Brambles 2006 Annual Report - Alle jaarverslagen

56
Brambles
2006 Annual Report
DIRECTORS’ REPORT – REMUNERATION REPORT
periods that exceed 12 months, or are based in countries
where higher severance terms apply.
When setting and reviewing remuneration levels for the
Executive Directors and other members of the Executive
Committee, the Committee considers the experience,
responsibilities and performance of the individual and
takes account of market data relevant to the individual’s
role and location, and the company’s size, geographic
spread and complexity. Brambles’ remuneration policy
is to pay at the median level of remuneration for target
performance and to provide upper quartile rewards for
outstanding performance.
Remuneration is divided into Fixed and At Risk
components.
2.1 FIXED REMUNERATION
Fixed remuneration generally consists of base salary and
benefits. However, the Executive Directors and certain
other managers based in Australia are provided with
an annual Total Fixed Remuneration (TFR) amount, and
have flexibility as to the precise mixture of cash and
benefits they receive within that amount. These benefits
are provided at cost and are inclusive of any Fringe
Benefits Tax (FBT) charge to the Company. They could
include motor vehicles, health care, and disability and life
insurance. Senior managers who are not covered by TFR,
may receive similar benefits in addition to their base salary.
Brambles provides a range of retirement and
death-in-service benefits to senior managers, which reflect
local statutory requirements and market practice. Since
the formation of the DLC in 2001, retirement benefits
have been standardised wherever possible. However,
some legacy arrangements continue to exist, giving rise to
differences in entitlements between executives at similar
levels. No retirement benefits are provided to the Executive
Directors beyond their TFR amount.
Some retirement benefits are delivered under defined
benefit plans. The Committee considers that these types
of plans have the potential to create an unreasonable
financial burden on the Company and has therefore
resolved that no new members will be admitted to such
plans, save in exceptional circumstances.
The Committee has reviewed the impact of the lifetime
allowance (applicable to pensions in the UK with effect
from 6 April 2006), and has determined that affected
individuals will be given the opportunity to opt out of their
pension scheme for future service and receive instead
an annual cash allowance (which will not compensate
for the additional tax arising from the new legislation).
The Executive Directors are based in Australia, and
are not therefore affected by this policy.
As an international group, Brambles operates an
international mobility policy which can include the provision
of housing, payment of relocation costs and other location
adjustment expenses where appropriate. Mr Luby did, and
Mr Turner does currently receive some such benefits.
In addition to those elements of remuneration which
are fixed, a significant element of senior managers’ total
potential reward is required to be At Risk. This means
that an individual’s maximum potential remuneration may
be achieved only in circumstances where they have met
challenging objectives which contribute to Brambles’
overall profitability and performance for the benefit
of all shareholders.
2.2 AT RISK REMUNERATION
At Risk remuneration is provided to Brambles’ senior
managers through short term incentive (STI) and long
term incentive (LTI) arrangements. All of the incentive
plans under which awards to Executive Directors and the
Disclosable Executives are still to vest or be exercised are
summarised either in the table below or in Section 8.3.
Brambles’ current incentive arrangements were approved
by shareholders at the 2004 Annual General Meetings of
BIL and BIP (AGMs), with a 98% vote in favour. These
arrangements include four different types of award, the key
features of which are summarised below:
Nature of
award
Size of award
Vesting
conditions
% vesting at
“Threshold
performance
level”
Performance/
vesting period
Life of award
STI Cash
Award
STI Share
Award
Enhanced STI
Share Award
Cash
Share rights
Share rights
Based on
performance
against KPIs for
the financial year
just ended
Up to 100% of
size of STI Cash
Award
Up to 50% of
size of STI Share
Award
LTI Award Share rights % of salary/TFR
N/A N/A N/A N/A
Time N/A 3 years
Time & Relative
TSR Hurdle
(between 37th &
25th (45) out of 100)
Time & Relative
TSR Hurdle
(between 50th &
25th (45) out of 100)
4% 3 years
30% 3 years
Maximum of
6 years
Maximum of
6 years
Maximum of
6 years