DIRECTORS’ REMUNERATION REPORT continued
The performance of the strategic measures included the following:
Address market challenges
• Win new business in strategic areas as well as improving margin • Develop e-drive and additive manufacturing technology • Implement defined continuous improvement systems
• Solid progress across the Group, with GKN Powder Metallurgy performing particularly well winning new business. • Good progress, with nomination as tier one status on an important hybrid platform. • Excellent progress across all divisions, with improvement across our key operational metrics.
Progress operational excellence Strengthen governance and risk
• Implement diversity and inclusion • All divisions successfully rolled out the Group’s diversity and inclusion programme. programme • Map key risks and controls in each • All divisions mapped and reviewed their quality, contract management and programme management systems in line with the plan. division
STVRS – deferred shares
Aimed at aligning executive Directors’ interests with those of shareholders and aiding retention of executives.
How the DBP works
Any STVRS payment above 65% of base salary is deferred into shares under the DBP for a two-year period. The release of awards is subject to continued employment and malus provisions. There were no DBP awards granted during 2015 as the STVRS payment for the prior year did not meet the 65% of salary threshold required for deferral. DBP awards will be granted in 2016 in respect of the 2015 STVRS amounts in excess of 65% of salary (see page 79 for further details).
Implementation of policy for 2016 – STVRS and DBP
The STVRS performance measures are reviewed annually. For the 2016 STVRS, the maximum opportunity for the strategic objectives has increased from 20% to 25% of salary while the maximum opportunity for profit has reduced from 50% to 45% of salary. The weightings for each measure are set out below:
% of salary
Profit Cash Margin Strategic objectives
22.5 15 5 12.5 55
45 30 10 25 110
There are no changes to the DBP. Any STVRS payment above 65% of base salary earned in respect of 2016 will be deferred into shares.
Aimed at improving alignment with the Group’s growth strategy and shareholders’ interests as well as rewarding and encouraging sustained earnings performance over the long term.
How the SEP works
SEP awards take the form of a core award and a sustainability award and are normally granted annually to executive Directors and to the senior management population. For 2016, the award levels for executive Directors (both core and sustainability awards) will be 198% of salary. Malus and clawback provisions will apply to SEP awards. The chart below illustrates how the SEP operates.
Year 1 Year 2 Year 3 Year 4 Year 5
Core performance period Core award
Sustainability period ‘Deferred’ Core award
50% Core award released 50% Core award released
Sustainability award will be reduced to the extent that the core target is not satis ed over the core performance period Sustainability award vests at the end of year 5 subject to the achievement of the sustainability target
GKN plc Annual Report and Accounts 2015
Total of Core and Sustainability Awards: 174% of salary