Thorn-EMI 1995 Annual Report

32. Directort'and employees' emoluments and Directorl' interests continued
The Sexior Executiae Incentiae Plan ("SEIP")
As first reported in the 1993 Annual Report and Accounts, the Committee approved the SEIP
with effect from I April 1993 to cover the uK Executive Directors and certain other senior
executives,It includes an annual and a longer-term bonus element which are both payable in the
form of share awards (or rights to acquire such shares) and with provisions that either encourage
or require these to be held.
Awards under the annual element of the plan are based on appropriate Group or business
sector profit targets set at the beginning of each year by the Committee. Such awards are
generally equal in value to 200/o of base salary if the Target Profit is achieved and increase to
a maximum of 350/o ofbase salary if the Maximum Proftt target is exceeded. Following
confrrmation of the year's profit performance, the appropriate award may be released (and the
shares may be sold immediately) or, at the executive's request, may be deferred. The value of the
award is increased by one-third provided it is deferred for at least three years (the value of this
one-third increase being included in reported emoluments only at the end of the three-year
deferal period). The share equivalent of dividends which would have been paid on the deferred
shares will be added to the award during the deferral period.
The longer-term element of the plan is equal to the annual element but vests only after a
deferral period ofbetween three and seven years and then only on achievement of a further
performance target (the value of the award being included in reported emoluments only if and
when this target is achieved). This target currently demands that real (i.e. inflation corrected)
profit growth be achieved by the Group or appropriate business sector over the deferral period.
Failure to have met the target after seven years results in the loss of the award. The share
equivalent of dividends which would have been paid on the shares will be added to the award
during the deferral period.
EMI Music Execative Incentiue PIan ("EIP") and Long-lZrm Incentiae PIan ("LTIP")
The E1P is an annual cash bonus based on EMI Music profit targets set at the beginning of each
year by the Committee. At the most senior level it is equal to 500/o ofbase salary if the Target
Profit is achieved and increases to a maximum of 1000/o of base salary if the Maximum Profit
target is exceeded.
The LTIP, created in 1989, is a bonus based on a continued substantial improvement in
EMI Music profrts ovet successive three-year cycles set at the beginning ofeach cycle by the
Committee. For the cycles up to and including the cycle which ended on 31 March 1995
(cycle 4), an individually-set cash amount was payable if the three-yearTarget Profit was
achieved increasing to a maximum of1500/o ofthe cash amount if the Maximum Profit target
was exceeded. For future cycles (the frrst ofwhich, cycle 5, ends 31 March 1995) the Committee
has modified the LIIP to provide share awards (rather than cash) which the executives are
encouraged to continue to hold beyond the three-year cycle.
The LIIP is now converted into a share award at the beginning ofthe cycle. Following
confirmation of the profrt performance over the cycle, the appropriate award may be released
(and the shares may be sold immediately) or, at the executive's request, may be deferred. The
value of the award is increased by one-quarter provided it is deferred for three years (the value of
the one-quarter increase being included in reported emoluments only at the end of the threeyear
delerral period). The share equivalent of dividends which would have been paid on the
deferred shares will be added to the award during the deferral period.
Share Optlons and Share Appreciatlon Rightt ("SARs")
Executives, including the Executive Directors, are normally granted options annuall% at the
discretion of the Committee. An option is the right (but not the obligation) to buy shares in the
future at the market share price prevailing when the option was granted. The "gain" is thus the