Annual Report & Accounts 2006 - Euromoney Institutional Investor ...

DIRECTORS’REMUNERATION REPORT continuedRemuneration structure continuedBasic salary and benefitsThe basic salary and benefits are generally not the mostsignificant part of a director’s overall compensationpackage. Each executive director receives a salarywhich is reviewed annually by the committee.Certain non-cash benefits are also provided includingprivate health care, and life assurance through themembership of one of the pension schemes.Pension schemesEach UK-based director is entitled to participate inthe Harmsworth Pension Scheme (a defined benefitscheme, closed to new directors), the EuromoneyPension Plan (a money purchase plan) or their ownprivate pension scheme. Directors based overseasare entitled to participate in the pension schemearrangements applicable to the country where theywork. Currently, NF Osborn, CR Brown, RT Lamont,D Alfano, G Mueller and MJ Carroll participate in thegroup’s US 401(k) plan. Details of pension schemecontributions can be found on page 32 of this report.There are no other post retirement benefits.Profit share schemeThe group believes in aligning the economic interestsof management with those of shareholders andachieves this through a comprehensive profit sharingscheme that links the pay of each executive director tothe profits and growth in profits of the businesses thatthe executive director manages.The executive directors who manage business divisionsare set profit thresholds for the businesses for whichthey are responsible. The profit thresholds are set atthe time the director takes on responsibility for thebusinesses concerned, usually based on the profitsof the previous 12 months, and are adjusted if suchresponsibilities change. The normal profit sharearrangement pays 1% of profits from zero up to athreshold and then 5% of profits achieved in excessof this threshold. Some of the directors have schemeswhich have been in place for a number of years andpay profit shares at slightly higher rates or which aresubject to additional thresholds.The profit shares of the chairman and managingdirector are based on the pre-tax post-minority profitsof the group, thereby matching their profit share withthe return the group generates for its shareholders.The chairman is entitled to 6.49% of the pre-taxprofits. The managing director is entitled to 3.84%of the pre-tax profits up to a threshold of £29,000,000and an additional 1.44% of pre-tax profits in excess ofthis threshold.The finance director receives a profit share linked tothe adjusted earnings per share of the group (EPS).A fixed sum is payable for every percentage point theEPS is above 10p. A further sum is payable for everypercentage point that EPS is above 17.25p.CHC Fordham, in addition to his profit share,has a second incentive linked to the performanceof acquisitions.All of the profit share schemes are completely variablewith no guaranteed floor and no ceiling and aredesigned to be the most significant part of theexecutive director’s remuneration package.The table below shows the 2006 percentage split of the fixed and variable elements of each director’s remunerationpackage.FixedVariableSalary &ProfitExecutive directorsbenefitssharePM Fallon 7% 93%PR Ensor 7% 93%NF Osborn 31% 69%DC Cohen 22% 78%CR Brown 43% 57%E Bounous* 21% 79%CR Jones 52% 48%RT Lamont 76% 24%SM Brady 64% 36%D Alfano 25% 75%G Mueller 30% 70%MJ Carroll 81% 19%CHC Fordham 34% 66%Total 21% 79%* E Bounous retired as a director on April 13 2006.26 Euromoney Institutional Investor PLC