34 | GOVERNANCE | Directors’ Remuneration Report
Performance targets have been agreed by the Board and include Investment Performance, Fund Flows, Profitability and a range of other financial and corporate objectives.
All staff including Executive Directors are eligible for discretionary cash bonus awards which recognise individual achievement and contribution relative to agreed annual objectives.
During 2012 Compulsory Purchased Equity awards made to Alain Grisay and David Logan in 2009 vested. The gains on vesting, representing the gross value of the shares and the cash equivalent of re-invested dividends thereon, was £592,000 and £135,000 respectively.
At 31 December 2012, as a result of a Compulsory Purchased Equity award made in 2010, 493,810 shares in the Company are held within the Purchased Equity Plan for Mr Grisay, which vest in March 2013.
(c) Savings-related share schemes To foster a culture of share ownership throughout the Group, the Board operates a Share Incentive Plan (SIP) for all eligible employees. The SIP is an “all-employee share scheme” and all employees including Executive Directors who meet certain criteria are eligible to participate.
The SIP enables employees to purchase F&C shares in the market in a tax efficient manner on a monthly basis at the prevailing market price.
At 31 December 2012, 220 employees (31 December 2011: 274 employees) participated in the SIP and 743,094 shares (31 December 2011: 783,944 shares) were held in trust for employees within the SIP.
(d) Share incentive schemes The Board believes that the share incentive schemes increase the potential for greater importance to be placed upon the performance- related element of total remuneration.
As currently drafted, in any ten-year period, the aggregate number of Ordinary Shares which will be placed under award under any share incentive scheme, shall not, when aggregated with the number of Ordinary Shares placed under option or issued in that period under any other employees’ share scheme operated by the Company, exceed 10 per cent of the Company’s issued ordinary share capital at that time. For the purposes of measurement against this limit the following will be disregarded: any Ordinary Shares that have been, or will be purchased, rather than allotted; any Ordinary Shares issued pursuant to the Thames River MRP and/or the MIP; and any awards or grants that have lapsed or become incapable of vesting.
The Board is, within Resolution 16, seeking an extension to this authority to allow up to 15 per cent of the Company’s issued share capital.
In order to ensure that the assessment of performance conditions in relation to the share incentive schemes detailed below is independent, Deloitte LLP will report to the Remuneration Committee as to whether the performance criteria under all schemes have been met.
Policy on grants and awards under the share incentive schemes
The Company’s policy for the granting of awards under the LTRP is that awards and grants are based on an assessment of individual contribution to the business and independent advice obtained on current remuneration practices. Award levels will be determined by the Remuneration Committee with reference to Group performance, market competitiveness (assessed on a total compensation basis using independent market total compensation data), and individual performance. Because of the active policy of reducing the emphasis on base salary, the Remuneration Committee will not link or limit any awards under the LTRP explicitly to a multiple of base salary, believing that making such a linkage provides an incentive to increase base salaries, and therefore fixed costs, which is contrary to shareholders’ interests.
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 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. The stability and retention of key employees is crucial to the continued success of the Group and share ownership will continue to be important in achieving this goal.
The Committee has also determined that share-based rewards should be contingent on clear performance conditions. As such the Committee will not make any further new deferred awards, other than in specific cases where it is contractually obliged to do so.
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.
The LTRP has two categories of contingent share awards:
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.
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