Annual Report - SABMiller

60 Remuneration report SABMiller plc Annual Report 2010Remuneration report continuedIn the light of comments received from shareholders, and the continuedgrowth in the company’s share price, the committee made the followingmodifications to the proposal. First, the committee reduced the proposedquantum of the awards to be made subject to the new Value Sharingcondition by approximately 12%. Secondly, the committee introduceddeferral provisions into this element of the plan, under which if anexecutive elects to exercise an award after three years but beforethe end of the five-year period, the shares will only be released to theexecutive in two or three equal instalments over the balance of thefive-year period. Thirdly, the committee reduced the quantum of sharesfor the share option and EPS-based performance share elements ofthe company’s long-term incentive plans by approximately 14%.Following these consultations with shareholders and institutionalinvestor representative bodies, this new Value Sharing condition wasadopted by the committee for the TSR component of awards madewith effect from 1 June 2010. The committee believes that this newcalibration of SABMiller’s long-term incentives will appropriately motivateand reward performance, by ensuring that management is incentivisednot only to continue delivering upper quartile performance but to strivefor upper decile outperformance for shareholders, will sharpen therelationship between pay and performance, and will materially contributetowards the achievement of the group’s strategic objectives.As to the future, the committee’s expressed intention is that reviews ofthe appropriate level and structure of long-term incentives are expectedto be conducted at approximately three-yearly intervals, and, in theabsence of wholly exceptional circumstances, the 2010 level of longtermincentives should remain unchanged until the next review.Remuneration policiesThe committee’s policy continues to be to ensure that executivedirectors and members of the executive committee are rewarded fortheir contribution to the group’s operating and financial performanceat levels which take account of industry, market and countrybenchmarks, and that their remuneration is appropriate to their scaleof responsibility and performance, and will attract, motivate and retainindividuals of the necessary calibre. The committee takes account ofthe need to be competitive in the different parts of the world in whichthe company operates.The table and charts below show the ratios of performance-relatedcompensation to base salary and benefits of the executive directors,and the relative value of the different elements, including the bonusand long-term share-based compensation awarded in respect of theyear ended 31 March 2010, assuming target or median performance.The ratios accord with the committee’s policy on the balance betweenfixed and variable pay.The committee considers that alignment with shareholders’ interestsand linkage to SABMiller’s long-term strategic goals is best achievedthrough a twin focus on earnings per share and, from 2010 onwards,additional value created for shareholders, and a blend of absoluteand relative performance. Hence, for executive directors and seniorexecutives, vesting for awards of a specified number of performanceshares are subject to SABMiller’s new TSR-based performancecondition under the Value Sharing Plan, and vesting for awardsof a fixed number of performance shares are subject to three-yearadjusted earnings per share (EPS) growth, with targets set accordingto the committee’s judgement after considering, among other factors,historical and forecast adjusted EPS growth for SABMiller’s peers(listed on page 62).Base payThe committee reviews the salaries of executive directors at thebeginning of each financial year.In setting target remuneration levels for the executive directors thecommittee has regard to the 30 FTSE 100 companies ranked in the15 places above and below the company by market capitalisation, aswell as to pay levels and practices in the company’s principal internationalcompetitors and, where relevant, in companies comparable in size tothe company’s divisions in those countries in which the company hasa significant presence. The committee also has regard to remunerationlevels and practices in the group’s own operations. In determining thesalaries of the executive directors for the year commencing on 1 April2010, the committee took into consideration the 17% increase inadjusted earnings (26% in sterling terms) achieved in the year ended31 March 2010, and the recommended 17% increase in the full yeardividend to 68 US cents per share, compared with 58 US cents pershare for the previous year.Salary Retirement Benefits Bonus LTI Total Fixed Variable£ £ £ £ £ £ % %EAG Mackay 1,145,000 343,500 105,347 1,580,000 2,027,982 5,201,829 31 69MI Wyman 687,000 206,100 74,948 683,000 1,298,011 2,949,059 33 67Executive remuneration breakdownEAG Mackay%MI Wyman%■ Salary 22%■ Pension 7%■ Benefits 2%■ Bonus 30%■ LTI 39%■ Salary 23%■ Pension 7%■ Benefits 3%■ Bonus 23%■ LTI 44%