Remuneration Report continued
Part 2 (Audited)
Directors' remuneration
Directors' emoluments
The remuneration of Directors, comprising salary or fees, taxable benefits and bonus payments for the year ended 31 December 2007 are set out in the
table below.
| Salary/fees | Bonus | Taxable Benefits2 | Salary supplement Pension |
Salary supplement Car/fuel | Compensation for loss of office | Total year to 31 December 2007 | Total year to 31 December 2006 | |||||||||
| £ | £ | £ | £ | £ | £ | £ | £ | |||||||||
| Executive | ||||||||||||||||
| J-P Bizet | 80,000 | – | – | – | – | – | 80,000 | 80,000 | ||||||||
| L Colyer | 237,000 | 35,550 | 14,632 | – | – | – | 287,182 | 429,808 | ||||||||
| M Hennessy1 | 440,000 | 66,000 | 1,551 | 65,500 | 20,000 | 470,000 | 1,063,051 | 682,780 | ||||||||
| S Palethorpe | 300,000 | 45,000 | 2,204 | 37,572 | 14,000 | – | 398,776 | 580,594 | ||||||||
| M Smith | 330,000 | 49,500 | 13,169 | 66,000 | – | – | 458,669 | 651,468 | ||||||||
| Total | 1,387,000 | 196,050 | 31,556 | 169,072 | 34,000 | 470,000 | 2,287,678 | 2,424,650 | ||||||||
| Non-executive | ||||||||||||||||
| W A Cathcart | 190,000 | – | 6,141 | – | 20,000 | – | 216,141 | 215,832 | ||||||||
| L Cullen | 40,000 | – | – | – | – | – | 40,000 | 40,000 | ||||||||
| R D'Ieteren | 32,500 | – | – | – | – | – | 32,500 | 32,500 | ||||||||
| B Ghiot | 32,500 | – | – | – | – | – | 32,500 | 32,500 | ||||||||
| G van Marcke de Lummen | 32,500 | – | – | – | – | – | 32,500 | 32,500 | ||||||||
| M Miller | 37,500 | – | – | – | – | – | 37,500 | 37,500 | ||||||||
| Dr A von Ruedorffer | 32,500 | – | – | – | – | – | 32,500 | 32,500 | ||||||||
| P A De Smedt | 29,792 | – | – | – | – | – | 29,792 | – | ||||||||
| Total | 427,292 | – | 6,141 | – | 20,000 | – | 453,433 | 423,332 | ||||||||
| Total | 1,814,292 | 196,050 | 37,697 | 169,072 | 54,000 | 470,000 | 2,741,111 | 2,847,982 | ||||||||
| Avis Executive Board (excluding executive Directors): | ||||||||||||||||
| Aggregate | 1,594,386 | 723,793 | 64,027 | 130,711 | 22,947 | 2,535,864 | 2,729,397 | |||||||||
- 1 Murray Hennessy left the Company on 31 December 2007. The compensation for loss of office comprises twelve months base salary only in line with contractual provisions of his service agreement plus £30,000 in consideration of waiving all statutory and further legal rights.
- 2 Taxable benefits include principally car, fuel and medical insurance.
Base salaries for the executive Directors at 1 January 2008 are: Pascal Bazin €640,000, Martyn Smith £330,000, Simon Palethorpe £300,000 and Lesley Colyer £237,000.
Pensions
Details of Directors' pension entitlements under the Avis UK Pension Plan (a defined benefit scheme) at 31 December 2007:
| Director | Amount of change in accrued benefit due to inflation | Amount of remaining change in accrued benefit during year | Accrued pension to 31 December 2007 | Transfer value of Increase/(decrease) in accrued pension excluding inflation | Transfer value of accrued pension at 31 December 2006 | Transfer value of accrued pension at 31 December 2007 | Increase/(decrease) in value less Director's own contributions | |||||||
| £ pa | £ pa | £ pa | £ pa | £ pa | £ pa | £ pa | ||||||||
| W A Cathcart1 | – | – | – | – | 4,237,750 | 4,144,670 | (93,080) | |||||||
| L Colyer2 | 4,683 | 729 | 125,491 | 7,980 | 1,125,792 | 1,272,209 | 146,417 | |||||||
| M Hennessy3 | – | – | – | – | 43,149 | 61,634 | 14,016 | |||||||
| G van Marcke de Lummen4 | – | – | – | – | 1,743,572 | 1,693,782 | (49,790) | |||||||
| S Palethorpe5 | – | – | – | – | 21,241 | 33,403 | 7,692 | |||||||
| M Smith6 | – | – | – | – | 56,226 | 63,583 | 7,357 |
- 1 Alun Cathcart is no longer accruing a benefit in the Avis UK Pension Plan and has been in receipt of a pension from 12 September 2005. In the year to 31 December 2007 he received a pension of £301,811 (2006: £295,643).
- 2 Lesley Colyer is a former member of the Final Salary section of the Avis UK Pension Plan and elected to join the Retirement Capital Plan section following the Plan changes on 1 April 2007. In the year to 31 December 2007 the value of the Company's contribution to the Retirement Capital Plan section in respect of Lesley Colyer was £37,488.
- 3 Murray Hennessy left the Avis UK Pension Plan effective 31 December 2007. In the year to 31 December 2007 the value of the Company's contribution in respect of him was £11,388 (2006: £10,576).
- 4 Gilbert van Marcke de Lummen is no longer accruing benefit in the Avis UK Pension Plan and has been in receipt of a pension from 1 May 2002. In the year to 31 December 2007 he received a pension of £141,611 (2006: £138,343).
- 5 Simon Palethorpe is a member of the Retirement Capital section of the Avis UK Pension Plan. In the year to 31 December 2007 the value of the Company's contribution in respect of him was £6,519 (2006: £6,014).
- 6 Martyn Smith left the Avis UK Pension Plan on 5 April 2006 and received a deferred pension of £6,160 per annum payable from age 62.
Directors' interests in the Company's shares
The beneficial and non beneficial interests of the Directors as at 31 December 2007 are shown below.
There have been no changes between 31 December 2007 and 27 February 2008:
| 31 December 2007 | 1 January 2007 | |||
| Executive | ||||
| J-P Bizet | – | – | ||
| L Colyer1 | 164,506 | 164,506 | ||
| M Hennessy2 | 520,266 | 317,171 | ||
| S Palethorpe | 15,000 | 15,000 | ||
| M Smith | 30,462 | 30,462 |
- 1 Included within Lesley Colyer's holding of 164,506 shares are 1,620 shares in which she has a non-beneficial interest as trustee for the beneficial owners.
- 2 Murray Hennessy left the Company on 31 December 2007.
| 31 December 2007 | 1 January 2007 | |||
| Non-executive | ||||
| W A Cathcart1 | 443,373 | 443,373 | ||
| L Cullen | 20,000 | 7,857 | ||
| R D'Ieteren | – | – | ||
| B Ghiot | – | – | ||
| G van Marcke de Lummen | 47,634 | 47,634 | ||
| M Miller | 7,857 | 7,857 | ||
| Dr A von Ruedorffer | 20,000 | 20,000 | ||
| P A De Smedt | 449,270 | – |
- 1 Included within Alun Cathcart's holding of 443,373 shares are 12,673 shares in which she has a non-beneficial interest as trustee for the beneficial owners.
Directors' interests in the Company's share plans
Details of awards outstanding at 31 December 2007 under the Group's share schemes are shown below.
In respect of Murray Hennessy leaving the Company on 31 December 2007, the Remuneration Committee exercised its discretion under the Share Retention Plan and Deferred Share Bonus Plan rules to allow full vesting of the options under both plans at 31 December 2007. All his other outstanding awards and/or options under the Avis Europe share option scheme, the Long Term Incentive Plan and the Performance Share Plan lapsed at 31 December 2007.
Long Term Incentive Plan
The following awards were made under this Plan on 4 June 2007. The market price of the Company's shares at that date was 61 pence. As at 31 December 2007, no awards under this Plan had vested.
| At 31 December 2006 | Award in year to 31 December 2007 | Date of 2007 award | Lapsed during 2007 | At 31 December 2007 | Vesting date of outstanding awards | |||||||
| L Colyer | – | 388,524 | 4 June 2007 | – | 388,524 | 4 June 2010 | ||||||
| M Hennessy | – | 1,081,967 | 4 June 2007 | 1,081,967 | – | – | ||||||
| S Palethorpe | – | 491,803 | 4 June 2007 | – | 491,803 | 4 June 2010 | ||||||
| M Smith | – | 540,983 | 4 June 2007 | – | 540,983 | 4 June 2010 |
Performance conditions
The performance conditions required for vesting purposes are based 50% on the Company's three-year growth in earnings per share (EPS) and 50% on return on capital employed (ROCE), based on the Group's results under the International Financial Reporting Standards. These targets are set such that shares will vest only if performance is between a minimum threshold level, where 20% of an award will vest, and the maximum level, where 100% of an award will vest.
2006 Deferred Bonus Share Plan
The following awards were made under this Plan on 5 June 2007. The market price of the Company's shares at that date was 60.25 pence. As at 31 December 2007, Murray Hennessy's award had vested. The Remuneration Committee exercised its discretion to allow his award to vest at that date in recognition of the fact that he had remained in service throughout the financial year to which the award related.
| At 31 December 2006 | Award in year to 31 December 2007 |
Date of 2007 award | At 31 December 2007 | Vesting date of outstanding awards | ||||||
| L Colyer | – | 291,393 | 5 June 2007 | 291,393 | 19 March 2008 | |||||
| M Hennessy | – | 540,983 | 5 June 2007 | 540,983 | 31 December 2007 | |||||
| S Palethorpe | – | 368,852 | 5 June 2007 | 368,852 | 19 March 2008 | |||||
| M Smith | – | 405,737 | 5 June 2007 | 405,737 | 19 March 2008 |
Performance conditions
There are no performance conditions relating to awards under the 2006 Deferred Bonus Share Plan and, subject to continued employment, all awards will
be released.
Share Retention Plan
Murray Hennessy was the only executive Director to be granted an award under this Plan. The award was in the form of a nil cost option to acquire ordinary shares in the company. The second tranche of his award (238,600 shares) under this Plan vested on 1 January 2007 and was released on 4 June 2007. The market price of each of the shares on the date the award was made was 51 pence and the market price of each of the shares when the award was released was 61 pence. The Remuneration Committee exercised its discretion to allow the final tranche of the award (238,600 shares), that would have vested on 1 January 2008 to vest in full on the date of Murray Hennessy's termination of employment on 31 December 2007.
| At 31 December 2006 | Award in year to 31 December 2007 | Released in year to 31 December 2007 | Vested at 31 December 2007 | At 31 December 2007 | ||||||
| M Hennessy | 477,200 | – | 238,600 | 238,600 | – |
Performance conditions
There are no performance conditions relating to the award under the Share Retention Plan and, subject to continued employment, the award is released.
Performance Share Plan
No awards have been made under this Plan since 2004. As at 31 December 2007, no awards under this Plan had vested.
| At 31 December 2006 | Award in year to 31 December 2007 | Lapsed during 2007 | At 31 December 2007 | Vesting date of outstanding awards | ||||||
| W A Cathcart | 244,409 | – | – | 244,409 | 17 March 2010 | |||||
| L Colyer | 187,852 | – | – | 187,852 | 17 March 2010 | |||||
| M Hennessy | 584,887 | – | 584,887 | – | – | |||||
| G van Marcke de Lummen | 78,491 | – | 78,491 | – | – | |||||
| M Smith | 270,466 | – | – | 270,466 | 17 March 2010 |
Performance conditions
The performance conditions applying to the Performance Share Plan have been based on the performance of the Company in relation to the total shareholder
return (TSR) of a peer group, together with an earnings per share (EPS) underpin.
For the awards to vest, TSR at the end of each performance period must be at least at the median in relation to the comparator group and there has to be a minimum real increase in EPS of 3% per annum over the relevant period.
For awards made prior to 2004, if both these conditions are met, 50% of the award may vest. For full vesting, the EPS target must be met and the Group's TSR must be in the top quartile of the comparator group over the seven-year period. TSR achievement between the median and 75th percentile results in vesting between 50% and 100% of the award on a pro rata basis.
The comparator group for TSR for awards made prior to 2003 comprises the companies listed below:
Airtours plc, Arena Leisure plc, Arriva plc, Associated British Ports Holdings plc, Eurotunnel plc/Eurotunnel SA, First Choice Holidays plc, First Group plc,
Go-Ahead Group plc, Lex Service plc, Minorplanet Systems plc, Mitie Group plc, National Express Group plc, NFC plc, Ocean Group plc, Powell Duffryn plc, Christian Salvesen plc, Stagecoach Holdings plc, TBI plc, Thomson Travel Group plc, Tibbett & Britten Group plc.
The comparator group for TSR for awards made in 2003 comprises the companies listed below:
Arena Leisure plc, Arriva plc, Associated British Ports Holdings plc, Eurotunnel plc/Eurotunnel SA, First Choice Holidays plc, First Group plc, Go-Ahead Group plc, RAC plc, Minorplanet Systems plc, Mitie Group plc, MyTravel Group plc, National Express Group plc, Christian Salvesen plc, Stagecoach Holdings plc,
TBI plc, Tibbett & Britten Group plc.
Share Option Schemes
Directors' interests in share options granted under the Avis Europe plc share option schemes, all of which are beneficial except as noted, are shown below.
No options were granted and no options were exercised during the period under review or the previous year. All options were granted for nil consideration. There have been no grants or exercises between 31 December 2007 and 27 February 2008.
| 31 December 2007 | Lapsed during period | Granted during period | 1 January 2007 | Exercise price (pence) | Excercisable date | Expiry date | ||||||||
| Executive | ||||||||||||||
| J-P Bizet | – | |||||||||||||
| L Colyer | – | 28,858 | – | 28,858 | 103.9 | March 2000 | March 2007 | |||||||
| 22,667 | – | – | 22,667 | 136.4 | May 2004 | May 2011 | ||||||||
| 159,862 | – | – | 159,862 | 83.6 | September 2005 | September 2012 | ||||||||
| 182,529 | – | – | 211,387 | |||||||||||
| M Hennessy | – | 511,742 | – | 511,742 | 78.2 | April 2007 | April 2007 | |||||||
| S Palethorpe | – | |||||||||||||
| M Smith | 238,599 | – | – | 238,599 | 83.6 | September 2005 | September 2012 | |||||||
| Non-executive | ||||||||||||||
| W A Cathcart1 | 357,899 | – | – | 357,899 | 174.2 | March 2005 | March 2012 | |||||||
| 71,580 | – | – | 71,580 | 83.6 | September 2005 | September 2012 | ||||||||
| 429,479 | – | – | 429,479 | |||||||||||
| L Cullen | – | |||||||||||||
| R D'Ieteren | – | |||||||||||||
| B Ghiot | – | |||||||||||||
| G van Marcke de Lummen | – | 28,858 | – | 28,858 | 103.9 | March 2000 | March 2007 | |||||||
| M Miller | – | |||||||||||||
| Dr A von Ruedorffer | – | |||||||||||||
| P A De Smedt | – |
- 1 Alun Cathcart's and Gilbert van Marcke de Lummen's share options were granted when they were executive Directors of the Company.
Performance conditions
The performance conditions applying to the share option schemes have been based on real growth in earnings per share (EPS).
Options granted before 2004 become exercisable when real growth in EPS exceeds 3% per annum during any period of three consecutive years following the date of grant. Only options shown as having an exercisable date of March 2000 have satisfied this performance condition.
Options granted in 2004 become exercisable when real growth in EPS during the three-year period 2004 to 2006 exceeds 10% per annum compound. For 30% of the options to be exercisable there must be real minimum growth of 5% per annum compound. Vesting is on a straight-line basis for EPS growth between these targets. There is no re-testing and as the performance conditions relating to options granted in 2004 have not been met, these options have lapsed.
At 31 December 2007, 211 qualifying employees held options over 3,530,733 shares. No options were granted in 2007. The market price of the Company's shares at 31 December 2007 was 40.5 pence. During the year, the market price ranged between 27.25 pence and 90.25 pence.
Signed on behalf of the Board
Judith Nicholson
Company Secretary
27 February 2008
