2568.11 kb - Compass Group

33 Compass Group PLC Annual Report 2007Directors’ ReportDirectors’ remuneration reportincluding the statement of remunerationpolicy for the year ended 30 September 2007The Board presents its remunerationreport, which has been prepared on therecommendation of the RemunerationCommittee (‘the committee’) and inaccordance with the requirements of theCompanies Act 1985. Shareholders will beinvited to approve the report at the AnnualGeneral Meeting on 8 February 2008.The report covers the following matters:executive remuneration policy for theyear ended 30 September 2007 and theintended policy for the year ending30 September 2008; anddirectors’ remuneration, incentive planparticipation and pension provision.With the exception of the annualperformance-related award, serviceagreement details, the first shareholderreturn graph on page 36, disclosure ofremuneration to other senior executives andexternal directorships, the information set outon pages 33 to 39 of this report representsthe auditable disclosures referred to in theAuditors’ report on page 40 as specifiedby the UK Listing Authority and underSchedule 7A of the Companies Act 1985.Role of Remuneration CommitteeThe Board sets the Company’s remunerationpolicy and the committee is responsible,within the authority delegated by the Board,for determining specific remunerationpackages and the terms and conditions ofemployment for the members of theExecutive Committee, which comprises theexecutive directors and other seniorexecutives. The committee ensures that themembers of the Executive Committee areprovided with the appropriate incentives toenhance the Group’s performance and toreward them for their personal contributionto the success of the business. The committeereviews the remuneration arrangements forGroup employees whose salaries exceed aspecified level and administers the Company’sshare incentive plans. The committee alsodetermines the Chairman’s remunerationalthough the Board itself determines the levelof fees paid to the non-executive directors.No directors are involved in deciding theirown remuneration.The committee also maintains an activedialogue with shareholder representatives andits full terms of reference are set out on theCompany’s website www.compass-group.com.Membership of the committeeThe committee consists entirely ofindependent non-executive directors (asdefined in the Code). The committee has beenchaired by Sir James Crosby, seniorindependent non-executive director since hisappointment as a director on 17 February2007. Sir James Crosby succeeded PeterCawdron as Chairman of the committee uponhis retirement as a director of the Company atthe conclusion of the 2007 Annual GeneralMeeting. Other members who served duringthe year were Sir Roy Gardner; Sven Kado;Steve Lucas; Tim Parker, since his appointmenton 17 February 2007; and Val Gooding untilher resignation on 31 December 2006.Biographical details of the current membersof the committee are set out on page 17. TheGeneral Counsel and Company Secretaryacts as the secretary to the committee. Thecommittee met on six occasions during theyear. Attendance details are shown on page 29.Advisors to the committeeThe committee has access to detailed externalinformation and research on market data andtrends from independent consultants. Duringthe year KPMG LLP (who also provide duediligence services and support some of theCompany’s internal audit projects),PricewaterhouseCoopers LLP (who alsoprovide expatriate assignment advice) and theHay Group were engaged by the committeeto advise on the design of incentivearrangements, job evaluation andremuneration levels as well as general humanresource and compensation related matters.The committee also engaged Mercer HumanResource Consulting (who also providedpensions and actuarial advice to some of theGroup’s pension schemes) to provide adviceon job evaluation, remuneration levels andpension issues for employees below executivedirector level, and they also provided generalactuarial advice. The committee also soughtadvice from Freshfields Bruckhaus Deringerin its capacity as legal advisor to the Company.In addition, Alithos Limited providedinformation for the testing of the totalshareholder return performance conditionsfor the Company’s Long-Term Incentive Plan(‘LTIP’).The Chairman and the Group ChiefExecutive together with Jane Kingston,the Group Human Resources Director, andDavid Walker, Director of Group Reward, arenormally invited to attend each committeemeeting and provide advice and guidance tothe committee (other than in respect of theirown remuneration).Summary of activity during the yearDuring the year the committee conducted itsannual review of remuneration to ensure thatthe overall remuneration structure continuesto promote the Company’s business strategy.In addition the committee sought toharmonise Executive Committee members’service contracts in order to expressly requirean executive to seek alternative employmentin the event of termination and to acceptpayments in lieu of notice in monthlyinstalments. Further details of the executivedirectors’ service contracts are set out onpage 38. The committee also reviewed thelong-term incentive plans and reconfirmedthat the bonus matching and share optionplans would not be used for new awards toexecutive directors without seeking renewedshareholder approval. The committee alsoreviewed the free cash flow targets usedin the LTIP in light of the disposal of theSelecta vending business and adjusted thesame for awards made in the years ended30 September 2006 and 2007. Details of theLTIP and the adjustments made to the targetsare set out on pages 35 and 36.