Directors' Report: Governance - British American Tobacco

More documents

Recommendations

Info

www.bat.com/annualreport2009 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 Sharesave Scheme notes: 1 In respect of the Executive Directors, no options lapsed during the year ended 31 December 2009. There have been no variations in the terms and conditions of these interests in share options during the year. Options granted under the Sharesave Scheme are exercisable in conjunction with a three year or five year savings contract up to a monthly limit of £250. Options are normally granted at a discount of 20 per cent to the market price at the time of the invitation, as permitted under the rules of the Sharesave Scheme. 2 There were no Sharesave options exercised by Executive Directors during the year and therefore no aggregate gains were made (2008: £nil). 3 The closing mid-market price of ordinary shares in British American Tobacco p.l.c. on 31 December 2009 was 2,016.5p and the range during the year was 1,495.0p to 2,032.5p. The market price on 31 December 2009 exceeded the grant price of all the options detailed in the share options tables for the Executive Directors. Table 7: Executive Directors’ pension entitlements – audited Transfer value Transfer value Transfer value Total Total accrued Gross increase Increase in of net increase of accrued of accrued change in Normal pension at in accrued accrued pension in accrual pension at pension at transfer value retirement 31 Dec 2009 pension net of inflation over period 31 Dec 2008 31 Dec 2009 during period age £ £ £ £ £ £ £ Paul Adams 60 567,071 55,771 43,523 992,910 10,478,739 12,936,971 2,458,232 Nicandro Durante 60 384,449 97,344 90,466 1,875,855 5,245,580 7,971,698 2,726,118 Ben Stevens 60 157,464 28,659 25,574 500,557 2,173,058 3,082,063 909,005 Notes: 1 The amount of total accrued pension is the pension that would be paid annually on retirement based on service to the end of the year, excluding any increase granted under statute before retirement. 2 The value of net increase in accrued pension represents the incremental value to the Executive Director of his service during the year, calculated on the assumption that service terminated at the year end. 3 Changes in the transfer values reflect both individual Executive Director’s circumstances such as the date of joining the Pension Fund and changes in salary during the year together with the application of market value adjustments in accordance with actuarial and legislative requirements. Following completion of the ongoing funding valuation of the Pension Fund in June 2009, the Trustee of the Pension Fund reviewed the method and assumptions used to calculate transfer values and decided to amend the transfer value basis. The Trustee’s agreed transfer value basis was updated to remain consistent with that used for the ongoing funding of the Pension Fund. The transfer value at 31 December 2008 shown above has been calculated in line with the transfer value basis in force at that time, whereas the transfer value at 31 December 2009 has been calculated in line with the revised transfer value basis. The transfer values of the accrued entitlement represent the value of assets that the Pension Fund would need to transfer to another pension provider on transferring the Pension Fund’s liability in respect of Executive Directors’ pension benefits. They do not represent sums payable to individual Executive Directors and, therefore, cannot be added meaningfully to annual remuneration. Further, although Nicandro Durante is not a member of the Pension Fund, the transfer values calculated above have been calculated in accordance with the method used for the Pension Fund. Although Paul Adams and Ben Stevens receive a significant element of their overall entitlement from an unfunded unapproved retirement benefit scheme, the transfer values calculated above have been calculated in accordance with the method used for the Pension Fund. 4 The Pension Fund is non-contributory. Voluntary contributions paid by Executive Directors and resulting benefits are not shown. No excess retirement benefits have been paid to or are receivable by any Executive Director or past Executive Director. 5 Nicandro Durante is entitled to a benefit promise of 0.65 per cent of final sterling pensionable salary (calculated as a 12 month average) in relation to service from 1 March 2006. In addition, he is entitled to a pension from the Souza Cruz Pension Scheme based on an accrual rate of 1.85 per cent of final Brazilian real pensionable salary (calculated as 12 month average) in relation to service from December 1981 (the value of this pension – in terms of £ sterling – has increased during 2009 due to a 21 per cent strengthening of the Brazilian real). The accrued pension amount and transfer values shown above are based on the sum of these promises (i.e. with accrual rate since 1 March 2006 being a total of 2.5 per cent). Nicandro Durante is entitled to receive that part of the promise from the Souza Cruz Pension Scheme (based on 1.85 per cent accrual rate) with immediate effect; this entitlement has been ignored for the purposes of the above transfer value. Status of Remuneration report This report has been prepared in accordance with the relevant provisions of the Companies Act 2006 and Schedule 5 and Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. The report also meets the relevant requirements of the Listing Rules of the UK Listing Authority and describes how the Board has applied the Principles of Good Governance relating to Directors’ remuneration as set out in the Combined Code on Corporate Governance referred to in the Corporate governance statement. As required by the Companies Act 2006, a resolution to approve the Directors’ Remuneration report (the Report) will be proposed at the Annual General Meeting of the Company on 28 April 2010, at which the financial statements will be presented for approval. The vote will have advisory status, will be in respect of the remuneration policy and overall remuneration packages Directors’ report: Governance British American Tobacco Annual Report 2009 and will not be specific to individual levels of remuneration. The Companies Act 2006 requires the auditors to report to the Company’s shareholders on the ‘audited information’ within the Report and to state whether, in their opinion, those parts of the Report have been prepared in accordance with the Companies Act 2006. The report of the independent auditors, in respect of the Company, addresses those aspects of this Report and which have been subject to audit have been clearly marked: Table 1, Table 2, Table 3, Table 4, Table 6 and Table 7. On behalf of the Board Anthony Ruys Chairman of the Remuneration Committee 24 February 2010 97 From the Chairman Performance and strategy Regional review Financial review Governance Group financial statements Parent Company financial statements Shareholder information
CONTENTS Companies Act 2006 98 Principal activities 98 Group results and dividends 98 Share capital 99 Purchase of own shares 99 Significant agreements – change of control 99 Contractual arrangements 99 Articles of Association 100 Creditor payment policy 104 Intra-Group pricing 104 OTHER STATUTORY AND REGULATORY INFORMATION Nicola Snook, Secretary Companies Act 2006 The Companies Act 2006 requires the Company to set out in this report the development and performance of the business of the Group during the financial year ended 31 December 2009, including an analysis of the position of the Group at the end of the financial year, and a description of the principal risks and uncertainties facing the Group. Principal activities British American Tobacco p.l.c. is a holding company which owns, directly or indirectly, investments in the numerous companies constituting the British American Tobacco Group of companies. The principal subsidiaries and associates are listed on the Principal subsidiary undertakings and Principal associate undertakings pages. All subsidiary undertakings are involved in activities directly or indirectly related to the manufacture, distribution or sale of tobacco products. Group results and dividends The Group results are addressed fully in the financial statements and in the Directors’ report: Business review. The Board recommends to shareholders a final dividend of 71.6p per ordinary share of 25p for the year ended 31 December 2009. If approved by shareholders at the Annual General Meeting to be held on 28 April 2010, the dividend will be payable on 6 May 2010 to shareholders registered on either the UK main register or the South African branch register on 12 March 2010, the record date. The ex-dividend trading dates are 8 March 2010 on the JSE Limited (JSE) and 10 March 2010 on the London Stock Exchange (LSE). As the Group reports in sterling, dividends are declared and payable in sterling except for shareholders on the branch register in South Africa whose dividends are payable in rand. A rate of exchange of £:R = 12.03230 as at 23 February 2010 (the closing rate for that date as quoted on Bloomberg), results in an equivalent final dividend of 861.51268 SA cents per ordinary share. 98 British American Tobacco Annual Report 2009 Directors’ report: Governance
Page 1 and 2: GOVERNANCE Board of Directors A sum
Page 3 and 4: 1. Richard Burrows (Irish) Chairman
Page 5 and 6: CONTENTS Chairman’s introduction
Page 7 and 8: meeting to address Jan du Plessis
Page 9 and 10: The Board and its Committees receiv
Page 11 and 12: Accountability and audit Audit Comm
Page 13 and 14: The Audit Committee has an establis
Page 15 and 16: Corporate social responsibility CSR
Page 17 and 18: Appointments to the Board Nominatio
Page 19 and 20: CONTENTS Introduction 78 Remunerati
Page 21 and 22: The Remuneration Committee reviewed
Page 23 and 24: For the Executive Directors and Man
Page 25 and 26: in each company’s index over the
Page 27 and 28: The Company also operates the Free
Page 29 and 30: Executive Directors’ external app
Page 31 and 32: Appendices to the Remuneration repo
Page 33 and 34: REMUNERATION REPORT CONTINUED Table
Page 35 and 36: REMUNERATION REPORT CONTINUED Table
Page 37: REMUNERATION REPORT CONTINUED Table
Page 41 and 42: Articles of Association The followi
Page 43 and 44: 2) a Director to accept or continue
Page 45 and 46: The Disclosure and Transparency Rul
Page 47: 106 British American Tobacco Annual

Directors' Report: Governance - British American Tobacco

Create successful ePaper yourself

Delete template?

Save as template?