Annual report 2010 - Imperial Tobacco Group

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Directors’ Remuneration Report continuedStrategy Performance Governance FinancialsHewitt New Bridge Street also reviews the Group’sremuneration principles and practices against corporategovernance best practice and helps ensure adherence to theGroup’s Executive Directors’ Remuneration Policy.Executive remuneration data provided by Towers Watsonwas also used to assist in benchmarking to ensure theconsistent application of our executive Remuneration Policy.To ensure Remuneration Committee members are fully awareof new developments and evolving remuneration best practice,Hewitt New Bridge Street presented a review of developmentsin UK corporate governance, focusing primarily on executivepay governance.Aon Hewitt is also assisting the Group in respect of thetriennial valuation of its pension fund and acts as insurancebrokers to the Group.Solicitors Allen & Overy LLP are retained by the Company andprovide legal advice on our employee share plans. Allen & OveryLLP and Ashurst LLP also provide services to the RemunerationCommittee as and when required. Both Allen & Overy LLP andAshurst LLP provide other legal services to the Group.The Company has appointed Alithos Limited to undertaketotal shareholder return (TSR) calculations and provideadvice on all TSR related matters, including advice in respectof the bespoke comparator group. Alithos Limited providesno other services for the Group.PricewaterhouseCoopers LLP, our Auditors, perform agreedupon procedures on earnings per share (EPS) calculationsused in our employee share plans to assist the RemunerationCommittee in determining the level of awards vesting.Main Activities – How the Remuneration Committee metits ObjectivesThe Board is ultimately accountable for executiveremuneration but delegates responsibility to theRemuneration Committee. Our Remuneration Committeeaddressed the following main issues during the year:– consideration of our new Chief Executive’s remunerationpackage upon appointment;– consideration of our Remuneration Policy forExecutive Directors;– the annual review of the Chairman’s, Executive Directors’and Chief Executive’s Committee members’ remuneration;– reviewing the executive bonus targets;– reviewing, and subsequently increasing, the executivebonus levels;– overseeing Remuneration Policy for senior managementand employees and our employee share plans;– undertaking the annual review of the Committee’s Termsof Reference; and– the disclosures in this Report.How the Committee spent its time102040%Executive remuneration 40Performance metricsincluding bonusOversight of sharebased incentives301030Other including bestpractice updates2080
2 Directors’ Emoluments for the Year Ended 30 September 2010 (Audited)£’000 2010 2009Executive DirectorsBase salary 2,414 2,612Benefits 75 84Pension salary supplement 276 256Bonus 2,769 2,573LTIP annual vesting 1 3,454 2,248SMS annual vesting 2 1,183 1,45310,171 9,226Non-Executive DirectorsFees 1,061 1,101Benefits 33 115Subsidiary Board fees – 5Consultancy fees 442 7021,536 1,923Former Executive DirectorsSalary of former Executive Director 75 –Bonus of former Executive Director 77 –Consultancy fees to former Executive Directors 106 112Subsidiary Board fees 43 81Benefits 2 –303 193Fees of former Non-Executive DirectorsSubsidiary Board fees 28 2828 28Total remuneration 12,038 11,370Chief Executive’s Committee (excluding Executive Directors)Base salary 1,583 1,342Benefits 141 74Pension salary supplement 110 99Bonus 1,079 819LTIP annual vesting 1 439 285SMS annual vesting 2 360 3693,712 2,9881 Value of LTIP shares vesting in the year based on the prevailing closing share price on the day of exercise.2 Value of SMS shares vesting on maturity based on the prevailing closing share price on the day of vesting.Note: Aggregate remuneration paid to or receivable by Executive Directors, Non-Executive Directors and members of the Chief Executive’s Committee forqualifying services in accordance with IAS 24, which includes National Insurance and similar charges £17,274,754Key Management Compensation for the Year Ended 30 September 2010 (Audited)£’000 2010 2009Short-term employee benefits 9,595 9,427Post employment benefits 636 378Other long-term benefits – –Termination benefits – –Share-based payment (in accordance with IAS 24) 4,043 3,68814,274 13,49381
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Imperial Tobacco Group PLCAnnual Re
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…to deliver sustainableshareholde
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Operational HighlightsDelivering Su
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and product portfolio to evolving c
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In this section9 Strategic Review10
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Our StrategyWe are focused on deliv
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Total Tobacco5 % Our Powerful Brand
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Our global strategic cigarette bran
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Our global team is fully aligned be
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Satisfying consumers and aligning o
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We are a responsive business with s
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Operating responsibly, combined wit
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Our growth drivers of sales growth,
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Principal Risks and UncertaintiesA
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Competition LawOverviewWe take comp
Page 31 and 32: Reconciliation of Adjusted Performa
Page 33 and 34: Key Performance Indicators (KPIs) 1
Page 35 and 36: Lambert & Butler and Richmond remai
Page 37 and 38: Within this the travel retail marke
Page 39 and 40: OutlookThe strength of our portfoli
Page 41 and 42: Blondes. In the Middle East, we aga
Page 43 and 44: Corporate ResponsibilityOur Corpora
Page 45 and 46: Corporate Responsibility and our St
Page 47 and 48: We have revised our IMS and employe
Page 49 and 50: Environmental Performance 1Absolute
Page 51 and 52: across the business. More informati
Page 53 and 54: Supplier RelationshipsOur main supp
Page 55 and 56: Non-financial performance indicator
Page 57 and 58: “High standards of corporategover
Page 59 and 60: 5. Pierre Jungels, CBE (HON), PHD,
Page 61 and 62: Management and Corporate StructureB
Page 63 and 64: Meetings of the Board, Board Commit
Page 65 and 66: and supplemented by our Non-Executi
Page 67 and 68: 6 Performance evaluation: How do we
Page 69 and 70: The Board recognises that we operat
Page 71 and 72: Assurance process for financial rep
Page 73 and 74: - receiving reports from, and quest
Page 75 and 76: Directors’ Report: Other Informat
Page 77 and 78: - state whether IFRSs as adopted by
Page 79 and 80: We understand that a purported coll
Page 81: This Report covers the following:1
Page 85 and 86: Directors’ Interests in Ordinary
Page 87 and 88: Executive Directors’ Service Agre
Page 89 and 90: When setting base salary the Remune
Page 91 and 92: First ElementFifty per cent of the
Page 93 and 94: In respect of the October 2007 - Oc
Page 95 and 96: Any annual bonus earned up to 100 p
Page 97 and 98: Benefit Trusts have also been provi
Page 99 and 100: Independent Auditors’ Reportto th
Page 101 and 102: Consolidated Statement ofComprehens
Page 103 and 104: Consolidated Statement of Changes i
Page 105 and 106: Accounting PoliciesBasis of Prepara
Page 107 and 108: Duty and Similar ItemsDuty and simi
Page 109 and 110: InventoriesInventories are stated a
Page 111 and 112: Restructuring CostsSignificant one-
Page 113 and 114: Property, Plant and Equipment and I
Page 115 and 116: Tobacco net revenue£ million 2010
Page 117 and 118: 3 Restructuring Costs£ million 201
Page 119 and 120: Factors affecting the tax charge fo
Page 121 and 122: 9 Intangible Assets2010£ million G
Page 123 and 124: 10 Property, Plant and Equipment201
Page 125 and 126: 13 Trade and Other Receivables2010
Page 127 and 128: Sensitivity analysisIFRS 7 requires
Page 129 and 130: At 30 September 2009Balance sheetam
Page 131 and 132: (iii) Currency analysis and effecti
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(iv) Derivative financial instrumen
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Matures in financial year ending in
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The following tables are provided i
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Matures in financial year ending in
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(vi) Hedge of net investments in fo
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18 Retirement Benefit SchemesThe Gr
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Assumptions regarding future mortal
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21 Share SchemesThe Group recognise
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Year from 1 October 2008 to 30 Sept
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23 CommitmentsCapital commitments£
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27 Reconciliation of Cash Flow to M
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Imperial Tobacco Group PLC Balance
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(iii) Debtors: Amounts Falling Due
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Principal SubsidiariesThe principal
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Shareholder InformationRegistered O
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IndexAAccounting Policies 103Acquis
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Annual report 2010 - Imperial Tobacco Group

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