G4S Annual Report and Accounts 2011

Overview Strategic review Performance
Directors’ remuneration report
at 31 December 2011
“Mindful of regulatory developments in the UK
and in particular the consultation launched by the
Department of Business, Innovation and Skills, the
Remuneration Committee has decided to start the
evolution of its report and adopt what it considers
to be a clearer and easier to read form of reporting.
The Remuneration Committee needs to ensure
that the remuneration of the directors provides
an adequate incentive to motivate, particularly
in the context of the challenges posed by macroeconomic
factors both in the UK and the wider
global markets, and that any incentive payouts
withstand reasonable and appropriate scrutiny
by the company’s stakeholders.
The company made good progress in 2011 despite
a number of challenges. Nevertheless, the executive
directors and the Remuneration Committee have
agreed that it would not be appropriate to consider
the payment of an annual bonus for this year. In
addition, the executive directors have proposed that
their base salaries are frozen for 2012, and this has
been endorsed by the committee.”
Lord Condon
Chair of the Remuneration committee
This report is prepared on behalf of and approved by the board. It:
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sets out the activities of the Remuneration Committee in the year
under review;
sets out the company’s remuneration policies for the current financial year
and, subject to ongoing review, for subsequent financial years; and
details the remuneration of each of the directors.
The report will be put to the company’s Annual General Meeting for
approval by the shareholders.
Remuneration Committee
The committee is responsible for setting all aspects of the remuneration
of the chairman, the executive directors and the company secretary and
for monitoring the level and structure of remuneration for other senior
management of the group. It is also responsible for the operation of the
company’s share plans and monitors the level and structure of the
remuneration for senior management. Its terms of reference are available
on the company’s website.
How the committee spent its time
Executive remuneration
Calibrating incentive levels
and performance metrics
Best practice update
Oversight of other benefits
including pension
Oversight of remuneration
for senior management
Other
During the year, the committee received advice from Towers Watson
Limited as the committee’s appointed advisor on executive and senior
management remuneration matters. Towers Watson has also provided
management remuneration information to the company during the period
under review. The committee ensures that the value of this other service
is of relative insignificance so as not to affect the advisor’s independence.
Their terms of appointment are available on the company’s website.
In addition, Alithos Limited has been appointed by the committee to verify
the calculation of certain elements of payments due under the company’s
performance share plan. Alithos has not provided any other services to
the company during the period under review.
Nick Buckles, chief executive, provided guidance to the committee on
remuneration packages for senior executives within the group. Further
guidance was received from the group’s HR director, Irene Cowden.
Neither Mr Buckles nor Mrs Cowden participated in discussions regarding
their own remuneration.
As part of an effectiveness review for the entire board, an externally
facilitated evaluation of the committee was also undertaken. The review
concluded that the committee has operated efficiently.
Remuneration policy
The policy for the remuneration of the executive directors and the
executive management team aims to achieve:
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the ability to attract, retain and motivate high calibre executives;
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a strong link between executive reward and the group’s performance;
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alignment of the interests of the executives and the shareholders; and
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provision of incentive arrangements which focus appropriately on both
annual and longer term performance.
In terms of market positioning, the overall objective is to achieve
remuneration levels which provide a market competitive base salary with
the opportunity to earn above market norms through the company’s
incentive schemes on the delivery of superior performance. A significant
proportion of total remuneration is therefore related to performance,
through participation in both short-term and long-term incentive schemes.
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G4S plc
Annual Report and Accounts 2011