As stated in the Remuneration package for executive directors section, 37.5% of any bonus earned is normally deferred into shares under the SBP, under which restricted shares are awarded and held in a trust for three years. The release of shares is not subject to further performance conditions; however, executives are normally required to remain in employment during the three-year vesting period. As the shares have been earned prior to award, any dividends occurring on these shares are paid to the executives during the vesting period. The value of the shares awarded to directors is reported in the year of performance and shown in the directors’ remuneration table in the Our remuneration policies section.
For bonus awarded in 2010, a choice was given to executive directors and employees below Board level to receive their deferred bonus in one of three ways:
- shares under the Share Bonus Plan (SBP), as described above;
- a combination of shares under the SBP and approved options under the Company Share Option Plan (CSOP); or
- a combination of unapproved nil cost options under the SBP and approved options under the CSOP.
This choice allowed some minor tax efficiency, at no cost to the Group, or flexibility in choosing when an award vests once the initial three-year holding period ends.
This choice was consistent with our approach of ensuring that the overall benefits of reward are maximised and valued by employees.
Should the performance which led to the payment of a bonus subsequently be found to be misstated, the Committee has discretion to withhold some or all of the SBP awards paid to executive directors relating to the relevant year’s performance. During 2011, this withholding discretion will also be extended to issues surrounding any personal misconduct.
