Annual Report 2010 in PDF - BBA Aviation

Directors’ Remuneration Report
I am pleased to introduce our Directors’ Remuneration Report for 2010, which over the following pages sets
out the policy, principles and implementation in practice for directors’ remuneration, covering each of the
constituent elements of their remuneration in turn. I trust you will f nd the format of this year’s report easy
to follow.
The Committee appreciates the dialogue and support it receives from
investors and welcomes the constructive feedback that investors have
been able to provide. As you know from our report last year BBA
Aviation’s Remuneration Committee conducted a major review of the
structure of the remuneration packages of the Company’s senior
executives at the end of 2009. As part of the review process, the
Committee discussed with shareholders, representing over 45% of the
Company’s share register, our proposals to better align executive
remuneration with the strategic objectives of the Group and therefore
the interests of shareholders. As a consequence of the review a
number of changes were introduced to the structure and balance of
the key elements of the Company’s remuneration packages in 2010.
In particular:
– the 2010 annual bonus plan was weighted to focus on the Group’s
operating profts;
– half of any 2010 annual bonus payable to executive directors is
required to be deferred into the Deferred Bonus Plan;
– the LTIP awards that will be made in 2011 will have an earnings per
share performance condition measured over a three-year
performance period, while the matching awards made under the
Deferred Bonus Plan in 2011 will have a return on invested capital
performance condition, also measured over three years.
The operation of these is described in this year’s report. We believe
that the changes that were introduced in 2010 and which were
described fully in last year’s annual report are in the best interests of
both the Company and all its stakeholders. They are designed to
reward long-term sustainable performance efectively and to
encourage retention of key employees and the Committee will
continue to monitor their impact over the coming years.
In formulating remuneration policy and its implementation, the
Committee recognises the need for BBA Aviation to compete
efectively for executive talent in the diferent markets in which it
operates. We therefore continue to place high importance on the
need for remuneration to be competitive while refecting the business
strategy of the Group. The annual and long-term incentive
arrangements are designed to drive business strategy and align our
executive directors with sustainable value creation for our
shareholders. We also take into account UK best practice for listed
companies and understand that this and the views of stakeholders are
constantly evolving and that diferent market participants have
diferent views of best practice. An example of this is the dif ering
views on what is the most appropriate use of benchmarking data.
Following the 2010 AGM, we met some shareholders whose shares
had been voted against the 2010 Remuneration Report and they have
confrmed that they too are now satisfed with the Group’s
remuneration structure and practice.
Mark Hoad was promoted to the Board on his appointment as
Group Finance Director in April 2010 and this report describes his
remuneration arrangements in detail for the frst time. Andrew Wood
retired as Group Finance Director on 29 April 2010 and details of his
remuneration on leaving the Company’s employment are also
contained in this report.
The Committee looks forward to contributing to the promotion
of the long-term success of the Company by ensuring that executive
directors and other designated senior executives are provided with
appropriate incentives to encourage enhanced performance that will
support the growth of the business.
Mark Harper
Chairman of the Remuneration Committee
1 March 2011
Directors’ Report — 75