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The remuneration committee

Composition
On 1 August 2004, Mr Kahn stepped down from the committee and Mr Morland was appointed chairman, succeeding Lord Renwick. On 1 April 2005, Lord Renwick stepped down from the committee and was replaced by Mr Manzoni. Other members of the committee are Lord Fellowes and Mr Manser. The committee now consists entirely of independent directors.

Terms of reference
The committee is empowered by the board to set short, medium and long-term remuneration for the executive directors. More generally, the committee is responsible for the assessment and approval of a broad remuneration strategy for the group and for the operation of the company’s share-based incentive plans. This includes determination of short and long-term incentives for executives across the group.

Operation of the committee
During the year the remuneration committee has implemented its strategy of ensuring that employees and executives are rewarded for their contribution to the group’s operating and financial performance at levels which take account of industry, market and country benchmarks. In order to promote goal congruence, share incentives are considered to be critical elements of executive incentive pay. To assist the committee in fulfilling its responsibilities to the board, the company engages the services of consultants, Mercer Human Resource Consulting (Mercer), who also advise the company on pensions matters and accounting for share-based incentive reward. Mercer has no other connection with the company. At levels below the company’s executive committee, the company’s management consults, amongst others, Hay Consulting, Ernst & Young and Towers Perrin, on a project basis. More detail of the company’s remuneration policy can be found in the remuneration report.

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