Thorn-EMI 1995 Annual Report

It is the Remuneration Committee's intention that the performance requirement for the exercise of the ftrst
options granted under the Scheme will be based on THORN EMI's Total Shareholder Return ("TSR") over the
measurem€nt period determined by the Remuneration Committee relative to the other companies comprising the
FT-SE 100 at the start of that period. TSR is the notional return based on share price growth plus the dividends paid
on a share and therelore it is a measurement of performance which, as closely as possible, reflects the return provided
to shareholders. To reflect the long-term share price position of THORN EMI and those other companies, the
calculation (both at the start and the end of the period) uses their share prices averaged over the preceding
12 months. The Remuneration Committee believes poor performance or failure should not be rewarded and,
accordingly, an option will only become exercisable if THORN EMI's TSR, on the appropriate date, is equal to or
better than the median of the original FT-SE 100 companies. This calculation is undertaken when the option would
frrst normally become exercisable (usually after three years) and if this perlbrmance requirement has not then been
met, the calculation will be repeated at regular intervals until either it has been met or th€ option lapses. If and when
this perforrnance requirement has been met, the option becomes exercisable for the remainder of the period
until it lapses.
Each year's Annual Report will set out the performance requirements established by the Remuneration
Committee subject to which grants have been made in that year.
In relation to UK employees, the Scheme will be submitted to tbe Inland Revenue for approval in accordance
with Schedule 9 to the Income and Corporation Taxes Act 1988. The percentage limit on the number of shares which
may be issued pursuant to the Scheme as compared to the 1984 Scheme has not increased. The Rules of the Scheme
have been prepared taking account ofthe current guidelines published by the investment committees represenling
institutional investors and it is intended that such guidelines will continue to be taken account of in operaring
the Scheme.
Additionally, the Directors are proposing in Resolution 8 that arrangements may be made to give the Group's
overseas employees the opportunity to participate in the Scheme or schemes similar to the Scheme but tailored
to local circumstances. Such arrangements will, however, operate within the limits on the issue of new shares as
approved by shareholders for the Scheme.
The principal terms of the Rules of the Scheme are summarised in the Appendix to this letter. Copies of the
Rules of the Scheme will be available for inspection at the Register€d Office of the Company during normal business
hours lrom today's date until the close of the Annual General Meeting and, on the day of the Meeting, at the place
of the Meeting fiom at least 15 minutes prior to the Meeting until its conclusion.
Action to be taken by shareholders
Shareholders will find accon.rpanying this document a pre addressed Form of Proxy for use at the Annual General
Meeting which they are urged to complete and return to the Company's registrar, Lloyds Bank Registrars, so as to
arrive not later than 48 hours before the time fixed lor the Meeting.
The return of the Form of Proxy will not prevent a shareholder from attending the Meeting and voting in person
if he/she is entitled to do so and so wishes.
Recommendation
Your Directors consider that the proposals set out above are in the best interests of the Company and its shareholders
in general. They recommend that you vote in favour of the Resolutions set out in the Notice of Annual General
Meeting, as they intend to do in respect oftheir own beneficial holdings.
Yours sincerely,
5ir (olln Southgate Chairman