Annual report 2010 - Imperial Tobacco Group

Directors’ Remuneration ReportStrategy Performance Governance FinancialsThe Remuneration Committee believesour remuneration practices link closelywith our sustainable sales growthstrategy without encouragingmanagement to take undue risks.Remuneration CommitteeMembersDr P H Jungels (Chairman)Mr M H C HerlihyMr C F Knott (to 17 July 2010)Ms S E MurrayMr M D WilliamsonPierre JungelsChairmanMr M R Phillips (General Counsel &Company Secretary (from 1 October2010 Group Corporate and LegalAffairs Director), acts as Secretaryto the Committee)ResponsibilitiesThe responsibilities of the Remuneration Committee include:– determination of the Remuneration Policy for ExecutiveDirectors and members of the Chief Executive’s Committee(from 1 October 2010 the Operating Executive);– recommendations to the Board in respect of theChairman’s remuneration;– determination of targets for performance related pay elements;– policy for Directors’ pensions and contracts;– oversight of the overall policy for seniormanagement remuneration;– oversight of disclosures in the Remuneration Report; and– oversight of the Group’s employee share plans.OverviewThe Group’s remuneration policy is intended to attract andretain high quality employees throughout the organisation,encourage loyalty and motivate them to achieve a high levelof corporate performance in an increasingly demanding,competitive and international environment.Performance related rewards reflect the businessperformance delivered by the Board and senior managementin a year of significant achievement that included a revisedstrategic focus towards our sales growth agenda and thefurther integration of our Altadis acquisition.For the financial year ending 30 September 2011 the overallstructure of the Group’s remuneration policy will remainunchanged. Subject to shareholder consultation, to furthermotivate the achievement of strategic objectives theExecutive Directors’ potential maximum annual bonus hasbeen increased dependent on the achievement of stretchingmeasurable strategic objectives. The increase will bedelivered in deferred shares. In addition, the entire bonuswill be subject to claw-back. These changes are discussedin the Revisions to Executive Directors’ Remunerationsection on page 92.IntroductionWe have prepared this Report in accordance with theCompanies Act 2006, Statutory Instrument 2008/410 The Largeand Medium-sized Companies and Groups (Accounts andReports) Regulations 2008 (the Regulations) and to meet therequirements of the Listing Rules of the UK Listing Authority.We describe how the principles of good governance relatingto directors’ remuneration set out in the Combined Code onCorporate Governance (the Code) are applied in practice. Theprovisions of the UK Corporate Governance Code, published bythe Financial Reporting Council in June 2010, apply to the Groupwith effect from its financial year commencing 1 October 2010.The Regulations require our Auditors to report to shareholders onthe audited information within this Report and to state whether, intheir opinion, the relevant parts of the Report have been preparedin accordance with the Companies Act 2006. The Auditors’opinion is set out on page 97 and we have clearly marked theaudited sections of the Report.78