Pinewood Shepperton plc Annual Report ... - Pinewood Studios

Pinewood Shepperton plc Annual Report & Accounts 2010 45Directors’ remuneration report continuedLong-Term Incentive Plan continuedIn order for Level 1 awards to be granted, Executive Directors are required to have purchased shares in the Company(to a maximum value of 50% of Level 2 awards), which are matched on a two for one basis up to a maximum of 125%of salary. The number of executive shares purchased is detailed in the section entitled ‘Directors and their interests’ in theDirectors’ report. Level 2 awards are restricted to a maximum of 150% of basic salary.Awards granted on 30 March and 11 May 2007 failed to meet the Total Shareholder Return and Return on Capitalemployed targets over the three year measurement period and therefore lapsed.In respect of the grants during 2010, the value of Level 2 awards was set at 125% of basic salary. Level 1 awards weregranted on the basis of two matching shares for every executive share purchased during the 30 business days from1 April 2010, the date of grant of the Level 2 awards.The Committee intends to satisfy 2010 LTIP awards with new issue shares.Basis of performance condition selection and measurementThe shares subject to the LTIP awards will only be released to Executive Directors in three years from the date of grant,subject to the retention of the related executive shares purchased for three years, the continued employment of theExecutive Directors, and the satisfaction of performance conditions based 50% on Total Shareholder Return and 50%on annual average Return on Capital Employed (“ROCE”) performance, both measured over the three year period.Total shareholder return (“TSR”)Comparative TSR was selected as a performance condition for part of the awards granted by the Committee as it ensuresthat the executives have outperformed their peers over the measurement period in delivering shareholder value beforebeing entitled to receive any of their awards, irrespective of general market conditions.Prior to the measurement of the TSR performance of the Company the Remuneration Committee will determine whetherthe precondition has been satisfied. The precondition has to be satisfied prior to determining the actual level of releaseof the part of the award subject to the TSR performance condition. The test used by the Remuneration Committee todetermine whether this part of the award is capable of release will be the level of financial performance of the Companyover the measurement period against budgeted levels for the following financial criteria:(a) ROCE;(b) EBITDA; and(c) Normalised Earnings per Share.If the Remuneration Committee on measurement finds that the majority of these criteria have not been met and thatsuitable justification for this has not been provided by the Board, this part of the award will be incapable of releaseirrespective of the TSR performance of the Company.TSR is measured against an appropriate comparator group of companies consisting of those forming the FTSE SmallCap index. This is set for each award year by reviewing and updating the comparator group data to ensure that theinformation reflects those companies who have moved in or out of the index. The 2007 comparator group was set at30 March 2007, the 2008 group was set at 7 May 2008 and the 2010 group was set at 1 April 2010.Where the performance measure is TSR PricewaterhouseCoopers LLP, the Committee’s advisers, shall calculate theTSR in accordance with the rules of the LTIP and approve those figures prior to the release of any award.