Annual Report 2012 - Development Securities PLC

) Annual bonus
The non-pensionable annual bonus is based on the performance of the
Company during the period, team achievements and the specific contribution
of the individuals concerned. With the exception of M H Marx, Executive
Directors are set a target bonus of 37.5 per cent of salary and an above
target maximum of 75.0 per cent. As M H Marx does not normally qualify for
awards under the Development Profit Plan, Joint Venture Profit Plan and
Investment Growth Plan described below, his target bonus is 75.0 per cent
of salary, with a maximum of 150.0 per cent.
The Committee has always taken a somewhat different approach to the annual
bonus compared to our competitors, in that the annual bonus has never been
formulaically driven by the annual financial results but reflects a true measure
of annual performance in the context of the length of the property cycle.
The annual bonus in respect of the Executive Directors is determined
principally by the four main drivers for the creation of shareholder value in our
business: namely, accurate reading of the economic and market cycles in which
we operate, the pipeline of future development projects, active management of
the investment portfolio and the maintenance of the standards of excellence
that are embedded within the Company’s corporate culture.
The Committee considered that although management had delivered an
exceptional period in laying the ground work for future success, the
performance of the Company in the financial period did not warrant bonus
awards at Target. The following bonus awards were made in respect of the
financial period ended 29th February 2012.
29th February
2012
£’000
31st December
2010
£’000
29th February
2012
% of
maximum
31st December
2010
% of
maximum
M H Marx 150.0 378 21 63
C J Barwick 60.9 170 21 70
M S Weiner 60.9 170 21 70
G Prothero 60.9 170 21 70
From 1st March 2012, 100.0 per cent of any annual bonus awarded which is
above Target will be paid in shares which the recipient must hold for at least
two years.
c) Development Profit Plan
The Development Profit Plan seeks to reward and incentivise those Directors
and senior managers that have brought successful development
opportunities to the Company.
Not all developments are eligible for an award; the following criteria must
be met before an award can be made:
1) The development must be unconditional; and
2) (i) The development must be expected to exceed £2.0 million profit; or is
(ii) A multi-phased development where the first phase is expected to
exceed £2.0 million profit.
Awards are based on a percentage of the bonus pool which becomes payable
only once the development has achieved realised profits. The maximum
bonus pool available for distribution is 10.0 per cent of the realised profit for
Remuneration Report
each development. This is calculated once a notional cost of equity of
12.5 per cent is deducted, so that the pool generated only relates to profits
over and above a threshold equity return.
The Committee reserves the right to award 80.0 per cent of the prospective
bonus pool prior to completion, subject to profit realisation. When the
development completes and the profit has been realised, the remaining
unallocated 20.0 per cent of the bonus pool is assessed to take into
consideration any additional Directors and senior managers who were
instrumental during the life of the development. If no other participants are
identified then the 20.0 per cent is allocated pro-rata to those participants
already in receipt of an award.
In awarding annual bonuses and awards under the Development Profit Plan,
there is no ‘double-counting’. The contribution of any team and individual
performance, which leads to awards under the Development Profit Plan,
are disregarded in assessing the annual bonus.
The principal awards, that are outstanding for Executive Directors are
as follows:
Project
M H Marx
% award
C J Barwick
% award
M S Weiner
% award
Awards granted in previous years
PaddingtonCentral Phase III (Two
Kingdom Street) — 7.00 —
399 Edgware Road, London — 4.00 4.00
St Bride Street, London — 6.00 —
10 Hammersmith Grove, London — 3.50 —
Hale Barns, Manchester — — 6.50
Westminster Palace Gardens, London — — 5.50
Shepherds Bush Market, London — 1.00 5.50
Wick Site, Littlehampton — — 5.25
The Movement MVMT, Greenwich,
London — — 7.00
Airport House, Croydon — — 6.50
Awards granted during the period
and to date
Manchester Arena Complex — — 6.00
Rock portfolio — — 5.00
Sandbanks, Dorset — — 6.00
The Old Vinyl Factory (Hayes) — — 6.00
Abbey Wood, London — — 4.50
Kensington Church Street, London — — 6.00
Wick Lane, London — — 6.00
Chorlton Cross Shopping Centre,
Manchester — — 6.00
The above excludes awards made in respect of more minor projects or those
where current forecasts show a nil profit.
Development Securities PLC / Annual Report 2012 59