36 | GOVERNANCE | Directors’ Remuneration Report
Any share incentive awards made to Executive Directors will be LTRP restricted awards.
The F&C Asset Management plc Long Term Remuneration Plan (LTRP)
The LTRP is the primary long term incentive arrangement of the Company.
The LTRP is a discretionary contingent share award scheme unapproved by HM Revenue and Customs. The LTRP is designed to support the business objectives of the Group.
Under the LTRP, contingent awards of shares are made under two categories:
Deferred awards The Committee believes that it is to the benefit of shareholders that key employees have a long-term interest in the future performance of the Group. Equally the stability and retention of key employees is crucial to the continued success of the Group. To achieve this, Deferred awards may be made in Ordinary Shares the vesting of which is contingent on the continued employment of the relevant participant over the three-year deferral period.
This arrangement provides competitive Total Compensation and secures a high retention value combined with strong alignment to the interests of shareholders.
During the year, 15,437,379 deferred awards were made under the LTRP (2010: 17,355,585). Deferred awards were made to 217 staff during 2011 (2010: 201 staff).
The Executive Directors are not eligible to participate in deferred share awards under the rules of the LTRP.
Restricted awards Vesting of the Ordinary Shares that are currently the subject of a restricted award under the LTRP will be contingent upon both the specified performance conditions and conditions of continued service.
The performance conditions applied to restricted awards under the LTRP are determined by the Board and are measured over a three- year period.
For the awards granted in 2010 and 2011 the following four performance measures were applied with equal weighting:
– Real Growth in Earnings per Share over 3 years: full vesting at RPI+11% p.a., 25% vesting at RPI+3% p.a.
– Total Shareholder Return relative to a peer group of FTSE250 Financial Companies: full vesting at upper quartile, 25% vesting at median
– Achievement of annual net new business targets as approved by the Board: full vesting for achievement of 125% of target, reducing on a straight line to nil vesting for achievement of 25% of target
– Relative investment performance compared to benchmarks: full vesting at 75% of revenue-weighted funds outperforming benchmark, reducing on a straight line to nil vesting for 42% of revenue-weighted funds outperforming benchmark
These measures were selected as at the time they were considered by the Committee to be the most relevant in capturing the critical elements of performance which reinforce value creation for shareholders.
In 2012 it is intended to make a one-off award of restricted shares to certain key staff, the performance conditions of which will be solely linked to the Company’s underlying Earnings per share for the year ended 31st December 2015.
During the year a total of 2,815,730 restricted share awards were made under the LTRP to the Company’s Executive Directors (2010: 3,786,486) and a further 933,954 restricted share awards were made to members of the senior management team (2010: Nil).
Achievement of performance conditions During 2011, the growth in the Group’s underlying EPS underperformed the growth in the RPI by 8.3 percentage points.
The Company’s total shareholder return (TSR) ranked 8th out of a FTSE 250 Financial Companies Index comparator group of 15 companies in the period from 4 May 2010 to 31 December 2011 and 7th out of a FTSE 250 Financial Companies Index comparator group of 16 companies in the period from 4th May 2011 to 31 December 2011.
Information on the net new business and investment performance results of the Company is set out in the Business Review on pages 2 to 21.
Share price performance The share price at 31 December 2011 was 65.5 pence. During the year the highest price was 92.90 pence per share and the lowest price was 56.05 pence.
Performance graph for the share incentive schemes The graph below compares the performance of the Company with a notional investment made up of shares of the group of companies from which the FTSE 250 Financial Companies Index of companies is calculated for the period from creation of the index in July 2006 to 31 December 2011. The graph is based on the TSR for each period (assuming all dividends are reinvested). The FTSE 250 Financial Companies Index has been chosen as the comparator index as it is the index that includes the Company and is considered the most appropriate benchmark as there are very few comparable listed asset management businesses.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147