Annual report 2007 - Torotrak

Remuneration Report - continuedThe Remuneration Committee considered that the circumstances of the recruitment of Jeremy Deering as Finance Directorfollowing his previous temporary assignment were such that it was necessary on that occasion to exceed the normal limiton annual participation in the LTPSP. The Remuneration Committee therefore adopted a separate arrangement for thepurposes of this award. No further awards will be made under this arrangement other than following additionalshareholder approval or in exceptional circumstances as described in Rule 9.4.2 of the Listing Rules of the United KingdomListing Authority.The performance conditions adopted for these awards made during the year are designed to be challenging and relate toboth market and non-market performance conditions:• Receipt of up to 50% of the shares is based on achieving both an overall increase in share price and on the relativeranking of Torotrak’s total shareholder return (‘TSR’) against the TSR of the FTSE techMARK All-Share index (the‘Comparator Group’). A quarter of the shares in this part of the award would be received if Torotrak’s share pricewas to reach over 60p over the three year period and Torotrak’s TSR was in the top half of the Comparator Group.The maximum number of shares in this part of the award would vest if Torotrak’s share price were to be 120p ormore averaged over a fixed period at the end of the three year period and Torotrak’s TSR was in the top quartileof the Comparator Group. A sliding scale will operate in between the two levels of award. No shares would bereceived in this part of the award if Torotrak’s share price was less than 60p or if Torotrak’s TSR was not in thetop half of the Comparator Group. The Comparator Group chosen was the group of companies comprising theFTSE techMARK All-Share index• Receipt of up to 50% of the shares is based on achieving a measure of Cumulative Operating Cash Flow (‘COCF’)for the three year period commencing on 1 April 2006. A quarter of the shares in this part of the award would bereceived if Torotrak’s COCF achieved a target set in relation to the Business Plan COCF. The maximum number ofshares in this part of the award would vest if a further and significant improvement to COCF was achieved. A slidingscale will operate in between the two levels of award. No shares would be received in this part of the award ifTorotrak’s COCF does not achieve the target set in relation to the Business Plan.In addition to the above long-term incentive scheme, the Company operates a savings related share option scheme,details of which are given on pages 53 and 54.Non-executive Directors' RemunerationThe remuneration of non-executive directors is established by the Board within the limits set out in the Articles ofAssociation. The non-executive directors do not participate in the Company’s employee share option schemes or theLTPSP, are not eligible for bonuses and do not receive any other benefits or pension rights under the pension scheme.The non-executive directors do not have service contracts. However, each of them has a letter of appointment whichcontains a notice period of three months. The letters of appointment set out the expected time commitment, any othersignificant time commitments of the non-executive directors are disclosed to the Board and substantial changes broughtto the Board's attention. Non-executive directors are not appointed for specific terms but are subject to re-election byshareholders every three years.28Annual Report and Financial Statement 2007