24 | GOVERNANCE | Report of the Directors
ordinary share capital without the need to call an additional general meeting. This would shorten the implementation timetable for such a rights issue. The Directors have no present intention of exercising this authority. The authority will expire at the end of the AGM to be held in 2014, unless previously cancelled or varied by the Company in general meeting. It is the intention of the Directors to renew this authority annually at each AGM.
Special resolution 14 will renew the present power to allot unissued ordinary share capital and to sell ordinary shares held in treasury for cash without first being required to offer such shares to existing shareholders in proportion to their existing shareholdings.
Such power will apply to the allotment of unissued ordinary shares and treasury shares sold up to a maximum nominal amount of £27,759.04 representing approximately 5 per cent of the Company’s issued ordinary share capital as at the date of this report, except that:
(1) the maximum nominal amount of shares that can be allotted in connection with a pre-emptive rights issue is £370,083.52 representing approximately 66.67 per cent of the Company’s total issued ordinary share capital (excluding treasury shares) as at the date of this report; and
(2) the maximum nominal amount of unissued ordinary shares that can be allotted or treasury shares sold:
(a)
pursuant to any other pre-emptive offering (where legal or regulatory requirements prevent the issue of shares wholly on a pre-emptive basis); or
(b)
in order to satisfy options or awards under any share scheme for employees or share incentive plan approved by the Company in general meeting,
is £185,041.76, representing approximately 33.33 per cent of the Company’s total issued ordinary share capital (excluding treasury shares) as at the date of this report.
The Directors consider that the authority proposed to be granted by resolution 13 and the power proposed to be granted by resolution 14 are necessary in order to take advantage of opportunities as they arise and to retain flexibility. The Directors do not have any intention of exercising such authority or power at the present time other than for the purposes referred to in (2)(b) above.
Purchase of own shares Special resolution 15 will be put to the AGM to renew the present power to make market purchases of the Company’s own ordinary shares. Pursuant to the renewed power, the maximum aggregate number of ordinary shares which may be purchased pursuant to the authority shall be 55,518,079 (being approximately 10 per cent of the issued ordinary share capital of the Company as at the date of this report. The minimum price which may be paid for an ordinary share shall be 0.1 pence (exclusive of expenses). The maximum price for an ordinary share (again exclusive of expenses) shall be an
amount equal to 105 per cent of the average of the middle market quotations for the Company’s ordinary shares for the five business days immediately preceding the date of purchase. The power conferred by this resolution will expire on the earlier of the date falling fifteen months after the date of the passing of this resolution and the conclusion of the AGM of the Company to be held in 2014.
As at the date of this report, the Company had 82,915,399 options to subscribe for ordinary shares outstanding (representing 14.93 per cent of the issued ordinary share capital of the Company at the same date, excluding treasury shares). If the buy-back authority is renewed at the AGM and is then utilised in full, the options outstanding at the date of this report would represent 16.59 per cent of the issued ordinary share capital of the Company (excluding treasury shares).
Any ordinary shares purchased pursuant to this authority would either be held as treasury shares or cancelled. While any shares are held in treasury, voting rights are suspended and currently no dividends (or any other distribution) are paid (or made) on such shares. The Directors consider it appropriate to have in place the facility to acquire shares in circumstances where they believe that future shareholder returns can be enhanced by taking such action. This authority, if renewed, will only be exercised if to do so would result in an increase in earnings per ordinary share and if it is considered to be in the best interests of shareholders generally.
Proposed amendment to the Company’s Long-Term Remuneration Plan (LTRP)
The LTRP is the Company’s principal long-term retention plan and allows the Board to grant selected employees and senior managers awards over ordinary shares that not only act as an incentive to remain with the business but also help to ensure that the interests of participants are more closely aligned with those of shareholders.
Awards granted under the LTRP can be satisfied either by the issue of new shares or the purchase of existing shares in the market. However, the rules of the plan place a limitation on the number of new shares over which awards can be granted in any rolling ten year period. This “dilution limit” is currently set at 10 per cent of the Company’s issued share capital.
In light of the significant changes made to the Company’s business in recent years, the LTRP has been used extensively as a means of ensuring the continued stability of the Company’s key employee population throughout this period. This has, in turn, resulted in a marked reduction in the available “headroom” under the 10 per cent dilution limit summarised above. As a consequence, and in order to ensure that the Company has sufficient flexibility to operate this important element of its overall remuneration structure in an appropriate, cost-effective manner in the future, Resolution 16 seeks shareholder approval to amend the LTRP’s rules by raising the dilution limit from 10 per cent to 15 per cent of the Company’s issued ordinary share capital.
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