Directors' remuneration report
The directors' remuneration report is presented to shareholders by the Board. The report complies with Regulation 11 and Schedule 8 of the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 (the Regulations). A resolution will be put to shareholders at the Annual General Meeting on 17 November 2009 inviting them to approve this report.
Remuneration policy and arrangements
The Remuneration Committee
Responsibilities of the Committee include making recommendations to the Board on the Group's executive remuneration policy and determining, on behalf of the Board, specific remuneration packages for the executive directors and Chairman. The Committee operates within agreed terms of reference which are available for inspection on the Company's website. The Company complied with the provisions of the Combined Code 2008 on Corporate Governance relating to directors' remuneration throughout the financial year except as is disclosed in the Corporate governance statement.
The Committee met four times in the past year to consider and agree, amongst other things:
- Annual Incentive Plan performance and payments for fiscal 2008
- Annual Incentive Plan structure and performance targets for fiscal 2009
- participants in the approved long-term incentive plans
- potential impact of the global recession on the Group's long-term incentive plans
- framework of executive total remuneration
- principles to govern the Annual Incentive Plan for fiscal 2010
- Committee terms of reference
- structure of the directors' remuneration report for fiscal 2009
In 2008/09 the Committee consisted of:
Stuart Chambers (Chairman of the Committee)
Donald Brydon
David Challen
Peter Jackson
Sir Kevin Tebbit
Mr Brydon is absent when his own remuneration as Chairman of the Company is under consideration. The Chief Executive attends meetings of the Committee by invitation; he is absent when his own remuneration is under consideration.
During the year, the Committee received material assistance and advice from the Chief Executive and the HR Director (who is also Secretary to the Committee). The Committee and the Company also received advice from Kepler Associates and Freshfields Bruckhaus Deringer LLP. Freshfields Bruckhaus Deringer LLP, who were appointed by the Company, also advised the Group on various legal matters during the year.
Remuneration policy
The Committee applies a remuneration policy which has at its core the following objectives:
- to align the interests of executives with those of shareholders
- to focus on top-line growth, margin improvement and capital discipline
- to link a significant proportion of remuneration to financial and individual performance, both in the short-term and long-term
- to provide strong linkage between remuneration and performance
- to ensure total remuneration is market-competitive and helps attract and retain executives of the highest calibre.
Remuneration arrangements
The remuneration of senior executives balances fixed, variable, short-term and long-term remuneration, and is reviewed each year on a total remuneration basis to ensure that executives continue to be appropriately incentivised to achieve the Group's objectives.
For 2008/09, executive directors' remuneration comprised basic salary, benefits in kind, annual bonus and pension benefits. In addition, executive directors and senior executives participate in share-based incentive schemes, which in 2008/09 included the Smiths Group Sharesave Scheme, the Smiths Group Value Sharing Plan (VSP) and the Smiths Group Co-Investment Plan (CIP).
Elements of remuneration
The main elements of remuneration for executive directors in 2008/09 are summarised below:
|
Element: 2008/09 policy |
Objective |
|---|---|
|
Base salary: frozen in 2008/09 for at least two years |
|
|
Annual bonus: maximum opportunity of 180% of salary for the Chief Executive and 150% of salary for the Finance Director |
|
|
Co-Investment Plan(CIP): mandatory investment in Smiths shares of 50% of any net bonus earned, in return for up to a 2-for-1 matching opportunity after three years, subject to average ROCE exceeding WACC+3% p.a. |
|
|
Value Sharing Plan (VSP): one-off incentive under which executives receive a pre-defined number of shares per £5m of ‘surplus value created'. For executive directors, 1/3rd of an award is based on TSR relative to the FTSE 100 (excluding financial services companies) and 2/3rds on growth in internal value above the cost of equity |
|
|
Pension |
|
|
Share ownership guidelines: 200% of salary for the Chief Executive and 150% of salary for the Finance Director |
|
The following charts illustrate the proportions of the 2008/09 remuneration packages comprising fixed (ie base salary) and variable elements of pay, assuming target annual bonus and expected values of long-term incentives. For 2008/09, c.70% of the fair value of executive directors' total remuneration was performance related.
Executive Director pay mix, 2008/09
Base salary and benefits
Executive directors' salaries have typically been reviewed annually, taking into account the size and nature of the role, individual performance and experience, the relative performance of the Company, remuneration policy within the Company and salaries at comparator companies. Salaries are benchmarked against comparable roles at other FTSE 100 companies of similar market capitalisation, revenues and complexity to Smiths. The salaries for all participants in the Value Sharing Plan, including executive directors, have been frozen at their 2007/08 levels until 1 August 2010. Executive directors' base salaries for 2009/10 are, therefore, unchanged from 2008/09 at the following levels:
|
Executive director |
Salary last reviewed |
2008/09 salary |
2009/10 salary |
|---|---|---|---|
|
P Bowman |
10 December 2007 |
£800,000 |
£800,000 |
|
J Langston |
1 August 2007 |
£424,000 |
£424,000 |
Benefits include a fully expensed company car, or an allowance in lieu thereof, and health insurance.
Annual bonus
Executive directors were eligible to participate in an annual bonus plan based on a combination of corporate financial goals (Group EPS and cash conversion) and individual performance. The maximum annual bonus opportunity for the Chief Executive was 180% of salary and for the Finance Director was 150% of salary. Of any bonus earned, 50% is compulsorily deferred into Smiths shares under the rules of the CIP. The table below summarises the structure of the 2008/09 annual bonus plan and the awards receivable for performance in 2008/09.
2008/09 annual bonus outcome as a percentage of salary
|
|
Group EPS |
Cash conversion |
Personal objectives |
Total (% of salary) |
||||
|---|---|---|---|---|---|---|---|---|
|
Executive director |
Maximum |
Actual |
Maximum |
Actual |
Maximum |
Actual |
Maximum |
Actual |
|
P Bowman |
95% |
0% |
25% |
20.5% |
60% |
55.2% |
180% |
75.7% |
|
J Langston |
80% |
0% |
20% |
16.4% |
50% |
38.5% |
150% |
54.9% |
Co-Investment Plan (CIP)
For 2008/09 and future years, executive directors and selected senior executives are required to invest 50% of any net bonus earned in Smiths shares. Invested amounts are eligible for a 2-for-1 matching share award after three years (based on the pre-tax amount of deferred bonus in question), subject to continued employment in the Group and the Company's average return on capital employed (ROCE) over the performance period exceeding the Company's weighted average cost of capital (WACC), which the Committee regards as appropriately reflecting the operating efficiency of the Company.
Matching share awards vest in full if ROCE exceeds WACC by an average margin of at least 3% a year; a 1-for-1 matching share award vests if ROCE is between WACC+1% and WACC+3% p.a. Dividends accrue on matching shares that vest.
For 2007/08 and earlier years, executive directors and selected senior executives were able to invest up to 100% of any net bonus earned (or if greater, 25% of salary) in Smiths shares. Invested amounts were eligible for a 1-for-1 matching share award after three years (based on the pre-tax amount of salary or deferred bonus in question) subject to continued employment in the Group and the Company's average ROCE over the performance period exceeding the Company's WACC over the same period by an average margin of at least 1% p.a.
Value Sharing Plans (VSPs)
The Group and divisional VSPs are one-off, long-term incentive plans designed to reinforce Smiths strategy of focusing on shareholder value creation at the Group and divisional levels.
Group VSP
Messrs Bowman and Langston are participants in the Group VSP, which rewards executive directors and selected senior executives with a pre-determined number of shares for every £5m of value created above a hurdle over the three-year and four-year performance periods from 1 August 2008 (or until a vesting event, if earlier). On 28 July 2008 Mr Bowman was granted an award under which he will be entitled to receive 1,250 Smiths Group shares for each £5m of surplus value created in respect of each performance period. On the same date Mr Langston was granted an award under which he will be entitled to receive 500 Smiths Group shares for each £5m of surplus value created in respect of each performance period.
– TSR Element
One-third of the award will depend on the growth, over each performance period, in Smiths market capitalisation plus net equity cash-flows to shareholders (ie dividends plus share buybacks less share issues) over and above the median total shareholder return of the FTSE 100 companies (excluding financial services companies).
Participants will only be entitled to a vesting of shares under the TSR Element if the Committee is satisfied that this is justified by the underlying financial performance of the Company over the performance period.
– Earnings Element
The remaining two-thirds of each award will be determined by the growth, over each performance period, in adjusted Profit Before Tax (PBT) (from a baseline PBT of £338.6m in 2007/08) times a fixed multiple of 12.0 plus net equity cash-flows to shareholders over and above a cost of equity hurdle return of 9.5% a year.
The Committee may reduce the payout of the Earnings Element if an acquisition results in a material reduction in return on invested capital.
No retesting of either performance condition is permitted.
Performance measure selection
The Remuneration Committee believes that the combination of relative TSR and PBT provides the best balance between internal line-of-sight and shareholder alignment, between absolute and relative performance and between internal and external perspectives. PBT is considered the best internal measure of Smiths financial performance as it is highly visible internally and regularly monitored and reported. Relative TSR provides strong alignment with shareholders and the FTSE 100 index (excluding financial services companies) continues to be considered a relevant and robust indicator of the relative value created by Smiths management for its shareholders.
Divisional VSPs
In addition to the Group VSP, the Committee has introduced divisional plans for each of the five divisions (Smiths Detection, Smiths Medical, John Crane, Smiths Interconnect, and Flex-Tek). The plans are along the same lines as the Group VSP to help focus the most senior divisional executives on maximising the value of their divisions and returning surplus cash to the Group.
The Shareholder Circular issued in July 2008 which dealt, amongst other things, with the proposed establishment of the VSP stated that the Remuneration Committee would not consider further long term incentives for participants in the Group or Divisional VSPs until 2010. The Committee intends in 2010 to consider potential long-term incentives for participants in the VSP. Any proposals for such long-term incentives will be the subject of shareholder consultation and the required approvals at the appropriate time.
Performance Share Plan (PSP)
No awards under the PSP have been made to Executive Directors or other participants in the VSP in 2008/09 and none will be made to these executives in 2009/10.
Awards vest after three years, subject to performance conditions. One-third of an award is subject to the Company's TSR performance relative to other FTSE 100 companies (excluding financial companies and investment trusts). For full vesting, the Company's TSR must be at or above the 75th percentile over the three-year performance period. Of the award, 25% will vest if the Company's TSR is at median. Awards will vest on a straight-line pro rata basis between median and 75th percentile.
The remaining two-thirds of the award will be subject to earnings per share (EPS) growth targets (measured before exceptional items). For each of the outstanding three-year cycles commencing in 2006/07 and 2007/08, full vesting will occur if the compound annual growth in EPS is equivalent to 12% a year. If the compound annual growth in EPS is equivalent to 5% a year, 25% vesting will occur with vesting on a straight-line basis between 5% and 12%. There will be no retesting of the TSR and EPS performance measures.
Sharesave Scheme
The Smiths Group Sharesave Scheme, which is open to all UK employees with at least 12 months' service, is subject to UK legislation as to the maximum amount that can be saved. Participants save a fixed sum of up to £250 a month for three or five years and may use the sum generated by their savings contracts to exercise the options which are usually granted at a 20% discount to the market price.
Share ownership guidelines
It is the Committee's policy that executive directors should, over time, acquire a shareholding with a value equal to at least one and a half years' gross salary (two years' gross salary for the Chief Executive) and retain at least 50% of any net vested share awards (after sales to meet tax liabilities) until those values are achieved.
Share scheme dilution limits
The Company follows the guidelines laid down by the Association of British Insurers. These restrict the issue of new shares under all the Company's share schemes in any 10-year period to 10% of the issued ordinary share capital and under the Company's discretionary schemes to 5% in any 10-year period. As at 31 July 2009, the headroom available under these limits was 4.1% and 0.5%, respectively (excluding the conditional share awards granted under the VSP on 28 July 2008 and subsequently).
Pension
The Company operates pension arrangements for executive directors. In the case of Mr Bowman, the Company pays a monthly salary supplement (worth 42% of salary per annum) approved by the Committee to enable him to make his own pension provision. In the case of Mr Langston, a final salary scheme provides a pension of up to two-thirds of final pensionable salary. The Company continues to apply an earnings cap, on a basis similar to the pre-2006 statutory limit, to determine the proportion of overall pension payable by the regulated pension scheme, with the balance of pension provided by the Company. This arrangement substantially represents a continuation of pre-2006 practice and involves no additional cost for the Company. In appropriate cases, the Company permits the waiver of salary and pension supplement entitlements where the arrangement does not involve additional cost for the Company. Where such waivers are made, incentives and pension entitlements continue to be calculated by reference to salaries prior to these reductions. Details of the salary supplements, waiver and other pension provisions are set out in the tables in the Directors' remuneration report.
Five-year historical TSR performance
The following graph shows the Company's total shareholder return (TSR) performance over the past five years compared to the FTSE 100 Index. The FTSE 100 Index, of which the Company has been a member throughout the period, has been selected to reflect the TSR performance of other leading UK-listed companies. The values of hypothetical £100 investments in the FTSE 100 Index and Smiths Group plc shares (after adjustment for the Return of Cash in June 2007) were £123 and £114 respectively.
Remuneration
The total remuneration of directors, excluding the value of shares to which certain directors may become entitled under the Value Sharing Plan, Performance Share Plan and Co-Investment Plan and also defined benefit pension arrangements, was as follows:
|
|
2009 |
2008 |
|---|---|---|
|
Fees, salaries and benefits, compensation for loss of office |
1,885 |
4,098 |
|
Performance-related bonuses |
839 |
1,232 |
|
Aggregate gain from exercise of share options and vesting of share awards |
866 |
2,026 |
|
Incremental gain from deferred share scheme exercises |
0 |
109 |
|
Payments in lieu of pension contribution |
336 |
362 |
|
|
3,926 |
7,827 |
The emoluments of the directors are set out below:
|
|
|
Compensation |
|
|
Payments in |
|
||
|---|---|---|---|---|---|---|---|---|
|
|
2008 |
2009 |
2009 |
2009 |
2009 |
2009 |
2009 |
2008 |
|
Chairman |
|
|
|
|
|
|
|
|
|
D H Brydon |
295 |
305 |
|
23 |
|
|
328 |
317 |
|
Chief Executive |
|
|
|
|
|
|
|
|
|
P Bowman1 |
516 |
800 |
|
36 |
606 |
336 |
1,778 |
1,355 |
|
Executive director |
|
|
|
|
|
|
|
|
|
J Langston2 |
424 |
424 |
|
36 |
233 |
|
693 |
808 |
|
Non-executive directors |
|
|
|
|
|
|
|
|
|
D J Challen |
67 |
69 |
|
|
|
|
69 |
67 |
|
S J Chambers |
62 |
69 |
|
|
|
|
69 |
62 |
|
P J Jackson |
67 |
69 |
|
|
|
|
69 |
67 |
|
Sir Kevin Tebbit |
52 |
54 |
|
|
|
|
54 |
52 |
|
Directors who resigned in 2007/08 (in aggregate) |
683 |
|
|
|
|
|
|
2,970 |
|
|
2,166 |
1,790 |
|
95 |
839 |
336 |
3,060 |
5,698 |
1. Philip Bowman's total emoluments for 2008 are for a part year, covering the period from his appointment on 10 December 2007 until the end of the 2008 financial year on 31 July 2008.
2. In common with other UK employees participating in the relevant pension schemes, the salary of John Langston was reduced by £8,970 and the Company paid the same amount directly to his pension scheme during the year. The salaries shown in the table above for Mr Langston are the amounts he would have been paid if he had not given up these salary entitlements.
David Lillycrop resigned from the Board on 3 June 2008 and remained in service as an employee on his existing terms and conditions until 30 November 2008. Full details of Mr Lillycrop's termination arrangements were set out in last year's directors' remuneration report. In respect of the period 1 August 2008 to 30 November 2008, Mr Lillycrop received salary and benefits to the value of £151,829 as an employee.
Director's pension entitlements
Accrued annual pension under defined benefit schemes
|
|
Age at |
Accrued |
Additional |
Transfer |
Transfer |
The amount of |
Accrued |
|---|---|---|---|---|---|---|---|
|
J Langston |
59 |
241 |
3 |
6,181 |
5,670 |
502 |
256 |
1. Mr Langston's normal retirement age is 60. An early retirement pension, based on actual service completed, may be paid after age 50 and may be subject to a reduction on account of early payment. On death, a spouse's pension of two-thirds of the director's pension (or for death-in-service his prospective pension at age 60) is payable. All pensions in excess of the Guaranteed Minimum Pension (GMP) are guaranteed to increase at the lesser of (i) 7% per annum compound and (ii) the annual increase in the Retail Prices Index. There has, however, been a long-standing practice of granting additional discretionary increases on pensions in excess of the GMP to bring them into line with price inflation.
2. See note 2 to the emoluments table above. The benefits provided under the relevant pension schemes were not affected by these arrangements.
3. Transfer values of the accrued benefits have been calculated on the basis of actuarial advice in accordance with pensions regulations, and represent the amount that the pension scheme would pay to another pension provider if the member elects to transfer all of his benefits out of the scheme. The transfer values do not represent sums payable or due to the director and therefore cannot be added meaningfully to annual remuneration.
Directors' interests in the Company's shares
|
|
Ordinary shares |
Ordinary shares |
|---|---|---|
|
D H Brydon |
8,000 |
8,000 |
|
P Bowman |
70,000 |
20,000 |
|
D J Challen |
1,333 |
1,333 |
|
S J Chambers |
1,333 |
1,333 |
|
P J Jackson |
0 |
0 |
|
J Langston |
247,281 |
175,650 |
|
Sir Kevin Tebbit |
0 |
0 |
These interests include beneficial interests of the directors and their families in the Company's shares held in trusts and holdings through nominee companies. None of the directors has disclosed any non-beneficial interests in the Company's shares.
Ms A C Quinn had no interests in the Company's shares on 1 August 2009, the date of her appointment as a director of the Company. The Company has not been notified of any changes to the holdings of the current directors, their families and any connected persons between 1 August and 26 September 2009.
Service contracts
The Company's policy is that executive directors are normally employed on terms which include a one-year rolling period of notice and provision for the payment of a predetermined sum in the event of termination of employment in certain circumstances (but excluding circumstances where the Company is entitled to dismiss without compensation).
Mr Bowman
Mr Bowman is employed under a service contract with the Company dated 15 November 2007 and effective from 10 December 2007. The service contract is for an indefinite term expressed to end automatically on his anticipated normal retirement date (age 60), but may be terminated by 12 months' notice given by the Company or six months' notice given by Mr Bowman. The Company may elect to terminate the contract by making a payment in lieu of notice equal to 150% of Mr Bowman's basic salary, this being a genuine pre-estimate of Mr Bowman's entitlement in respect of the unserved notice period, to cover:
1. salary;
2. annual pension contribution by the Company (42% of base salary);
3. the annual cost to the Company of providing all other benefits to which Mr Bowman is entitled under his contract, but excluding bonus.
In this event, the contract provides that Mr Bowman's bonus entitlement for the financial year in which termination occurs and for the unserved notice period will be the subject of a separate, good faith discussion between Mr Bowman and the Chairman; the contract also specifies that Mr Bowman would in this case be treated as a 'good leaver' for the purposes of relevant share plans. In certain constructive dismissal events, Mr Bowman is entitled to resign and be treated in the manner set out above.
Mr Langston
As stated in last year's report, Mr Langston is employed under a service contract with the Company dated 26 September 2001. The service contract is for an indefinite term expressed to end automatically on the anticipated normal retirement date (age 60), but may be terminated by 12 months' notice given by the Company or six months' notice given by Mr Langston. The Company may at its discretion elect to terminate the contract by making a payment in lieu of notice on the following terms:
1. the salary receivable during the notice period;
2. an amount equal to 50% of the maximum bonus potential receivable under the executive bonus scheme for the then-current bonus year;
3. the annual cost to the Company of providing all other benefits to which Mr Langston is entitled under his contract, which has been pre-agreed as 10% of basic salary; and
4. an amount equal to the cost of securing one year's pensionable service in the appropriate pension scheme(s). In addition, the Company has given its irrevocable consent to early payment of Mr Langston's pension (from age 50) and without actuarial reduction from age 55.
External appointments
Subject to the overriding requirements of the Company, the Committee is prepared to allow executive directors to accept external appointments where it considers that such appointments will contribute to the director's breadth of knowledge and experience. Directors are permitted to retain fees associated with such appointments.
Chairman and non-executive directors
The Chairman and the non-executive directors serve the Company under letters of appointment and do not have contracts of service or contracts for services. Except where appointed at a general meeting, directors stand for election by shareholders at the first Annual General Meeting following appointment and stand for re-election every three years thereafter (under Article 55). Either party can terminate on one month's written notice and no compensation is payable in the event of an appointment being terminated early. The dates of their original appointment were as follows:
|
|
|
|
Expiry of current term |
|---|---|---|---|
|
D H Brydon |
19 April 2004 |
19 November 2007 |
2010 |
|
D J Challen |
21 September 2004 |
19 November 2007 |
2010 |
|
SJ Chambers |
27 November 2006 |
19 November 2007 |
2010 |
|
P J Jackson |
1 December 2003 |
19 November 2007 |
2010 |
|
Sir Kevin Tebbit |
14 June 2006 |
17 November 2006 |
2009 |
The Board of Directors, excluding Remuneration Committee members, is responsible for recommending the remuneration of the non-executive directors with the exception of the Chairman, whose remuneration is determined by the Remuneration Committee. The fees payable (with effect from 1 August 2008) to the non-executive directors for the full year 2008/09 comprised the following and will be frozen at this level for the full year 2009/10:
|
Non-executive director |
Basic fee |
Audit / Remuneration |
Senior Independent |
Total |
|---|---|---|---|---|
|
D H Brydon |
£305,000 |
– |
– |
£305,000 |
|
D J Challen |
£54,000 |
£15,000 |
– |
£69,000 |
|
S J Chambers |
£54,000 |
£15,000 |
– |
£69,000 |
|
P J Jackson |
£54,000 |
– |
£15,000 |
£69,000 |
|
Sir Kevin Tebbit |
£54,000 |
– |
– |
£54,000 |
The Chairman and the non-executive directors are not eligible for bonuses or participation in share schemes and no pension contributions are made on their behalf.
Auditable part
The directors' remuneration tables and accompanying notes; the directors' pensions table and accompanying notes; and the directors' share options and awards table have been audited.
The Directors' remuneration report has been approved by the Board and signed on its behalf by:
S J Chambers
29 September 2009
Directors' share option and long-term share plans
|
|
Options |
Options |
Option and award data |
Options exercised and awards vested 2008/09 |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Director and Scheme |
Number |
Number |
Performance |
Exercise |
Grant |
Vesting |
Expiry |
Exercise / vesting date |
Number |
Exercise |
Market price |
Market price |
|
P Bowman |
|
|
|
|
|
|
|
|
|
|
|
|
|
PSP |
75,543 |
75,543 |
C |
n/a |
11/12/07 |
13/11/10 |
13/11/10 |
|
|
|
|
|
|
|
37,771 |
37,771 |
D |
n/a |
11/12/07 |
13/11/10 |
13/11/10 |
|
|
|
|
|
|
CIP |
78,199 |
0 |
E |
n/a |
20/10/08 |
28/09/11 |
28/09/11 |
|
|
|
|
|
|
SAYE |
2,750 |
0 |
|
569.00p |
21/05/09 |
01/08/14 |
01/02/15 |
|
|
|
|
|
|
J Langston |
|
|
|
|
|
|
|
|
|
|
|
|
|
95 ESOS |
38,462 |
38,462 |
A |
806.00p |
09/04/02 |
09/04/05 |
09/04/12 |
|
|
|
|
|
|
|
38,461 |
38,461 |
B |
806.00p |
09/04/02 |
09/04/05 |
09/04/12 |
|
|
|
|
|
|
PSP |
0 |
38,269 |
C |
n/a |
07/10/05 |
20/10/08 |
|
27/10/08 |
38,269 |
n/a |
937.00p |
720.11p |
|
|
0 |
19,135 |
D |
n/a |
07/10/05 |
20/10/08 |
|
27/10/08 |
7,271 |
n/a |
937.00p |
720.11p |
|
|
|
|
|
|
|
|
# |
27/10/08 |
11,864 |
lapsed |
|
|
|
|
44,618 |
44,618 |
C |
n/a |
29/09/06 |
25/10/09 |
25/10/09 |
|
|
|
|
|
|
|
22,039 |
22,039 |
D |
n/a |
29/09/06 |
25/10/09 |
25/10/09 |
|
|
|
|
|
|
|
38,243 |
38,243 |
C |
n/a |
13/11/07 |
13/11/10 |
13/11/10 |
|
|
|
|
|
|
|
19,121 |
19,121 |
D |
n/a |
13/11/07 |
13/11/10 |
13/11/10 |
|
|
|
|
|
|
CIP |
0 |
51,680 |
E |
n/a |
25/10/05 |
24/09/08 |
|
24/09/08 |
51,680 |
n/a |
886.50p |
1,040.25p |
|
|
31,881 |
31,881 |
E |
n/a |
02/02/07 |
30/09/09 |
30/09/09 |
|
|
|
|
|
|
|
22,202 |
22,202 |
E |
n/a |
13/11/07 |
29/09/10 |
29/09/10 |
|
|
|
|
|
|
|
22,222 |
0 |
E |
n/a |
20/10/08 |
28/09/11 |
28/09/11 |
|
|
|
|
|
|
SAYE |
1,088 |
1,088 |
|
868.00p |
18/05/07 |
01/08/10 |
01/02/11 |
|
|
|
|
|
Value Sharing Plan
|
|
VSP awards |
VSP awards |
Award data |
Awards vested 2008/09 |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Director and Scheme |
Shares per £5m surplus value |
Shares per £5m surplus value |
Performance |
Exercise |
Grant |
Vesting |
Expiry |
Exercise / vesting date |
Number |
Exercise |
Market price |
Market price |
|
P Bowman |
||||||||||||
|
VSP |
417 |
417 |
F |
n/a |
28/07/08 |
Oct 2011 |
Oct 2011 |
|
|
|
|
|
|
|
833 |
833 |
G |
n/a |
28/07/08 |
Oct 2011 |
Oct 2011 |
|
|
|
|
|
|
|
417 |
417 |
F |
n/a |
28/07/08 |
Oct 2012 |
Oct 2012 |
|
|
|
|
|
|
|
833 |
833 |
G |
n/a |
28/07/08 |
Oct 2012 |
Oct 2012 |
|
|
|
|
|
|
J Langston |
||||||||||||
|
VSP |
167 |
167 |
F |
n/a |
28/07/08 |
Oct 2011 |
Oct 2011 |
|
|
|
|
|
|
|
333 |
333 |
G |
n/a |
28/07/08 |
Oct 2011 |
Oct 2011 |
|
|
|
|
|
|
|
167 |
167 |
F |
n/a |
28/07/08 |
Oct 2012 |
Oct 2012 |
|
|
|
|
|
|
|
333 |
333 |
G |
n/a |
28/07/08 |
Oct 2012 |
Oct 2012 |
|
|
|
|
|
Key
95 ESOS |
Smiths Industries 1995 Executive Share Option Scheme |
PSP |
Smiths Group Performance Share Plan |
CIP |
Smiths Group Co-Investment Plan |
SAYE |
Smiths Group Sharesave Scheme |
VSP |
Smiths Group Value Sharing Plan |
* |
Subject to the relevant performance test being passed, if applicable. |
** |
The expiry dates shown above apply in normal circumstances. No expiry date is shown if the option or award was exercised, vested, or lapsed prior to 26 September 2009. |
*** |
Market price of a Smiths share at date of grant (if different from exercise price). The exercise price of an option under the SAYE is set at 20% less than the mid-market closing price |
† |
Actual sale price on date of exercise. |
# |
Denotes a conditional award that partially lapsed. |
Performance tests
A EPS growth versus UK RPI Index + 3% p.a.
B EPS growth versus UK RPI Index + 4% p.a.
C PSP Earnings Per Share growth test
D Total Shareholder Return rank test
E CIP Return on Capital Employed test
F Surplus Shareholder Value – VSP TSR test
G Surplus Internal Value – VSP PBT test
There are no performance criteria for the SAYE
Notes
The high and low market prices of the ordinary shares during the period 1 August 2008 to 31 July 2009 were 1,156p and 663p respectively.
The mid-market closing price on 31 July 2008 was 1,047p and on 31 July 2009 was 720p.
The mid-market closing price of a Smiths share on the date of awards made to directors under the CIP in the 2008/09 financial year was 777.5p.
Of the 80,761 shares over which options had been granted under the 95 ESOS and SAYE to, and were held by, directors at 31 July 2009, 79,673 were granted at exercise prices below the market price of a Smiths Group share on 26 September 2009 (829p).
None of the options or awards listed above was subject to any payment on grant.
Options and awards which lapsed or partially lapsed during the financial year ended 31 July 2009 are indicated in the table above by a hash mark (#): no other options or awards held by any director lapsed during the period 1 August 2008 to 31 July 2009.
No other Director held any options over the Company's shares during the period 1 August 2008 to 31 July 2009.
No options or awards have been granted to or exercised by directors or have lapsed during the period 1 August to 26 September 2009.
Executive directors received their final grants of options under the 95 ESOS in October 2003. From 2004 to 2007, senior executives, including executive directors, received awards under the PSP.
PSP awards granted in October 2005
Smiths' TSR over the performance period in relation to 2005 PSP awards (20 October 2005 to 20 October 2008) ranked 32nd in the comparator group of FTSE 100 companies (excluding financial services companies), a level of performance equivalent to the 54th percentile. Based on the vesting schedule on which 25% of an award vests at median (and 100% vests for upper quartile performance), this performance warrants the vesting of 38% of the TSR element (one-third of an award). Smiths' EPS growth over the performance period was 12.2% p.a., warranting the full vesting of the remaining two-thirds of the award. Overall, 79% of 2005 PSP awards vested.
The performance tests for options granted under the 95 ESOS up to and including October 2005 have all been passed with the sole exception of the grant on 9 April 2002, which failed its initial test and two annual retests. No further retests of the April 2002 grant will be undertaken. The April 2002 grant can now only be exercised in the event of a change in control of the Company or by certain good leavers.