Annual report 2010 - Imperial Tobacco Group

Executive Directors’ Service AgreementsExecutive Directors Date of contract Expiry date Compensation on termination following a change of controlMrs A J Cooper 1 July 2007 Terminable on 52 weeks’ notice No provisionsMr R Dyrbus 21 August 1996 Terminable on 52 weeks’ notice Payment of a liquidated sum calculated by referenceto benefits receivable during the notice periodMr G L Blashill 28 October 2005 Terminable on 52 weeks’ notice No provisionsPolicy in Respect of Remuneration from External Board AppointmentsWe recognise that external non-executive directorships are beneficial for both the Executive Director concerned and theCompany. At the discretion of the Board, Executive Directors are permitted to retain fees received in respect of any suchnon-executive directorship. Each serving Executive Director is restricted to one external non-executive directorship and maynot serve as the chairman of a FTSE 100 company.The Executive Directors who held such appointments during the financial year were Mrs A J Cooper, who serves on theBoard of Inchcape PLC and received and retained fees of £40,000, and Mr G Davis, who serves on the Board of Wolseleyplc and received and retained fees of £44,063.Remuneration Policy for Non-Executive DirectorsDuring the year, fees for Non-Executive Directors, and chairmanship fees in respect of the Remuneration and Audit Committees, werereviewed by the Board as a whole. The review took into account market practice with reference to the comparator group on page 84and the various responsibilities of our Non-Executive Directors together with the need to attract and retain individuals with the relevantskills, knowledge and experience. The Chairman’s remuneration was determined by the Board following recommendation from theRemuneration Committee. The Chairman and Non-Executive Directors were not permitted to take part in discussions relating to theirown remuneration. With the exception of reimbursement of expenses incurred in connection with their directorship of the Company,Non-Executive Directors receive no other material pay or benefits. They are not eligible to participate in the Group’s employee shareplans or annual bonus schemes and are not eligible for pension scheme membership. During the year Mr J-D Comolli, however,received pension payments relating to his former executive position within the Altadis Group. The Company also provided medicalinsurance for Mr Comolli.A proportion of our Chairman’s and Non-Executive Directors’ fees is applied to purchase shares in the Company. This isto promote alignment of their interests with those of our shareholders and is not at a level that could compromise theirjudgement or independence. These shares are held by a nominee during the term of their directorship.The Company’s Articles of Association enable the Board to set the remuneration of Directors within the limits set byshareholders. The current aggregate limit is £2.0 million and the aggregate amount paid in the financial year was £1.1 million.Executive Directors are remunerated in respect of their executive appointments, under the terms of their service agreements,and receive no additional fees for serving as directors.Following his retirement from the Board in January 2006, Mr S Huismans remains a member of Supervisory Boards withinthe Reemtsma Group. He was also appointed as a Non-Executive Director of Altadis, S.A. upon its acquisition by the Groupuntil 5 November 2008. Mr S Huismans received additional remuneration for fulfilling such non-executive roles.Non-Executive Directors’ Letters of AppointmentThe Chairman and Non-Executive Directors do not have service agreements with the Company but the terms of theirappointment are recorded in letters of appointment which are available for viewing at our registered office during normalbusiness hours and prior to and at the AGM.In line with our annual review policy the Chairman’s and Non-Executive Directors’ terms of appointment were reviewed andconfirmed by the Board on 1 February 2010. Under the terms of our current Articles of Association Non-Executive Directors standfor election at the first AGM following appointment and are subject to re-election by shareholders every three years. A resolution toamend this provision and require all Directors to stand for re-election annually is being proposed at the 2011 AGM. There are noprovisions regarding notice periods in their letters of appointments which state that the Chairman and Non-Executive Directors willonly receive payment until the date their appointment ends and, therefore, no compensation is payable on termination. The lettersof appointment detail the time commitment expected of each Non-Executive Director.85