ANNUAL REPORT 2001 - Prudential plc

Directors’ Long-term Incentive Plans
Since 1996 up to and including 2001, the Group’s primary long-term incentive plan was the Restricted Share Plan which was designed
to provide rewards contingent upon the achievement of pre-determined returns to shareholders.
Under the Restricted Share Plan executive directors have received annual grants of conditional awards of shares in the Company
which are held in trust for three years.
In 2001, it became apparent that long-term incentive awards made in the market had moved significantly. Therefore for 2001, for the
Group Chief Executive, the conditional Restricted Share Plan award was equivalent to 200 per cent of basic salary at the time of the
award and for Michael McLintock the award was equivalent to 80 per cent of basic salary. For Philip Broadley and Mark Tucker, the
award was equivalent to 160 per cent of basic salary. The shares were valued at their average share price during the preceding
calendar year, and the award price used for the 2001 award was 975.6 pence (2000 – 921.7 pence).
At the end of the three-year performance period, a right to receive shares at no cost to the individual may be granted dependent on
the Company’s Total Shareholder Return (TSR) relative to other companies in the FTSE 100 share index over the performance period.
In addition, the Remuneration Committee must be satisfied with the Company’s underlying financial performance during this period.
No rights will be granted if the Company’s TSR percentile ranking is 60th or below and the maximum grant will be made only if the
TSR percentile ranking is 20th or above. Between these points, the size of the grant made is calculated on a straight line basis. In
normal circumstances, directors may take up their right to receive shares at any time during the following seven years.
Details of conditional awards made under the Plan are shown below. These shares are held in trust and represent the conditional
awards out of which rights may be granted, as stated above, at the end of the relevant performance period.
In respect of the 1999 Restricted Share Plan, the Company’s TSR was ranked 43rd out of the 84 relevant comparator companies
remaining in the FTSE 100 (i.e., 51st percentile) for the three-year performance period ended on 31 December 2001. As a result,
rights will be granted over 22.5 per cent of the shares conditionally awarded to executive directors. The 2000 and 2001 Restricted
Share Plans run to 31 December 2002 and 31 December 2003 respectively and any grants under these plans will be based on the
TSR ranking determined at the end of each performance period. Performance under these plans was ranked respectively at percentile
positions 67th and 62nd on the basis of TSR performance at 31 December 2001.
The table below shows the awards made under the Restricted Share Plan:
Conditional Rights Market value Conditional
share awards Conditionally (options) of rights share awards
outstanding at awarded granted granted in 2001 outstanding at Release
1 Jan 2001 in 2001 in 2001 £000* 31 Dec 2001 year
Keith Bedell-Pearce 36,024 30,620 234
28,664 28,664 2002
28,209 28,209 2003**
92,897 30,620 234 56,873
Jonathan Bloomer 45,390 38,581 295
36,308 36,308 2002
63,470 63,470 2003
135,301 135,301 2004
145,168 135,301 38,581 295 235,079
Philip Broadley 18,806 18,806 2003
57,401 57,401 2004
18,806 57,401 76,207
Michael McLintock 13,019 13,019 2003
25,420 25,420 2004
13,019 25,420 38,439
Mark Tucker 36,024 30,620 234
28,664 28,664 2002
31,247 31,247 2003
65,601 65,601 2004
95,935 65,601 30,620 234 125,512
* The market value of rights granted in 2001 is based on the market value of the shares over which rights are granted on the day of the grant.
** Following his retirement, no release will be made in respect of the 2000 RSP award to Keith Bedell-Pearce.
29 Prudential plc Annual Report 2001