Punch Taverns plc 2007 Annual Report and Financial Statements

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Report on Directors’ remuneration continued Pension Policy: lower quartile Executive Directors are entitled to receive a defined contribution to pension from the Company of between 12.0% and 12.5% of base salary. None of the Executive Directors are accruing benefits under a defined benefit pension plan. Benefits Policy: consistent with general market practice The Company’s policy is to provide Executive Directors with a market-competitive level of benefits, including company car or car allowance, private medical insurance, lump sum life insurance for death-in-service and income protection insurance for long term disability. Total compensation Policy: upper quartile (but with at least two thirds of total compensation subject to performance) The Committee’s policy is that Executive Directors should have the opportunity to earn upper quartile total compensation for upper quartile performance. The table below shows for the Company’s current Executive Directors: total compensation for 2006 / 2007; total compensation for 2007 / 2008, incorporating changes to base salaries, and annual bonus opportunity; and approximate market upper quartile total compensation for the market benchmark (being a peer group of companies in the same sector and companies of similar size across sectors). Name Position 2006 / 2007 actual total compensation 1 2007 / 2008 total compensation 2 Approximate market upper quartile total compensation 3 Giles Thorley Chief Executive £1,368,000 £1,779,000 £1,800,000 Phil Dutton Finance Director N / A £1,193,000 £1,100,000 Jonathan Paveley Commercial Director £695,000 £940,000 £1,000,000 Andrew Knight Managing Director – Spirit N / A £940,000 £1,000,000 1 2006 / 2007 actual total compensation is the sum of; base salary, actual bonus, approximate fair value of DSB and LTIP grants made during the year, Company pension contribution and other benefits. 2 2007 / 2008 total compensation is the sum of; new base salary, new target bonus, approximate fair value of LTIP grants expected to be made during the year, Company pension contribution and other benefits. 3 Approximate market upper quartile total compensation is calculated using; base salary, actual bonus paid, approximate fair value of long term incentive awards made, Company pension contribution and other benefits. Other remuneration matters All employee share arrangements The following table summarises the main features of the Group’s all employee share arrangements and their current status: Name Status Eligibility Main features SIP Operated during 2006 / 2007 and will be operated for 2007 / 2008 All employees of Punch Taverns including the Executive Directors. The Plan has been extended to Spirit employees in 2007 / 2008. The Plan provides employees with the opportunity of purchasing £1,500 of shares a year out of pre-tax salary and the Company providing additional matching shares on a 1:1 ratio. These matching shares will normally be released three years after they have been awarded provided that the associated shares purchased by the employee have been retained and provided the employee is still employed by a group company at this time. Percentage of eligible employees participating 64% SAYE scheme The Plan is in the run-off stage with no new invitations since May 2003. It is not currently intended to operate the Plan in the future. N / A Options are granted over Company shares at a discount of up to 20% of the market value on the date of grant, which subject to the satisfaction of conditions can be exercised after either three or five years. N / A 38 2 www.punchtaverns.com
Directors’ contracts The policy on termination is that the Group does not make payments beyond its contractual obligations. In addition, Executive Directors will be expected to mitigate their loss. The Remuneration Committee ensures that there have been no unjustified payments for failure. None of the Executive Directors’ contracts provides for liquidated damages. There are no special provisions contained in any of the Executive Directors’ contracts which provide for longer periods of notice on a change of control of the Company. Further, there are no special provisions providing for additional compensation on an Executive Director’s cessation of employment with the Group. Potential termination payment Potential payment on change of control / liquidation Executive Directors Company notice period Contract date Unexpired term of contract Giles Thorley 12 months 17 August 2001 Rolling contract 1 12 months salary Nil Phil Dutton 12 months 24 July 2007 Rolling contract 1 12 months salary Nil Jonathan Paveley 12 months 3 May 2004 Rolling contract 1 12 months salary Nil Andrew Knight 12 months 12 July 2007 Rolling contract 1 12 months salary Nil 1 Contract will continue until terminated by notice either by the Company or the Director. Non-executive Directors Company notice period Contract date Unexpired term of contract (months) Peter Cawdron 12 months 18 June 2003 9 Mike Foster 12 months 3 May 2002 9 Ian Fraser 1 month 22 Sept 2004 10 Randl Shure 12 months 29 July 2003 9 Fritz Ternofsky 12 months 3 May 2002 9 It should be noted that the fees paid for the services of Randl Shure and Mike Foster are paid to third parties. Non-executive Directors’ fees Policy: median level fees All Non-executive Directors have specific terms of engagement and their remuneration is determined by the Board based upon recommendations from the Chairman and Chief Executive (or, in the case of the Chairman, is determined by the Remuneration Committee based on recommendations from the Senior Independent Non-executive Director and the Chief Executive) within the limits set by the Articles of Association and based on the median level of fees payable to peers in the same Comparator Group as that used for Executive Directors’ remuneration. Non-executive Directors cannot participate in any of the Company’s share incentive schemes or performance-based plans and are not eligible to join any of the Group’s pension schemes. It is the Board’s policy to take into account the following factors in determining the fees of the Non-executive Directors: the median level of fees for similar positions in the Comparator Group; and the time commitment each Non-executive Director makes to the Group (through membership of the Audit, Remuneration and Nomination Committees). The following table sets out the non-executive fees for 2006 / 2007 and the fees for 2007 / 2008: 2006 / 2007 2007 / 2008 Basic fee £39,000 £42,000 Senior Independent Non-executive Director £42,000 £45,000 Additional fees for chairing the Audit or Remuneration Committee £10,000 £10,000 Additional fee for chairing the Nominations Committee Nil £5,000 The fee paid to Peter Cawdron, Chairman of the Company, for 2007 / 2008 will be £155,000 p.a. (2006 / 2007: £145,000 p.a. since appointment as Chairman in January 2007). Punch Taverns plc Annual Report and Financial Statements 2007 393
Page 1 and 2: Passionate about our pubs Punch Tav
Page 3 and 4: Punch Taverns: Our Punch Taverns le
Page 5 and 6: Operational highlights • We conti
Page 7 and 8: Managed estate: We have significant
Page 9 and 10: award winning training. Our managed
Page 11 and 12: Operational review Overview The fin
Page 13 and 14: Whilst the leased and managed estat
Page 15 and 16: Passionate about our people ATTRACT
Page 17 and 18: Corporate social responsibility Com
Page 19 and 20: Our ‘NITA’ award winning retail
Page 21 and 22: Results for the year The financial
Page 23 and 24: Capital expenditure and cash flow T
Page 25 and 26: purchased by the Group as well as f
Page 27 and 28: 5 8 6 9 7 5 Peter Cawdron Non-execu
Page 29 and 30: Directors’ report The Directors p
Page 31 and 32: Punch Taverns plc Annual Report and
Page 37 and 38: Introduction This report has been p
Page 39 and 40: Annual bonus Policy: maximum bonus
Page 41: Punch Taverns plc Deferred Share Bo
Page 45 and 46: Audited information The total of Di
Page 49 and 50: Statement of Directors’ responsib
Page 51 and 52: Consolidated statement of recognise
Page 53 and 54: Consolidated cash flow statement fo
Page 55 and 56: Company statement of recognised inc
Page 57 and 58: Contents for the notes to the finan
Page 63 and 64: 2 Segmental analysis The primary se
Page 65 and 66: 3 Analysis of expenses The followin
Page 67 and 68: 7 Employees and Directors continued
Page 69 and 70: 9 Earnings per share continued The
Page 71 and 72: 12 Goodwill and intangible assets O
Page 73 and 74: 14 Trade and other receivables 18 A
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Page 77 and 78: 20 Financial liabilities continued
Page 85 and 86: 25 Share-based payments continued D
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Page 89 and 90: 27 Other reserves Group Equity comp
Page 91 and 92: 28 Net debt continued (c) Reconcili
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30 Disposals On 17 September 2006,
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31 Pensions and other post-retireme
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31 Pensions and other post-retireme
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32 Operating lease commitments - mi
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34 Related party transactions conti
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Five year financial record Group tr
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Punch Taverns plc Annual Report and
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The paper used in this report is fu
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Punch Taverns plc 2007 Annual Report and Financial Statements

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