Annual Report & Accounts 2012 - Euromoney Institutional Investor ...

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Euromoney Institutional Investor PLC Annual Report and Accounts 2012 www.euromoneyplc.com Directors’ Remuneration Report continued The CSOP 2010 has the same performance criteria as that of the CAP 2010 as set out above. The number of CSOP 2010 awards that will vest proportionally reduces the number of shares that vest under the CAP 2010. The CSOP is effectively a delivery mechanism for part of the CAP 2010 award. The CSOP 2010 options have an exercise price of £6.03 2 , which will be satisfied by a funding award mechanism which is in place and results in the net gain 3 on these options being delivered in the equivalent number of shares to participants as if the same gain had been delivered using CAP 2010 options. The amount of the funding award will depend on the company’s share price at the date of exercise. 2004 Capital Appreciation Plan (CAP 2004) CAP 2004 was approved by shareholders on February 1 2005 and replaced the 1996 executive share option scheme. Each CAP 2004 award comprised an option to subscribe for ordinary shares of 0.25 pence each in the company for an exercise price of 0.25 pence per ordinary share. No consideration was paid for the grant of the awards. No further awards may be granted under CAP 2004. CAP 2004 awards vest in three equal tranches. The first tranche became exercisable on satisfaction of the primary performance condition in 2007, and lapse to the extent unexercised on September 30 2014. The other two tranches of awards became exercisable following the results achieved in financial years 2008 and 2009, but only to the extent that the additional performance condition was also achieved. The primary performance condition, broadly, required the company to achieve adjusted pre-tax profits 1 of £57.0 million by no later than the financial year ending September 30 2008 and remain at least this level for two further vesting periods. The additional performance condition required that the profits of the respective participants’ businesses in the subsequent two vesting periods be at least 75% of that achieved in the year the primary performance condition was first met. The CAP 2004 profit target was achieved in 2007 and the option pool (a maximum of 7.5 million shares) was allocated between the holders of outstanding awards by reference to their profit contribution to the achievement of the primary performance condition, subject to the condition that no individual had an option over more than 10% of the option pool. One third of the awards vested immediately. The primary performance target was achieved again in 2008 and, after applying the additional performance condition, 2,241,269 options from the second tranche of options vested in February 2009. The primary performance target was achieved again in 2009 and, after applying the additional performance condition, 1,527,152 options from the third (final) tranche of options vested in February 2010. The additional performance condition was applied to profits for financial years 2010 and 2011 for those individual participants where the additional performance conditions had not previously been met and 303,321 and 244,152 options vested in February 2011 and February 2012 respectively. Applying the additional performance test to profits for financial year 2012, a further 54,599 options are expected to vest in February 2013. For the executive directors, the value of the second and third tranches of the CAP 2004 award that vested in February 2012 is set out in the directors’ share option table on pages 49 to 51 and has been trued-up from the estimates provided in last year’s annual report. The provisional number of options vesting in February 2013 for those directors who have CAP 2004 options that did not previously vest are also set out in this table. The number of CAP 2004 options vesting in February 2013 is provisional and will depend on any true-up adjustments required by the remuneration committee to be made to reflect the results for the three month period to December 2012. Financial year 2012 is the last year for which the additional performance test can be applied. As a result, an estimated 629,507 unvested CAP 2004 options at September 30 2012 will lapse. 1996 executive share option scheme Some of the executive directors have options from a previous executive share option scheme approved by shareholders in 1996. This scheme expired in 2006 and no share options have been issued under it since February 2004 although options granted may be exercised before various dates to February 2014. These options are exercisable subject to the performance condition that the Total Shareholder Return (TSR) of the company exceeds the average TSR for the FTSE 250 index for the same period. For the performance condition to be satisfied, the TSR of the company must exceed that of the FTSE 250 on a cumulative basis, measured from the date of grant of the option, in any four out of six consecutive months starting 30 months after the option grant date. Shown below is the group’s TSR for the five years to September 2012 compared to the TSR of the FTSE 250 index over the same period. This index has been presented as it comprises the comparator group for the performance condition attached to the executive share option scheme. The TSR calculations assume the reinvestment of dividends. Details of options held and exercised under this scheme can be found on pages 49 to 51 of this report. The fair value per option granted and the assumptions used to calculate its value are set out in note 24. 44
Euromoney Institutional Investor PLC Annual Report and Accounts 2012 www.euromoneyplc.com SAYE Euromoney Institutional Investor PLC — Total Shareholder Return Total Shareholder Return % 200 180 160 140 120 100 80 60 40 20 0 28 Sept 2007 31 Dec 2007 31 March 2008 30 June 2008 30 Sept 2008 The group operates an all employee save as you earn scheme in which those directors employed in the UK are eligible to participate. Participants save a fixed monthly amount of up to £250 for three years and are then able to buy shares in the company at a price set at a 20% discount to the market value at the start of the savings period. In line with market practice, no performance conditions attach to options granted under this plan. The executive directors who participated in this scheme during the year were PM Fallon, PR Ensor, NF Osborn, DC Cohen, CR Jones and CHC Fordham, details of which can be found on pages 49 to 51 of this report. DMGT SIP DMGT, the group’s parent company, operates a share incentive plan in which all UK-based employees of the Euromoney group can participate. Employees can contribute up to £125 a month from their gross pay to purchase DMGT ‘A’ shares. These shares are received tax free by the employee after five years. The executive directors who participated in this scheme during the year were PM Fallon, 31 Dec 2008 31 Mar 2009 30 June 2009 30 Sept 2009 31 Dec 2009 31 March 2010 30 June 2010 30 Sept 2010 31 Dec 2010 PR Ensor and CR Jones, details of which can be found on page 52 of this report. 1. Adjusted pre-tax profits are before acquired intangible amortisation, exceptional items, movements in acquisition option commitment values, imputed interest on acquisition option commitments, foreign exchange loss interest charge on tax equalisation contracts, foreign exchange on restructured hedging arrangements, and the cost of the CAP itself. 2. The Canadian version of the CSOP 2010 has a grant date of March 30 2010 and an exercise price of £5.01, the market value of the company’s shares at the date of grant, and enables each Canadian participant to purchase up to 19,960 shares in the company. 3. The net gain on the CSOP options is the market price of the company’s shares at the date of exercise less the exercise price (£6.03 2 ) multiplied by the number of options exercised. Directors’ service contracts The company’s policy is to employ executive directors on 12 month rolling service contracts. The remuneration committee seeks to minimise termination payments and believes these should be restricted to the value of remuneration for 31 March 2011 30 June 2011 30 Sept 2011 31 Dec 2011 31 Mar 2012 29 June 2012 Company FTSE 250 28 Sept 2012 the notice period. Directors’ service contracts are reviewed from time to time and updated where necessary. A service contract terminates automatically on the director reaching their respective retirement age. On August 1 2012, the company announced that PR Ensor would succeed PM Fallon as chairman and CHC Fordham would succeed PR Ensor as managing director, both following the January 2013 AGM. At the same time, PR Ensor’s service contract was extended to September 30 2015. PM Fallon died on October 14 2012 at which point the succession plans announced on August 1 2012 were implemented with immediate effect. With the exception of Sir Patrick Sergeant, none of the non-executive directors has a service contract. The remuneration of the non-executive directors is determined by the board based on the time commitment required by the non-executive, their role, and market conditions. Each non-executive receives a base annual fee of £28,000, with an additional annual fee of £6,500 payable to the chairs of the remuneration and audit committees. Directors’ Remuneration Report Company Accounts Group Accounts Our Governance Our Performance 45
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