DIRECTORS’ REMUNERATION REPORT continued
Designed to recruit and retain individuals with the necessary knowledge, skills and experience to deliver the Group’s strategic objectives. In June 2015, we carried out the annual salary review for executive Directors. We took into account a number of factors, including their performance, scope of responsibilities, market data from our remuneration advisers and increases awarded to other employees in the UK and globally. We approved salary increases (rounded to the nearest thousand) of 2.6% for Nigel Stein and 3% for both Adam Walker and Andrew Reynolds Smith to recognise the additional responsibilities they had taken on at that time. These increases were effective from 1 July 2015 and were broadly in line with the average increase awarded to UK employees (2.6%) and employees globally (3.6%). Following Andrew Reynolds Smith’s resignation in September 2015, the scope of Adam Walker’s responsibilities significantly increased as he was appointed Chief Executive GKN Land Systems, in addition to his current role as Group Finance Director. Given these additional responsibilities, we approved an additional salary increase of 10% with effect from 1 October 2015. In reaching this decision, we took care to ensure that his salary remained appropriate in light of market benchmarking data. This salary increase was in line with our approved remuneration policy.
1 July 2015 (£) 1 July 2014 (£) Increase
The defined benefit section of the Scheme provides legacy arrangements that now only apply to Nigel Stein. He receives a cash retirement benefit allowance of 40% of his base salary. Andrew Reynolds Smith was a member of the defined benefit section of the Scheme until he resigned from the Board. The defined contribution section of the Scheme applies to Adam Walker. He receives retirement benefits by way of a cash allowance equivalent to 25% of base salary which may be delivered in cash or as a payment into the Scheme. He has opted out of the Scheme and receives the full allowance as cash. No compensation is offered for any additional tax suffered by a Director in the event that the value of their pension exceeds the statutory lifetime allowance. Details of the pension benefit provisions under the defined benefit and defined contribution sections of the Scheme can be found on page 87.
Implementation of policy for 2016
There are no plans to change Directors’ pension entitlements in 2016.
Designed to reward achievement of short-term financial and strategic measures to support the broader Group strategy and individual needs of each division, without encouraging excessive risk-taking. For 2015 the maximum STVRS opportunity was 110% of base salary. The financial measures represent a maximum of 90% of base salary and are assessed against profit, margin and cash targets in relation to Group and individual portfolios as appropriate. The strategic measures represent the remaining bonus opportunity of 20% of base salary. Payments of up to 65% of base salary are made in cash and any balance is deferred into shares under the Deferred Bonus Plan (see page 82). Malus and clawback provisions will apply to STVRS payments.
Executive Directors Nigel Stein Adam Walker 1 Former executive Director Andrew Reynolds Smith2
805,000 513,000 505,000
785,000 498,000 490,000
2.6% 3.0% 3.0%
Salary increased to £564,300 with effect from 1 October 2015. Salary increased prior to resignation from the Board.
Implementation of policy for 2016
Any salary increases in 2016 will be made in line with the approved remuneration policy as set out at the end of this report.
All Directors received healthcare benefits and car and fuel allowances.