Continued from page 47The executive management <strong>is</strong> charged by <strong>the</strong> Board withimplementing strategic policies. It <strong>is</strong> empowered to conduct<strong>the</strong> day-to-day strategic and operational management including,inter alia, <strong>the</strong> financial management <strong>of</strong> <strong>the</strong> Group. It <strong>is</strong> responsiblefor <strong>the</strong> management <strong>of</strong> <strong>the</strong> Group’s underlying businesses andinvestments, subject at all times to an obligation to provideadequate information on <strong>the</strong> development <strong>of</strong> those businessesto <strong>the</strong> Board.The Board employs various reporting means and controlmechan<strong>is</strong>ms in order to monitor <strong>the</strong> way in which seniormanagement exerc<strong>is</strong>es <strong>the</strong> authority delegated to it.• Prior to each meeting <strong>of</strong> <strong>the</strong> Board, members receive a financialreport, summar<strong>is</strong>ing recent Group, div<strong>is</strong>ional and Ma<strong>is</strong>onfinancial performance as well as operational developments.• The Group Chief Executive Officer and Group Finance Directorreport to <strong>the</strong> Board at each meeting. Supplementary reports areprovided, as required, by <strong>the</strong> Director <strong>of</strong> Corporate Affairs, <strong>the</strong>Director <strong>of</strong> Corporate Finance and <strong>the</strong> Lead Counsel and ChiefIntellectual Property Counsel as well as <strong>the</strong> Company Secretary.• The Group’s employee performance review process requires thatmembers <strong>of</strong> senior management are given clearly defined targetsat <strong>the</strong> beginning <strong>of</strong> each financial year. The executive directors<strong>of</strong> <strong>the</strong> Board monitor performance against <strong>the</strong>se targets on anongoing bas<strong>is</strong> and report progress to <strong>the</strong> Board.• There <strong>is</strong> regular interaction between members <strong>of</strong> <strong>the</strong> Boardand <strong>the</strong> Management Committee, for example, through <strong>the</strong>presence <strong>of</strong> certain executive directors on a regular or ad hocbas<strong>is</strong> at Board meetings and o<strong>the</strong>r Board committee meetings,as outlined above. Members <strong>of</strong> <strong>the</strong> Board are also exposedto <strong>the</strong> dec<strong>is</strong>ion-making process at <strong>the</strong> level <strong>of</strong> each Ma<strong>is</strong>onthrough <strong>the</strong>ir involvement with <strong>the</strong> annual reviews <strong>of</strong> <strong>the</strong>Ma<strong>is</strong>ons’ strategies and through <strong>the</strong> Strategic Product andCommunication Committee.• The Group’s internal audit function provides an objectivemeans <strong>of</strong> assessing how <strong>the</strong> Group’s r<strong>is</strong>ks are being managedand controlled. Th<strong>is</strong> function’s independent status <strong>is</strong> reinforcedby <strong>the</strong> direct reporting line from <strong>the</strong> Head <strong>of</strong> Internal Audit to <strong>the</strong>Chairman <strong>of</strong> <strong>the</strong> Audit Committee. The function performs financialand operational audits in accordance with a programme approvedannually by <strong>the</strong> Audit Committee. Th<strong>is</strong> r<strong>is</strong>k-based programme <strong>is</strong>designed to ensure that all business units as well as Group-wide<strong>is</strong>sues are given sufficient audit coverage within an appropriatetimeframe. Findings from each audit, toge<strong>the</strong>r with any relatedaction plans, are reported in detail to senior management;summary reports are provided to <strong>the</strong> Audit Committee andd<strong>is</strong>cussed at Audit Committee meetings. Progress with <strong>the</strong>implementation <strong>of</strong> corrective actions <strong>is</strong> monitored by seniormanagement and <strong>the</strong> Audit Committee on a regular bas<strong>is</strong>.Management contractsWith <strong>the</strong> exception <strong>of</strong> <strong>the</strong> contract between Atelier Fund, LLCand Atelier Management, LLC described in note 33(e) on page 99<strong>of</strong> th<strong>is</strong> report, <strong>the</strong>re are no contracts between <strong>the</strong> Group and anythird parties for <strong>the</strong> management <strong>of</strong> any subsidiary or associatedcompany in <strong>the</strong> Group.5. COMPENSATION, SHAREHOLDINGS AND LOANSContent and method <strong>of</strong> determining <strong>the</strong> compensation and shareownershipprogrammesThe Group’s compensation policies are designed to ensurethat Group companies attract and retain management talent,recogn<strong>is</strong>ing <strong>the</strong> international nature <strong>of</strong> <strong>the</strong>ir businesses. TheGroup sets high standards in <strong>the</strong> selection <strong>of</strong> executives whoare critical to <strong>the</strong> long-term development <strong>of</strong> <strong>the</strong> business.The Compensation Committee <strong>of</strong> <strong>the</strong> Board <strong>is</strong> responsible forsetting <strong>the</strong> compensation <strong>of</strong> <strong>the</strong> non-executive directors and <strong>the</strong>executive directors <strong>of</strong> Compagnie Financière <strong>Richemont</strong> SAtoge<strong>the</strong>r with that <strong>of</strong> <strong>the</strong> Executive Chairman and for reviewing<strong>the</strong> compensation <strong>of</strong> all o<strong>the</strong>r members <strong>of</strong> senior management.Executives are rewarded in line with <strong>the</strong> level <strong>of</strong> <strong>the</strong>ir authorityand responsibility within <strong>the</strong> organ<strong>is</strong>ation. In addition to a basicsalary, <strong>the</strong>y generally receive short-term incentives related to <strong>the</strong>irindividual achievements and <strong>the</strong> performance <strong>of</strong> <strong>the</strong> Group asa whole. Both elements are reviewed annually in accordancewith <strong>the</strong> Group’s salary review process. Increases in basic salaryare determined by reference to a set <strong>of</strong> competencies requiredto fulfil <strong>the</strong> role, <strong>the</strong> length <strong>of</strong> time in <strong>the</strong> position and marketbenchmarking stat<strong>is</strong>tics provided by an external consultant.The level <strong>of</strong> short-term incentive <strong>is</strong> dependent on performanceagainst a range <strong>of</strong> individual key performance indicators andcollective strategic objectives, establ<strong>is</strong>hed at <strong>the</strong> beginning <strong>of</strong><strong>the</strong> year. These indicators and objectives relate to <strong>the</strong> potential<strong>of</strong> <strong>the</strong> area <strong>of</strong> <strong>the</strong> business for which <strong>the</strong> individual <strong>is</strong> responsible.The level for executives <strong>is</strong> typically between 30 per cent and40 per cent <strong>of</strong> basic salary, with fur<strong>the</strong>r incentives for exceptionalperformance.Executives are also eligible to participate in <strong>the</strong> Group’s stockoption plan, details <strong>of</strong> which are set out on page 103 <strong>of</strong> th<strong>is</strong>report. Option awards are linked to each executive’s salary leveland performance. The Group does not operate any schemes to<strong>is</strong>sue shares to executives as part <strong>of</strong> <strong>the</strong>ir compensation package.The 2008 grant <strong>of</strong> options included vesting conditions linkedto <strong>the</strong> performance <strong>of</strong> <strong>the</strong> Company’s share price relative toa comparative group <strong>of</strong> <strong>luxury</strong> goods businesses.The Group also operates a long-term incentive plan. The purpose<strong>of</strong> th<strong>is</strong> plan <strong>is</strong> to motivate and reward Ma<strong>is</strong>on executives bylinking a major part <strong>of</strong> <strong>the</strong>ir compensation package to <strong>the</strong> valueadded to <strong>the</strong> area <strong>of</strong> <strong>the</strong> business for which <strong>the</strong>y are responsible,typically over a three-year period.Directors are reimbursed for travel and o<strong>the</strong>r necessary businessexpenses incurred in <strong>the</strong> performance <strong>of</strong> <strong>the</strong>ir duties.Non-executive directors receive an annual fee in respect <strong>of</strong> <strong>the</strong>irmembership <strong>of</strong> <strong>the</strong> Board. The level <strong>of</strong> th<strong>is</strong> fee <strong>is</strong> kept underreview by reference to comparable external figures. Non-executivedirectors are not eligible for performance-related payments anddo not receive awards under <strong>the</strong> Group’s stock option plan.There <strong>is</strong> no scheme to <strong>is</strong>sue shares to non-executive directors.Non-executive directors who are also members <strong>of</strong> <strong>the</strong> CompensationCommittee or <strong>the</strong> Audit Committee are entitled to receive anattendance fee <strong>of</strong> € 3 200 (CHF 5 000) and € 6 400 (CHF 10 000)for each respective Committee meeting.50 <strong>Richemont</strong> Annual Report and Accounts 2009Corporate governance
Directors’ compensationThe total level <strong>of</strong> compensation paid to members <strong>of</strong> <strong>the</strong> Board <strong>of</strong> Compagnie Financière <strong>Richemont</strong> SA and <strong>the</strong> Management Committee,including pension contributions, benefits in kind and all o<strong>the</strong>r aspects <strong>of</strong> compensation, amounted to € 37 319 954. In determining <strong>the</strong>value <strong>of</strong> each comp<strong>one</strong>nt <strong>of</strong> compensation, <strong>the</strong> Group has followed <strong>the</strong> valuation and measurement principles <strong>of</strong> International FinancialReporting Standards (‘IFRS’). The amounts are in agreement with o<strong>the</strong>r IFRS information provided elsewhere in th<strong>is</strong> annual report.Salary, short-termincentives andPosto<strong>the</strong>rshort-term Long-term employment Stock Totalemployee benefits benefits benefits option cost* 2009€ € € € €Board <strong>of</strong> Directors <strong>of</strong> Compagnie Financière <strong>Richemont</strong> SAJohann Rupert Executive Chairman 2 098 794 – 1 528 739 2 295 383 5 922 916Jean-Paul Aeschimann Non-Executive Deputy Chairman 123 613 – – – 123 613Norbert Platt Group Chief Executive Officer 5 070 284 – 67 643 2 221 997 7 359 924Richard Lepeu Group Finance Director 2 704 187 – 69 225 1 287 895 4 061 307Franco Cologni Senior Executive Director 517 161 – 9 416 – 526 577Lord Douro Non-Executive Director 192 080 – – – 192 080Yves-André Istel Non-Executive Director 118 613 – – – 118 613Simon Murray Non-Executive Director 76 938 – – – 76 938Alain Dominique Perrin Executive Director 1 545 442 – – – 1 545 442Alan Quasha Non-Executive Director 76 938 – – – 76 938Lord Renwick Non-Executive Director 118 613 – – – 118 613Jan Rupert Manufacturing Director 1 005 354 – 53 016 1 014 734 2 073 104Jürgen Schrempp Non-Executive Director 76 938 – – – 76 938Total 13 801 893 – 1 728 039 6 820 009 22 349 941Group Management Committee 10 032 558 (414 000) 629 485 4 721 970 14 970 013Total key management compensation 23 834 451 (414 000) 2 357 524 11 541 979 37 319 954*The cost for stock options <strong>is</strong> determined in accordance with IFRS 2, Share-based Payment. Details <strong>of</strong> <strong>the</strong> valuation model and significant inputs to th<strong>is</strong> model are to be foundin note 34 to <strong>the</strong> consolidated financial statements.The comparative analys<strong>is</strong> <strong>of</strong> <strong>the</strong> table above <strong>is</strong> presented in note 33(f) <strong>of</strong> <strong>the</strong> consolidated financial statements on page 101 <strong>of</strong> th<strong>is</strong> report.Details <strong>of</strong> options held by executive directors and members <strong>of</strong> <strong>the</strong> Management Committee under <strong>the</strong> Group’s long-term share-basedcompensation plan at 31 March 2009 are as follows:Number <strong>of</strong> optionsImpact <strong>of</strong>Weightedde-twinning average Latest1 April Granted Exerc<strong>is</strong>ed <strong>of</strong> <strong>Richemont</strong> 31 March grant price expiry2008 in year in year units 2009 CHF Exerc<strong>is</strong>e period dateBoard <strong>of</strong> Directors <strong>of</strong>Compagnie Financière <strong>Richemont</strong> SAJohann Rupert 6 104 000 – – 2 171 841 8 275 841 11.83 Apr 2009-Jul 2011 June 2013Norbert Platt 924 666 429 375 – 967 835 2 321 876 22.64 Apr 2009-Jul 2014 June 2017Richard Lepeu 995 000 257 625 – 541 987 1 794 612 19.75 Apr 2009-Jul 2014 June 2017Jan Rupert 570 000 214 689 – 451 654 1 236 343 20.71 Apr 2009-Jul 2014 June 2017Group Management CommitteeGiampiero Bodino 240 000 68 700 – 277 445 586 145 22.22 Apr 2009-Jul 2014 June 2017Pilar Boxford 80 233 17 175 (18 567) 79 575 158 416 20.76 Apr 2009-Jul 2014 June 2017Bernard Fornas 503 000 8 589 – 516 177 1 027 766 20.42 Apr 2009-Jul 2014 June 2017Alan Grieve 206 000 51 525 – 169 046 426 571 20.17 Apr 2009-Jul 2014 June 2017Albert Kaufmann 560 000 171 750 (1 670) 494 670 1 224 750 20.96 Apr 2009-Jul 2014 June 2017Thomas Lindemann 137 000 85 875 (5 500) 169 693 387 068 23.41 Jul 2009-Jul 2014 June 2017Eloy Michotte 225 555 85 875 – 150 551 461 981 20.36 Apr 2009-Jul 2014 June 2017Frederick Mostert 296 666 171 750 – 318 307 786 723 23.17 Apr 2009-Jul 2014 June 2017<strong>Richemont</strong> Annual Report and Accounts 2009 51Corporate governance
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