Thorn-EMI 1995 Annual Report

Notes to the accounts
32. Directors' and employees' emoluments and Directors' interests
Throughout this Note, reference to shares is to Ordinary Shares in THORN EMI plc.
Dlrectors' and employees' costsI
rWages and salaries
Social security costs
Other pension costs (see Note 28)
(i) Directors' Remuneration Policy
The remuneration of Executive Directors and other senior executives is determined by the
Remuneration Committee ("the Committee"), chaired by Sir Peter Walters and comprising all the
Non-executive Directors plus Sir Colin Southgate (other than in matters concerning himseltJ.
The Committee follows certain fundamental principles in deciding appropriate levels and
forms of remuneration, including a policy reflecting:
o the dtcentralised and differing natares of ou businesses and a focus
on sustainetl growth
o the importance ofrecraiting and retaining intemational management of the appropriate calibre
o a strong link betueen reward and perfofttane against dgreed targex, speciftcal$ recognising tbe retarn
prodded to shareholders and the long-term performance of both the basiness and the indioidual.
The Committee has applied these principles in the development oFreward plans which:
. Pa) d mid natket bdse sala1t Trrhile prooiding a higbly competitioe total pq package bat oxll uhen
trul1 uarrantetl b1 performance
c recognie the importance of attaining the targets set in the Companl's budgets and threeyar plans
. etuPbasise lons-teftt performance b1 proaiding awards of sbares which executioes are either encouragetl
or re4 red to hoLl
o direct! align the intelests of erec tizles with those of the shareholfurs.
The following is intended as a summary of the remuneration packages for Executive Directors
and other senior executives. Copies of the full documentation covering the various plans,
together with the Executive Directors' employment contracts, are available for inspection
by shareholders.
Base Salary and Benefits
The base salaries and benefits (typically including car and life, disability and health insurance) of
Executive Directors and other senior executives are reviewed, normally annually, by the
Committee, having regard to competitive market practice supported by external, independent
surveys. Any increase reflects both individual and business perlormance.
Annual and Longer-Term Incentive Plans
TArget Setting
THORN EMI operates a systematic, annual planning and budgeting review process covering
each business. The financial targets arising out of this process are reviewed and approved by the
Board and the Committee. There are two important proflt targets identified for incentive plans:
o a demanding Tirge t Proftt, at which the target reward is earned
o a Maximum Proftt target (typically set between 1050/o and ll0o/o ofTarget Profrt) at which the
maximum reward is earned.