13. Directors’ Remuneration for the year ended 31 December 2004
13.1 Emoluments
Table 1a below has been prepared in accordance with regulatory requirements in respect of Directors’ remuneration for the year ended 31 December 2004:
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| Table 1a | Notes | Salary (including, fees & further remu-neration) |
Taxable benefits incentive for 2004 |
Annual cash incentive for 2001 |
Deferred share |
Total year ended 31.12.04 |
Comparative total year ended 31.12.03 |
| £000 | £000 | £000 | £000 | £000 | £000 | ||
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| Chairman | |||||||
| Dennis Stevenson | 3 | 538 | - | - | - | 538 | 510 |
| Executive Directors | |||||||
| James Crosby | 1,5,6,8,9 | 808 | 24 | 534 | 117 | 1,483 | 1,072 |
| Mike Ellis | 1,2,8,9 | 553 | 17 | 362 | 88 | 1,020 | 757 |
| Phil Hodkinson | 1,5,6,8,9 | 427 | 19 | 285 | - | 731 | 571 |
| Andy Hornby | 1,5,6,8,9 | 598 | 18 | 395 | 67 | 1,078 | 810 |
| Colin Matthew | 1,8,9 | 423 | 13 | 285 | - | 721 | 553 |
| George Mitchell | 1,8,9 | 557 | 14 | 366 | - | 937 | 754 |
| Mark Tucker | 1,7,8,9 | 375 | 7 | 362 | - | 744 | - |
| Non-executive Directors | |||||||
| Charles Dunstone | 4 | 56 | - | - | - | 56 | 51 |
| Sir Ronald Garrick | 4 | 158 | - | - | - | 158 | 145 |
| Anthony Hobson | 4 | 195 | - | - | - | 195 | 165 |
| Brian Ivory | 4 | 124 | - | - | - | 124 | 91 |
| Coline McConville | 4 | 70 | - | - | - | 70 | 57 |
| John Maclean | 4 | 134 | - | - | - | 134 | 84 |
| Kate Nealon | 4 | 49 | - | - | - | 49 | - |
| David Shearer | 4 | 50 | - | - | - | 50 | - |
| Former Directors | |||||||
| Sir Peter Burt | 2 | - | - | - | - | - | 20 |
| Gordon McQueen | 2 | - | - | - | - | - | 598 |
| Sir Bob Reid | 4 | 19 | - | - | - | 19 | 53 |
| Louis Sherwood | 4 | 38 | - | - | - | 38 | 112 |
| Philip Yea | 4 | 29 | - | - | - | 29 | 51 |
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| Total | 5,201 | 112 | 2,589 | 272 | 8,174 | 6,454 | |
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Notes to Table 1a
Note 1
The annual cash incentive amounts, approved by the Committee, relate to performance under both the short term incentive plan and the special short term incentive plan in 2004 against targets including those for earnings per share and return on equity and the attainment of a certain level of profit before tax. The target cash incentive was 60% of salary and the maximum cash incentive was 90% of salary. Annual cash incentive figures exclude potential sharekicker enhancements for any element of the incentive taken in shares. Details of potential sharekicker enhancements from earlier years are set out in Table 5.
The deferred share incentive amounts, approved by the Committee, relate to the release of the additional shares under sharekicker as set out in Table 5.
Note 2
Mike Ellis retired as an Executive Director on 31 December 2004 based on terms set out in his contract. No termination payment was made. Gordon McQueen retired as an Executive Director on 31 December 2003 based on terms set out in last year’s Report. Sir Peter Burt retired as Executive Deputy Chairman on 6 January 2003 based on terms set out in last year’s Report.
Note 3
The fee payment to Dennis Stevenson comprises payments made to him personally in respect of his service as Chairman of the Group of £538,000 (2003 - £510,000).
Note 4
From 1 May 2003 the basic Board membership fee payable to Non-executive Directors was at a rate of £40,000 p.a. and from 1 May 2004 it was increased to a rate of £45,000 p.a. The basic Board membership fee covers the range of duties and responsibilities associated with Non-executive Directorship, including Board meetings and the Annual General Meeting.
The figures shown in the table above also include fees for services on committees of the Board, details of which are set out in the Corporate Governance Report on pages 56-58. The levels of fees for some Non-executive Directors reflect the significant time spent by them on such committee duties.
The figures shown in the table above also include fees for services as Directors of subsidiaries and joint ventures; and for services on other committees. The fees in relation to these subsidiaries, joint ventures and committees were as follows:
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| Table 1b | 2004 £000 |
2003 £000 |
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| Charles Dunstone | 12 | 12 |
| Sir Ronald Garrick | - | - |
| Anthony Hobson | 80 | 46 |
| Brian Ivory | 32 | 38 |
| Coline McConville | 12 | 12 |
| John Maclean | 83 | 38 |
| Kate Nealon | 5 | - |
| Sir Bob Reid | 2 | 6 |
| David Shearer | 13 | - |
| Louis Sherwood | 22 | 65 |
| Philip Yea | 4 | 6 |
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| Total | 265 | 223 |
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Kate Nealon and David Shearer were both appointed to the Board on 23 March 2004. Sir Bob Reid and Louis Sherwood both retired from the Board on 27 April 2004 and Philip Yea resigned from the Board on 30 June 2004.
Note 5
The salaries shown for James Crosby, Phil Hodkinson and Andy Hornby are the amounts of salary they would have received had they not given up £19,006, £1,606 and £11,696, respectively, as additional pension contributions. Short term incentives, long term incentives and pension entitlements have been calculated by reference to salaries prior to the reductions for additional pension contributions.
Note 6
Certain Executive Directors are non-executive directors of other companies. Their roles and fees were as follows:
James Crosby was a Non-executive Director of ITV plc throughout 2004. The annual rate of fee (which he retains) is £50,000.
James Crosby was appointed a Non-executive Director of the Financial Services Authority from 15 January 2004. The annual rate of fee (which he donates to charity) is £22,500.
James Crosby and Phil Hodkinson were Non-executive Directors of St. James’s Place Capital plc throughout 2004. The annual fees are paid directly to HBOS and not to them personally.
Andy Hornby was appointed a Non-executive Director of GUS plc from 21 January 2004. The annual rate of fee (which he retains) is £35,000. In addition, the annual rate of share-based fee (which he retains) is 2,500 ordinary shares in GUS plc, equivalent to £23,450 based on the market price of GUS plc’s ordinary shares at 31 December 2004.
Note 7
Unlike all other Executive Directors, Mark Tucker is not included in final salary pension arrangements. His contract provides for other arrangements to a value of 25% of salary per year. The nature of this remuneration element has not yet been established and so it does not appear in Table 1a.
Note 8
The annual cash incentives for 2004 may be applied, if participants so choose, to buy shares in March 2005 under the arrangements described in Section 13.3.2. The deferred share incentives for 2001 are the values of additional shares released in 2004, if participants chose to buy shares in March 2001 with their annual cash incentive under the arrangements described in Section 13.3.2.
Note 9
Taxable benefits comprise the benefits in kind values of company cars, healthcare, additional life assurance and concessionary rate mortgages.
