DIRECTORS’ REMUNERATION REPORT continued
STVRS: a combination of financial and strategic measures which support the delivery of the Group’s long-term strategic objectives. Appropriate targets are set each year which align with the specific business objectives for that year. The Committee has discretion to alter targets to reflect changed circumstances such as material changes in accounting standards or changes in the Group’s structure. The Committee also has discretion to reduce payments based on its assessment of underlying performance of the Group, including health and safety performance. SEP: based on sustained EPS growth over the long term in line with GKN’s stated growth strategy and objective of creating long-term shareholder value. Before any vesting can occur, the Committee must be satisfied that this is justified by the quality of earnings. This will involve consideration of Group return on average invested capital (ROIC) against internal projections, shareholder expectations, new investment performance and cost of capital to ensure that the level of vesting appropriately reflects shareholder value creation. In accordance with the rules of the SEP, the Committee can adjust and/or set different performance measures and targets if events occur (such as a change in strategy, a material acquisition and/or divestment of a Group business or a change in prevailing market conditions) which cause the Committee to determine that the measures or targets are no longer appropriate and that amendment is required so that they achieve their original purpose. While stretching, targets under the STVRS and SEP are designed to discourage inappropriate risk taking.
Policy table for Chairman and non-executive Directors Purpose and link to strategy Operation
• To provide fees within a market competitive range to recruit and retain individuals with the necessary experience and ability to make a substantial contribution to the Group’s affairs. • Fees are reviewed periodically. • The fee structure is: — the Chairman is paid a single consolidated fee — non-executive Directors are paid a basic fee plus an additional fee for any chairmanship of Board Committees and for the role of Senior Independent Director. • Fees are paid in cash. • Set at a level which reflects the contribution and commitment required of them, taking into account fee levels in other companies of similar size and complexity. • Overall the fees paid to non-executive Directors will remain within the limit stated in the articles of association, currently £1 million per annum.
Maximum potential value
The Chairman and non-executive Directors do not receive benefits in kind nor do they participate in the Group’s short- and long-term incentive arrangements or in its pension scheme.
GKN plc Annual Report and Accounts 2015