Directors’ Long-term Incentive Plan

Directors’ Long-term Incentive Plan

Service Contracts of Directors Proposed for Re-election

Directors’ Long-term Incentive Plan

The Group’s long-term incentive plan is known as the Restricted Share Plan and is designed to provide reward contingent upon the achievement of pre-determined returns to shareholders, thereby aligning directors’ interests with those of shareholders and encouraging them to perform at the highest level. Under this Plan executive directors are granted annually a conditional award of shares in the Company which is held in trust for three years. The conditional award is equivalent to 80 per cent (or 100 per cent in the case of the group chief executive) of salary at the time of the award, valuing the shares at their average share price during the preceding calendar year.

The number of shares that the directors are allocated out of the conditional award after three years depends on the Company’s total return to shareholders relative to other companies in the FTSE 100 share index over the three years. In addition, the Remuneration Committee must be satisfied with the Company’s overall financial performance during this period. No shares will be allocated if the Company’s total return ranks 60th or below and the maximum allocation will be awarded only if the total shareholder return is in the top 20. Between these points, allocations of shares will be on a straight line basis. The right to receive allocations may then be exercised by the director concerned at any time during the following seven years.

Details of conditional awards of shares under the Plan are shown below. These shares are held in trust and represent the conditional awards out of which allocations may be made, as stated above, in the allocation year.

In respect of the 1996 Restricted Share Plan, the Company’s total return to shareholders was ranked 13th out of the 98 relevant comparator companies for the three year performance period ended on 31 December 1998. As a result, options will be granted over 100 per cent of the shares conditionally awarded to executive directors.

Click icon to see this table in Excel format

Conditional awards outstanding at 1 Jan 1998

Conditionally awarded in 1998

Awards allocated in 1998

Conditional awards outstanding at 31 Dec 1998

Release year

Keith Bedell-Pearce

48,037

1999

39,350

2000

36,024

2001

87,387

36,024

123,411

Jonathan Bloomer

63,511

1999

56,859

2000

45,390

2001

120,370

45,390

165,760

Sir Peter Davis

90,226

90,226*

2000

115,474

1999

101,534

2000

79,417

2001

307,234

79,417

90,226*

296,425

Derek Higgs

69,285

1999

56,859

2000

45,390

2001

126,144

45,390

171,534

*These shares are in respect of the 1995 Restricted Share Plan, with a three-year performance period ended on 31 December 1997. They are, however, held in trust for a further two years after allocation and will not be released until April 2000. These shares are included within the directors’ shareholdings. The market value of the award, based on the market price of the shares on the day of the allocation was £812,000. No awards were allocated to any of the above directors in 1997.