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Remuneration Report
for the year ended 31 March 2000
Remuneration poliqy
EM|S remuneration policies reflect the need to attract, retain
and motivate top calibre international management in the context
of remunera{on leyels and practices in the international music
and entertainment industry many of vvhich are set in the USA.
Remuneration packages for senior executiues are designed to
create a strong link bet\eeen reward and performance, with
emphasis on longeFterm returns to strareholders and linkinq
incentiles to objectrre measum of perfornrance. Leds and=
forms of remuneration are tailorcd to the different marketplaces
in which the Group compet6, and recognise the importance
of creatrve talenL as \ €ll as the fact that Music fublishing and
Recorded Music are distlnct marketplaces.
The remuneration packages of the Executive Directors are
designed to help them attain, and encourage them to retain,
long-term interests in the Companys shares, and to align their
interes6 with those of the shareholden. Performanc+related
ehmenB represent a significant proportion, currently about
one-half to twqthirds, of their total annual remuneiatron
opportunity
Remuneration Committee
the Board has delegated to the Remuneration Committee
apprwal of the remuneration and emplqment terms of the
Executile Directors and other senior executi!€s, induding pension
righ$ and any compensation paymen6.
'lhe Committee consists entrely of the Non€xecutive Directors.
tt is chaied by Sir Dominic Cadbury the Deputy Chairman and
senior independent Non-executirc Director. Sir Dominic succeeded
Sir Peter Walters who retired follorving the 1999 AGM. The nam6
of the memben of the Committee are listed on page 24. 'lhe
Chairman is inMted to attend the Committees meetinos on
matteG other than those concerning himself.
The Committee has access to advice from internal souKes and
seeks external advlce as and when it requires. ln addition, to assist
it in monitoring the leyel and mix of remuneration packages, the
Committee has access to a number of music and general industry
remuneration surv€J,s, both lo(al and international, co€rinq a
range of companies. lhe Committee takes into account faitors
such as the nature, size, complexity and international profile of
those companies relative to EMl.
Elements of rem uneration
Bae sahry and funefis
the Executte Directors' base salanes are set by the Committee
and are normally revio,raed annually. Benefits typically include car.
life asurance, disability and heahha"re plans. iri addition, follouuing
his relocation to the US, the Group provides Mr Berry with a hous6
in Los Angeles rent-free. Mr Berry has the optron to purchase the
house at fair market value at ani trrne. He dbo receives tax
equalisation payments relating to seMce in California.
Details of the base elaries and benefis for individual Executive
Directo6 are set out on page 34.
Annual fuius
As participans in EM|S Senior Executive lncentive Plan (SEIP),
the Executive Directors and other senior execr.rtnes are eligible for
an annual bonus based on profit performance targets set by the
Remuneration Committee for the Group or indivrdual busines
units. Performance is measured by reference to a demanding
F,ryet Fofit level alvvhich the target award is earned, and a
maximum profit l*elat which the maximum award is earned.
Target and maximum awards are calculated as a percenbge of
base salary or, in the case of Mr Berry and Mr Bandier, as cash
amounts. Any cash bonus earned is paid immediatet oi at the
executves request, is made in the form of a defened share
award. During defenal, the shares do not earn dividends but, to
encourage_shares to be held, the number of shares is increased by
one-third if defened for three years and by twethirds if deferred
for at least six yea6. These increases are iricluded in reported
remuneration only at the end of the applicable defenal period.
For the year to 31 March 2000, the bonus opportunity at target
and maximum performance respectively was 40% and 8oo/o-of
base salary for both Mr Nrcoli and Mr Bates. The performance
targ€t for Mr Nicoll was related to the Groupb profit after tax.
Re{lectrng Mr Bates' dual oles, his performance targets partly
related to Recorded Musicb profit after interest and in pan to
Group profit after tax. Mr BerryS bonus opportunity for the
year was US$1,000,000 at target and US$2,000,000 at
mglrmgm performance, whilst Mr Bandie6 opportunity was
US$900,000 at target and US$1,800,000 at maximum
performance. Their performance targets related to the profit
atter interest achieved by Recorded Music and Music publishinq
respectvely. Details of the bonuses achieved during the year by
indMdual Executile Directo6 are set out on page :+.
Long-Hm incffitives
Executive Directors and other senior executtv6 are also normallv
eligible each year for performancerelated share awards under ihe
SEIB calculated a< a percentage of base salary Each year,s award
vesb at the end of a three-year performance period. the number
of sham released depending upon Group or business unit
performance against profit targeb for the three-year peiod set
by the Remuneration Committee. In certain circumstances, for
example upon a change of control, awards may be released
before the normal vesting date. As with the anhual bonus, to
encourage long-term interests in the Companys shares, executives
may opt to defer the share award for a further threeyear period,
with the number of shares being increased by onethird ai the
end of the deferral period.
ln the case of the Executile Directors, relede of the share award
is subject to a further performance requirem€nt related to the
Groups_Total Shareholder Return, i.e. share price growth plus the
value of dividends paid. For the award to be released, EMIS Total
Shareholder Return must have at least equalled the median of
those companig that comprised the ffSE 100 at the start of
the threeyear performance cycle.
Share awards to the Executive Directo6 are noted in the tables
on pages 34 and 35, but are included in reported remuneration
only on release at the end of the three.year performance cycle.
The cunent potential value of the performance-related share
awards at target and maximum performance respectively is
600/o and 120o/o of base salary for both Mr Nicoii and Mr Bates.