Annual Report and Accounts 2010-11 - Manchester Airport

Directors’ Remuneration Report35Although the Company is not a quoted company, as a matter of best practice it implements the Directors’ RemunerationRegulations 2002, as appropriate to its circumstances. This report covers the remuneration of directors and relatedmatters, including pay and benefits, remuneration policy and detailed terms of reference of the Remuneration and ReviewCommittee. The first part of this report is unaudited.Remuneration and Review Committee Terms of ReferenceThe members of the Committee are set out on page 31. The terms of reference for the Committee are as follows: To determine and review the policy for the remuneration of executive directors and senior executives within theManchester Airport Group; To determine short term incentives and long term incentives for executive directors and senior executives within theManchester Airport Group; To determine the policy for and scope of pension arrangements and employee benefits for the Manchester AirportGroup; To set annual performance targets for the Group Chief Executive and to review the performance of the Group ChiefExecutive against such targets.The Committee meets at least twice a year and at other times as it sees fit.The Group Chief Executive, the Group Human Resources Director and the director of Employment Policy & Servicesattend meetings with the Committee as and when appropriate.Remuneration policyThe objective of the remuneration policy in respect of the executive directors and senior executives is to offerremuneration packages that: allow the Group to attract, motivate and retain senior executives of high calibre who are capable of delivering theGroup’s objectives; and link rewards to both individual and corporate performance, responsibility and contribution.The policy seeks to provide total remuneration packages that are competitive in the markets in which executives arebased and which assist in attracting and retaining high calibre executives.Remuneration packages comprise: base salaries, which are benchmarked using external consultants and published survey data, allowing informedcomparisons with companies of similar size and complexity. Individual performance and any changes inresponsibilities are also taken into account. discretionary incentives which are payable to the executive directors and senior executives subject to the fulfillment ofcertain performance criteria. The Committee agrees the amount of performance incentive and the ongoing criteria areexamined to ensure that they remain focused upon motivating directors to enhance individual performance and createshareholder value. other benefits include a car cash allowance, or an equivalent car, in addition to permanent health insurance, criticalillness cover and death in service life cover. all executive directors and senior executives are entitled to join the Group’s pension scheme.Executive directors’ base salaries and annual bonusesThe base salaries of executive directors are reviewed annually, having regard to personal performance, Companyperformance, affordability and competitive market practice as determined by external research. The executive directorsare eligible to participate in the MAG Executive Directors Short Term Incentive Scheme. Subject to satisfactory personaland company performance, the executive directors could earn a maximum incentive of 40% of base salary.A revised long-term incentive plan was introduced in 2009 where an incentive of up to 60% of salary for executivedirectors and up to 45% of salary for senior executives could be paid dependant on achievement of targets linked togrowth in the Group’s return on capital employed and market share over a three year period. A further award was madein 2010/11 and accruals have been made at target levels for the return on capital employed element only. In both awardsno elements of remuneration, other than base salary, are pensionable.Executive directors’ service contractsThe Group’s policy is that directors will be employed with a notice period of twelve months.The Manchester Airport Group PLC Annual Report and Accounts 2010-11