Savills plc 2012 Annual Report - (PDF) - Investor relations

Remuneration report2008-2012 OverviewUnderlying Profit Before TaxDividend Payments to Shareholders*Executive Director Remuneration**Total Shareholder ReturnClare HollingsworthChair of the RemunerationCommittee83%83%65%100%* The dividend cost stated for 2012 includes the cost of the final dividendrecommended by the Board (amounting to £8.5m), payment of which is subjectto shareholder approval at the Company’s AGM scheduled to be held on 8 May2013, and along with the cost of the supplemental dividend (£7.5m), is based onthe number of shares in issue as at 31 December 2012.** Executive Director remuneration comprises the remuneration paid to the GroupChief Executive and Group Chief Financial Officer job holders in 2008 and 2012.Since 1 July 2010 the Executive representation on the Board has comprisedthese job role holders.Dear ShareholderOn behalf of the Board, I am pleased to report on the activities ofthe Remuneration Committee for the period to 31 December 2012.This report will be presented for approval by shareholders at the2013 Annual General Meeting.Our philosophy to remunerationOur focus and business policy is founded on the premise that staffshould be motivated through highly incentive based (and thereforevariable) remuneration consistent with our partnership style culture.We continue to believe that this approach best aligns shareholders’and management’s interests, and incentivises superior performanceand the creation of long term shareholder value. This approach alsoensures that our reward arrangements are consistent with andable to respond to the cyclical nature of the real estate markets,particularly transactional markets. Reflecting this philosophy, thesalaries for the Executive Directors, GEB Members and fee-earners,particularly the more senior ones, are set below market medians forsimilar businesses, with a greater emphasis on the performancerelated elements of profit share and/or, outside of the UK,commission in the total reward package.The Committee, supported by its advisors Towers Watson,is mindful of its responsibility to reward appropriately, but notexcessively, and rigorously assesses competitive positioning insetting remuneration and determining targets to ensure that rewardreflects performance, that it supports the delivery of our strategicand operational objectives and that it is fair to management andshareholders alike. Overall, we expect employment costs over thecycle to be in the range of 60% to 65% of revenue. In the five yearsbetween 2008 and 2012, underlying profit improved by more than80% and dividend payments to shareholders* increased by thesame amount notwithstanding the volatile market conditions. Overthe same period we have pursued our strategy of progressivelybuilding our non-Transactional businesses which provide morestable, long term earnings, to balance our Transactional businesseswhich are more dependent on the cycle. We also broadened ourgeographic footprint. Reward during this period overall for ExecutiveDirectors** rose by 65% reflecting this performance and ourprogress in delivering our strategy, although in some years duringthis period reward reduced year on year reflecting performance.There were no changes to our remuneration policy in 2012,and none are anticipated in 2013, although the Committee willcontinue to keep our reward structure under review.2012 remunerationDuring 2012 the base salaries of the Executive Directors werereviewed, but no increases were awarded. Profit share awardsfor the Executive Directors for the year were assessed againsta combination of the Group’s financial performance, whichexceeded expectations following a very strong end to the year,and personal performance, measured in terms of the deliveryof strategic and operational objectives or the achievement ofspecific milestones related to their delivery over the mediumterm. Reflecting this strong performance, profit share awardsof 65% of maximum potential were earned by the ExecutiveDirectors (compared to approximately 50% in respect of 2011)of which approaching one quarter will be delivered in theform of Savills shares, deferred for a further 3 years.Our business Our governance Our resultsSavills plc Report and Accounts 2012 45