2006, Nicandro Durante received a cash-based award on equivalent terms to the DSBS with a value equivalent to 5,380 Deferred Shares from the Company’s
subsidiary, Souza Cruz S.A., a former employing company of Nicandro Durante. This award was released and cash settled by Souza Cruz S.A. during 2009.
Options – Sharesave Scheme
At 1 Jan Granted Exercised At 31 Dec Dates
2009 in 2009 in 20091,2 2009 from Latest
Number Grant Grant Number Number Number which expiry
of shares date price of shares of shares of shares exercisable date
1,421 24 Nov 06 1,152.0p – – 1,421 Jan 2012 Jun 2012
Long-Term Incentive Plan notes:
1 The closing mid-market price of ordinary shares in British American Tobacco p.l.c. on 15 March 2006 was 1,435.0p, on 15 May 2007 was 1,590.0p, on 15 May 2008
was 1,966.0p, on 16 March 2009 was 1,704.0p (the vesting date of 15 March 2009 not being a business day) and on 27 March 2009 was 1,534.0p.
2 The vesting of the awards on 15 March 2009 was reported in the Company’s Directors’ Report and Accounts 2008 showing illustrative vesting values based on the
mid-market price of ordinary shares of 1,719.0p at 23 February 2009, being the latest practicable date prior to publication of that Report.
3 The May 2007 award will vest on 15 May 2010 at 100 per cent in the manner described in the Remuneration report. For illustrative purposes only, the share price on
22 February 2010, being the latest practicable date prior to publication, of 2,200.0p has been used to value the vesting awards.
4 The performance conditions applicable to the LTIP awards relate to an apportionment between measures relating to TSR and EPS-based criteria with reference to a three
year performance period. TSR combines both the share price and dividend performance of the Company as set against two comparator groups: (a) the FTSE 100 Index at
the beginning of the performance period; and (b) a peer group of FMCG companies. A total of 50 per cent of the total award is based upon each of two separate measures
(25 per cent for each measure). In the event of upper quartile performance by the Company relative to the comparator groups referred to above, 25 per cent of the total
award vests in full. From 2008, 6 per cent of the total award vests for median performance (7.5 per cent for the 2006 and 2007 awards). There is pro rata vesting between
these two points. The TSR portions of an LTIP award do not vest for below median performance. 50 per cent of an award is based on EPS growth relative to inflation. This
element of the award will vest fully if EPS growth over the three year performance period is an average of at least 8 per cent per annum in excess of inflation. 10 per cent
(8 per cent for awards made since 2008) of this element will vest if the EPS growth over the performance period is 3 per cent in excess of inflation. An award will vest on
a pro rata basis between these two points. The EPS portion of an award does not vest if EPS growth is less than 3 per cent in excess of inflation.
5 There have been no variations in the terms and conditions of the LTIP interests during the year.
6 The awards made in May 2008 and March 2009 are due to vest in May 2011 and March 2012 respectively. At 31 December 2009, the performance percentage reflecting
performance to date, was 100 per cent for the May 2008 award and 50 per cent for the March 2009 award.
Deferred Share Bonus Scheme notes:
1 Each Executive Director has an interest in the ordinary shares of the Company, as shown in the DSBS tables, which are held in trust pursuant to the British American Tobacco DSBS.
2 The DSBS shares awarded on 15 March 2006 vested on 16 March 2009 (15 March 2009 not being a business day). The closing mid-market price of ordinary shares in British
American Tobacco p.l.c. on 16 March 2009 was 1,704.0p.
96 British American Tobacco Annual Report 2009 Directors’ report: Governance