Annual Report 2010 in PDF - BBA Aviation

e. Pension: policy and implementation
All the Company’s UK Defned Beneft Plans were closed to new
entrants from April 2002; new employees from that date have the
option to join a Company-sponsored stakeholder-style Def ned
Contribution Plan provided through an external investment manager.
Simon Pryce does not participate in that Def ned Contribution
Plan and a sum equal to 20% of his base salary is paid by the Company
into his own Self Invested Personal Pension.
Mark Hoad does participate in the Company-sponsored
stakeholder-style Defned Contribution Plan and the Company pays a
sum equal to 20% of his base salary into that plan.
Andrew Wood, who had joined the Board in January 2001,
participated in the Company’s UK Defned Beneft Plan (Plan) between
the start of the year and his retirement as a director on 29 April 2010.
It has been the Committee’s policy since April 2000 that the bonus of
any new director joining the Company’s Plan would not be
pensionable and accordingly pensionable earnings for Andrew Wood
comprised salary only.
Andrew Wood’s normal retirement age under the Def ned
Beneft Plan was his 62nd birthday in line with that of existing directors
who were members of the Defned Beneft Plan when he joined. In
the case of death before retirement, a contingent widow’s pension
equal to two-thirds of the member’s prospective pension would have
been payable. Other dependants’ pensions may also be paid. The Plan
rules guarantee pension increases in retirement by the increase in RPI
up to 5% on pension accrued before 1 March 2010 and by the increase
in RPI up to 2.5% on pension accrued after 1 March 2010. However, at
Table 5 – UK Def ned Beneft Schemes (audited)
Accrued Transfer
Director’s Director’s pension at value at
age at contribution 31 Dec 31 Dec
31 Dec during year 2009 2009
2010 £000 £000 £000
retirement Andrew Wood opted to exchange part of his headline rate
of pension for guaranteed annual increases of 5% on the part of his
pension accrued before 1 March 2010.
Under the pensions legislation that was in force prior to April
2006 Andrew Wood’s pensionable salary was further restricted by the
state earnings cap. Prior to the changes which came into ef ect on
6 April 2006 the Company of ered directors a top up to their pension
benefts through a Funded Unapproved Pension Scheme (FURBS).
The Company’s FURBS contributions were closely related to the
contribution the Company made to the approved Def ned Benef ts
Plan less expenses and any special funding. The rate of contribution for
Andrew Wood was 36% per annum of pensionable earnings in excess
of the earnings cap. On 5 April 2006 the FURBS arrangements ceased as
a result of the “Simplif cation” regulations under the Finance Act 2004.
From 6 April 2006 revised arrangements applied to all the Company’s
UK pension arrangements as a result of both the Finance Acts 2004 and
2005 and the Pensions Act 2004. The Company and the Plan Trustee in
respect of the Defned Beneft Plan agreed that a “Notional Earnings
Cap” should be implemented in place of the state earnings cap in order
to limit the Company’s exposure to increases in both Def ned Benef t
liabilities and additional matching Defned Contribution contributions.
Directors and other employees whose earnings were above the
Notional Earnings Cap were given a choice of receiving either a
contribution to the Defned Contribution Plan or a cash replacement
equivalent to the contribution that would have been paid to a FURBS.
Andrew Wood elected to receive a cash replacement equivalent.
Transfer value Increase
Real of real increase in transfer Accrued Transfer
increase in Increase in in pension values less pension at value at
accrued accrued (less director’s director’s 31 Dec 31 Dec
pension pension contributions) contributions 2010 2010
£000 £000 £000 £000 £000 £000
Andrew Wood 59 2 37 860 (18) (17) (511) (112) 20 750
Additional notes
i The pension entitlement shown at 31 December 2009 is that which would have been paid annually on normal retirement based on service to and pensionable salary at 31 December 2009.
ii The pension entitlement shown at 31 December 2010 is the actual pension in payment at that date, following Andrew Wood’s retirement from the Company on 30 April 2010.
iii The transfer values have been calculated in accordance with legislative requirements and based on assumptions agreed by the trustees of the Plan.
iv The decrease in transfer values between 31 December 2009 and 31 December 2010 is largely as a result of Andrew Wood electin g under the rules of the Plan to receive a portion of his pension as a
pension commencement lump sum of £136,579 at retirement, in return for receiving a lower pension in payment.
4. Non-Executive Directors’ Remuneration
The non-executive directors each have a letter of appointment which is
available for inspection by shareholders at each AGM and during
normal business hours at the Company’s registered of ce. No
compensation would be payable for the early termination of the
appointment of any non-executive director.
The level of fees for non-executive directors is determined by the
Board as a whole on the recommendation of the Group Chief
Executive. Non-executive directors’ fees were reviewed in December
2010, by reference to independent market surveys and benchmarking
data, having last been reviewed 12 months earlier when the basic fees
for non-executive directors were not increased. With ef ect from
1 January 2011 the non-executive directors’ basic fee was increased
from £42,000 to £45,000, with the fee paid to the Chairman being
increased from £178,500 to £185,000. The annual supplements remain
the same: that for the Chairman of the Audit and Remuneration
Committees is £9,500, that for the Senior Independent Director £5,000
and the annual supplement for the CSR Responsible Director is £2,500.
These supplements refect the increased commitments and demands
placed upon each of the non-executive directors in performing their
duties on the Board and its principal committees.
Details of the non-executive directors’ fees for 2010 are set out in table 1
(page 81).
The dates of appointment or subsequent re-appointment and
unexpired term of the non-executive directors as at 1 March 2011 are
set out below:
Date of appointment/ Unexpired term as at
re-appointed 1 March 2011
Michael Harper 01/07/2010 28 months
Nick Land 01/08/2009 17 months
Mark Harper 01/12/2009 21 months
Peter Ratcliffe 09/01/2009 10 months
Hansel Tookes 19/02/2010 23 months
The non-executive directors do not participate in the Company’s
incentive plans or pension arrangements.
Directors’ Remuneration Report approved by the Board on
1 March 2011 and signed on its behalf by:
Mark Harper
Chairman, Remuneration Committee
Directors’ Report — 83