Remuneration report

Letter from Gerry Brown, Chairman of the Remuneration Committee

 

Dear Shareholder

On behalf of the Board, I am pleased to present the Directors’ remuneration report for 2011. This report explains the Group’s remuneration policy and provides details of the remuneration paid to Executive and Non-executive Directors for services to the Company during the year.

Following a difficult year in 2010, the global economy has remained challenging. With this in mind, it is important that the remuneration policy at Keller provides a clear link between performance and reward and that the Executive Directors’ interests are closely aligned to the creation of long-term shareholder value, which means that remuneration reduces sharply when performance has been disappointing. It is also important that the remuneration policy attracts, retains and motivates high calibre executives to manage the business and deliver against our strategy. I believe that these objectives are wholly compatible and that our remuneration policy strikes the right balance between the two.

This is the first year in which we are reporting under the terms of the new UK Corporate Governance Code. We remain committed to good corporate governance and to maintaining a dialogue with our shareholders on remuneration issues. As part of our focus on ensuring that remuneration policy is aligned to both our strategy and the Company’s risk profile, we have introduced formal shareholding guidelines for Executive Directors and clawback provisions to the annual bonus arrangements and the long-term incentive share plan. Both these measures are effective from 2012. More information is set out below regarding the alignment of remuneration policy to long-term shareholder value, strategy and the management of risk.

In determining remuneration levels, the Committee has taken account of market conditions, the performance of the Company, responsibility to shareholders and good corporate governance. Accordingly, basic salaries of Executive Directors for 2012 have increased by 2% to 3% and other elements of their remuneration package are unchanged.

A resolution to approve the Directors’ remuneration report will be proposed at the forthcoming Annual General Meeting (‘AGM’) of the Company, which I hope you will support. If, in the meantime, you have any queries regarding the matters set out in this report, I will be available at the AGM to answer questions.

Gerry Brown

Introduction

In preparing this report, the Committee has complied with the Companies Act 2006, (the ‘Act’) including Schedule 8 to the Accounting Regulations (the ‘Regulations’) and the UK Corporate Governance Code as set out at www.frc.org.uk/corporate/ukcgcode.cfm (the ‘Code’).

The Regulations require the Auditors to report to the Company’s members on the ‘auditable part’ of the remuneration report and to state whether, in their opinion, that part of the report has been properly prepared in accordance with the Act. The report has therefore been divided into separate sections for unaudited and audited information. Within the unaudited section, the report deals with the remuneration policy which is to be followed from 1 January 2012.

Unaudited information

Remuneration Committee

The Company has established a Remuneration Committee (the ‘Committee’) in accordance with the recommendations of the Code. The names of members of the Committee during the year are given below. The Committee was chaired by Mr Brown and all members served on the Committee throughout the year, except where indicated.

Committee members

E G F Brown (Chairman)
L R Cairnie
C Girling (from 28 February 2011)
D G Savage (from 1 August 2011)
R T Scholes (until 17 May 2011)

No member of the Committee has any personal financial interest (other than as a shareholder), conflict of interest arising from cross-directorships or day-to-day involvement in running the business. All members of the Committee were considered by the Company to be independent throughout the period of their membership. Given their diverse backgrounds, the Board believes that the members of the Committee are able to offer an informed and balanced view on executive remuneration issues.

Terms of reference and remit of the Committee

The Committee’s terms of reference are available on the Group’s website (www.keller.co.uk) and on request from the Company Secretary. The responsibilities of the Committee are set out below:

Responsibilities:

• agreeing the framework and policy for the remuneration of the Group’s senior management;
• determining, on behalf of the Board, the remuneration packages of the Executive Directors and other senior management including recruitment, pension arrangements and termination terms;
• monitoring the level and structure of remuneration for senior management;
• annually reviewing and noting remuneration trends across the Group;
• approving the design and targets for any annual incentive schemes for Executive Directors and senior managers;
• agreeing the design and targets of all share incentive plans requiring shareholder approval;
• selecting, appointing and setting the terms of reference for remuneration consultants advising the Company; and
• assessing the appropriateness and subsequent achievement of the performance targets for the incentive share plan.

The Committee met three times during the year. Attendance at Committee meetings is shown in the corporate governance statement on page 40.

Evaluation of Committee work

During the year, in accordance with the recommendations of the Code, the Board appointed an external facilitator to assist in a review of the Board’s performance and that of its Committees and Directors. The review confirmed that the Board, its Committees and Directors were performing effectively.

In determining the Executive Directors’ remuneration policy for 2012, the Committee has consulted Mr Franklin, the Chairman, and Mr Atkinson, the Chief Executive, about its proposals, except (in the case of Mr Atkinson) in relation to his own remuneration. No Executive Director is involved in determining his own remuneration.

During the year, the Committee has received advice on Executive Directors’ remuneration from New Bridge Street (‘NBS’), who were appointed by the Committee and who have also advised the Company on the valuation of share-based payments. Neither NBS, nor any of its associated companies, have provided any other services to the Company.

Alignment of remuneration with Company strategy and risk

In the Committee’s view, the alignment between strategy, risk and remuneration is crucial to the success of the Company. To achieve alignment, the remuneration packages of Executive Directors are leveraged, with an appropriate percentage at risk against achieving stretching performance targets. These targets are aligned to the Company’s strategy for providing sustained improvements in profitability and delivering superior shareholder returns, but also with the Company’s risk profile and acceptable employee behaviours.

As part of its focus on ensuring alignment of remuneration to strategy and risk, the Committee has adopted shareholding guidelines for Executive Directors. In addition, a clawback provision has been incorporated into both the annual and long-term incentives – again, focusing senior managers on the long-term results of the Company, strengthening the alignment with shareholders and promoting the right behaviours. The Committee is of the view that its policy for incentives is compatible with the Company’s risk policies and systems.

The table below summarises the elements of the Executive Directors’ remuneration packages and their strategic role, as well as the steps taken to mitigate risk.

Remuneration element	Strategic role	Risk managed
Basic salary
Fixed cash compensation, dependent upon experience and responsibilities	Recruitment, attention and attraction of high calibre executives Reward for day-to-day performance	Positioned broadly at median level to ensure adequate retention Sufficient for executives to not be reliant on earning incentives
Annual cash bonus
Short-term incentive – up to 100% of salary; varies in accordance with achievement of annual financial and personal strategic objectives	Drive and reward annual performance	A mix of financial and personal strategic objectives ensures a broad focus on different elements of Company performance and required behaviours
Medium-term incentive bonus in excess of 100% of basic salary (up to a maximum of 150% of salary) is deferred for three years	Part deferral, together with link to share price, focuses on medium-term performance and alignment with shareholders	Bonus in excess of 100% of salary is deferred for three years. The deferred part is paid out in cash, linked to movements in share price and therefore to medium-term performance
Long-term incentive share plan
Variable long-term remuneration paid in shares, based on EPS and TSR targets; focuses on very strong financial performance as well as stock market out-performance	Drive and reward long-term performance Alignment of interest with shareholders Retention of senior managers	With the deferred bonus and the long-term incentive, a potentially considerable part of Executive Directors’ remuneration is linked to the long-term performance of the Company Retention of vested shares (linked to shareholding guidelines) enables meaningful shareholdings to be built up
Pension
Salary supplement, defined benefit plan and defined contribution plan	Provides for employee welfare and retirement needs	No defined benefit arrangements remain open (except for Dr Sondermann). Replaced with lower risk defined contribution plans
Executive shareholding guidelines
Executive Directors to hold shares with a value equivalent to 100% of salary. New for 2012	Alignment of interest with shareholders	Potential ‘downside’ created for Executive Directors to counterbalance ‘upside’ of incentives
Clawback
Allows clawback of remuneration paid in situations of material misstatement, error and gross misconduct. New for 2012	Promotes achievement of targets and performance through acceptable behaviours	Discourages performance and achievement of targets by “any means”

 

Environmental, social and governance matters

The Committee takes account of the handling of environmental, social and governance risks when setting performance targets. For example, in 2012 by providing that a percentage of the total annual bonus potential is at risk if specific personal safety objectives have not been met.

Remuneration policy

The objective of the remuneration policy is to attract, retain and motivate Executive Directors and senior executives of the highest calibre to further the Company’s interests and to optimise long-term shareholder value creation.

The remuneration policy also seeks to ensure that other members of the Group’s senior management are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the Company.

Executive Directors are assessed individually on their performance against a mix of financial and personal strategic objectives so that their remuneration is directly related to their performance over time.

The Committee has adopted the principle that basic salary should be set broadly in line with the median for executives in a role of comparable standing and that Executive Directors should be able to achieve total remuneration at the market upper quartile level when justified by exceptional performance.

Benchmarking of remuneration is not carried out annually, but is a tool used occasionally by the Committee to ensure that remuneration remains competitive. The last exercise to benchmark the remuneration of all Executive Directors was undertaken in 2007 and the remuneration of the Finance Director was subsequently re-assessed in 2009. Other than where benchmarking reveals a significant misalignment with market rates, Executive Directors’ basic salaries increase broadly in line with salary increases across the Group, although there may be regional differences reflecting local market and trading conditions.

Total remuneration mix

An appropriate balance is maintained between fixed remuneration and variable (performance-related) remuneration. Fixed remuneration is made up of basic salary, pension and other benefits. Variable remuneration is made up of an appropriate mix of short-term and long-term incentives (further details of which are given below). At ‘target’ performance (i.e. assuming that 50% of salary is payable under the annual bonus and that 55% of the performance share awards vest), 51% of the package for each of the Executive Directors, excluding pension and other benefits, comprises variable elements. Assuming performance-linked elements pay out in full, the proportion of the variable elements increases to 71% of the total package, excluding pension and other benefits.

This remuneration policy is expected to apply to the 2012 financial year and to subsequent years.

Elements of remuneration

There are five main elements of the remuneration package for Executive Directors and selected senior managers: basic salary, performance-related annual bonus, long-term incentive arrangements, pension arrangements and other benefits. Only basic salary is pensionable.

Remuneration element	Policy	How it operates
Basic salary	Basic salary broadly in line with the median for executives in a role of comparable standing.	For 2012 basic salaries will increase by between 2% and 3%.
	Salaries for Executive Directors determined by the Committee before the start of each year and when an individual changes position or responsibility.	The pay and conditions throughout the Group, as reported by the Chief Executive, were taken into account by the Committee when determining this increase in basic salary.
Annual cash bonus	Maximum bonus potential 150% of basic annual salary.	Bonus up to 100% of salary is payable in full for very strong financial performance.
	Bonus in excess of 100% of salary is deferred for three years.	Bonus in excess of 100% of salary is only payable for exceptional performance.
	Annual bonuses are not pensionable.	Deferred element satisfied in cash as adjusted in line with share price movements over the three-year deferral period, commencing on the last day of the year to which the bonus relates.
	Subject to: (i) stretching financial performance targets designed to enhance shareholder value; and (ii) individual performance against personal objectives set by the Committee, most of which are specifically linked to strategy.	Target bonus is 50% of salary (one third of maximum).
Long-term incentive share plan	Maximum award under plan rules (set when plan approved by shareholders in 2004) is 100% of basic annual salary, 200% where the Committee determines exceptional circumstances exist, e.g. to facilitate the recruitment or retention of a key executive.	Awards to Executive Directors in 2012 over shares worth 100% of salary at grant (the same level as for 2011).
		Benchmarked to provide a broadly mid-market opportunity at target and upper quartile at superior performance and appropriate balance to other elements of the package.
		Focus on long-term, strategic corporate objectives and to further align the interests of senior managers and shareholders.
Pension	The Keller Group Pension Scheme (the ‘Scheme’) provides a pension based upon a percentage of final salary and pensions for dependants on death in service or following retirement. The Scheme closed to future benefit accrual with effect from 31 March 2006.	Mr Atkinson receives a salary supplement since closure of the Scheme.
	Neither pension payments nor salary supplements are taken into account in determining bonuses or any other form of remuneration.	Dr Sondermann, Mr Hind and Mr Rubright are members of defined contribution schemes.
Other benefits		Other benefits for Executive Directors comprise a car and payment of its operating expenses, or car allowance; private health care; life assurance; and long-term disability insurance.

Further details of the remuneration policy are set out below:

(i) Basic salary

Name	Salary in 2012 in local currency	Increase from 2011	Salary for 2011
J R Atkinson	£432,900	3%	£420,300
J W G Hind	£311,500	3%	£302,400
R M Rubright	$619,000	2%	$607,000
Dr W Sondermann	€403,300	3%	€391,600

(ii) Performance-related annual bonus

The bonus targets for 2011 were met in part in relation to the achievement of personal strategic objectives. Accordingly, the Executive Directors were entitled to annual bonuses for 2011 in the following amounts: Mr Atkinson £50,436, Mr Hind £36,288, Mr Rubright £57,750 and Dr Sondermann £68,000. Further detail regarding the specific targets for 2011 is set out on page 36. Mr Atkinson opted to waive his annual bonus for 2011 in full.

The 2012 bonuses for Mr Atkinson and Mr Hind will be linked to the achievement of:

• Group EPS profit before tax (‘PBT’) and average net debt targets; and
• personal, strategic objectives.

The 2012 bonus for Mr Rubright will be linked to the achievement of:

• divisional operating profit and average net debt targets;
• Group EPS and PBT targets; and
• personal, strategic objectives.

 The 2012 bonus for Dr Sondermann will be linked to the achievement of:

• Group EPS, PBT and average net debt targets; local operating profit; and
• personal, strategic objectives.

The actual financial performance targets for 2012 are considered to be commercially sensitive and accordingly they are not disclosed in this report.

report.

(iii) Long-term incentive arrangements

2012 awards

Having considered carefully the grant levels, taking account of the share price and the performance conditions (which are proposed to be unchanged, as described below), grants will be made to Executive Directors in 2012 over shares worth 100% of salary (the same level of award as 2011).

The Committee has also considered carefully the range of growth targets for awards in 2012 and has decided to retain the same targets as have been adopted since 2007.

Using a mix of TSR and EPS targets means that in order for awards to vest in full, there must be very strong financial performance as well as stock market out-performance, thereby aligning the interest of Executive Directors with those of shareholders.

Specific details of the performance conditions applying to long-term incentive awards are set out in the following table:

Plan terms	Terms of award	Additional detail
Performance period	Three years	Performance measured over a single three-year period, with the return at the end of the perieod being the average over the last three months of the performance period. No retesting.
Performance targets	50% of award TSR	Earnings per share is earnings per share before amortisation and impairment of intangible assets and exceptional items, as calculated from the Company’s Annual Report and Accounts.
	50% of award EPS	TSR performance is compared to the companies comprising the FTSE All-Share Index (as it has been for awards granted since 2007).
		TSR calculations are independently performed for the Committee by NBS

2012 targets

The sliding scale ranges for the EPS and TSR conditions for 2012 are set out below. Performance is measured over a three-year period:

 

 

Relative TSR vesting schedule

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EPS vesting schedule

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The Committee expects that performance share awards will be satisfied by shares purchased in the market, either specifically to satisfy these awards or shares previously purchased and held in treasury.

(iv) Pension arrangements

Mr Atkinson is a member of the Keller Group Pension Scheme (the ‘Scheme’). The Scheme provides a pension based upon a percentage of final salary and pensions for dependants on death in service or following retirement.

The table on page 37 shows Mr Atkinson’s accrued Scheme benefits. The Scheme closed to future benefit accrual with effect from 31 March 2006, since when Mr Atkinson has received a salary supplement in lieu of a Company contribution to an alternative pension arrangement. The salary supplement is not taken into account in determining bonuses or any other form of remuneration.

Dr Sondermann is a member of the defined benefit pension arrangements established by Keller Grundbau GmbH. Dr Sondermann’s accrued benefits under these arrangements are included in the table on page 37.

Dr Sondermann is also a member of a defined contribution scheme, as are Mr Hind and Mr Rubright.

(v) Other benefits

Other benefits for Executive Directors comprise a car and payment of its operating expenses, or car allowance; private health care; life assurance; and long-term disability insurance.

Clawback

The Committee has introduced clawback provisions to payments made under the annual bonus scheme and the long-term incentive share plan. Clawback would be operable in the event of material misstatement, error in calculation of a performance condition which resulted in overpayment or gross misconduct leading to dismissal.

Service contracts

In accordance with general market practice, it is the Company’s policy that Executive Directors should have contracts with an indefinite term providing for a maximum of one year’s notice. However, it may be necessary occasionally to offer longer initial notice periods to attract new directors, provided that the notice period shall reduce to one year after the initial period.

Service contracts between the Company (or other companies in the Group*) and individuals who served as Executive Directors at any time during the year are summarised below. All were rolling contracts.

Director	Date of service contract	Notice period
J R Atkinson	11 October 1999	12 months
J W G Hind	16 May 2003	12 months
R M Rubright*	8 August 1977 (modified by a memorandum of employment dated 12 May 2003)	12 months
Dr W Sondermann*	12 February 1998 (modified by  memoranda of employment dated 5 March 2004 and 20 December 2011)	12 months

*Mr Rubright’s service contract is with Hayward Baker Inc. Dr Sondermann’s service contract is with Keller Holding GmbH.

In the event of early termination, the Executive Directors’ contracts provide for compensation up to a maximum of basic annual salary plus the fair value of benefits to which they are contractually entitled for the unexpired portion of the notice period. The Company seeks to apply the principle of mitigation in the payment of compensation on the termination of the service agreement of any Executive Director. There are no special provisions for payments to Executive Directors on a change of control.

The Board may allow Executive Directors to accept external appointments; however, in accordance with the Code, the Board will not agree to a full-time executive taking on more than one non-executive directorship, or the chairmanship of any company. None of the Executive Directors held external appointments during 2011.

During the year, £20,000 was paid to Mr M W C Martin, a former Director of the Company, for services provided to Group companies. 

Directors’ shareholdings

The Committee has introduced a formal shareholding requirement for Executive Directors for 2012 and future years. Set out below is the current shareholdings of the Executive Directors as at 31 December 2011 as set against the guidelines that will be effective for 2012 and onwards.

Director	Share ownership  guidelines as a % of salary	*Actual ownership as a % of salary as at 31 December 2011
J R Atkinson	100%	129%
J W G Hind	100%	59%
R M Rubright	100%	74%
Dr W Sondermann	100%	70%

Below Board remuneration

In 2011 there were 89 senior managers who were paid salaries of between £100,000 and £300,000 per annum.

Salary  £000	Number of senior managers
100-150	65
151-200	18
201-250	4
251-300	2

 Salaries are paid in local currencies and at levels determined by market practice in those jurisdictions.

Non-executive Directors

All Non-executive Directors have specific terms of engagement, the dates of which are set out below. For Non-executive Directors appointed before 1 October 2003, the initial appointment period is 12 months and thereafter the appointment is subject to three months’ notice by either party. Subsequent appointments are for an initial three-year period, and thereafter are subject to review by the Nomination Committee, unless terminated by either party on three months’ notice. There are no provisions for compensation payable in the event of early termination.

Director	Date of engagement letter	Unexpired terms (months as at 27 February 2012)
E G F Brown	18 January 2002	Rolling contract (3 months’ notice)
L R Cairnie	8 April 2010	15 months
R A Franklin	17 July 2007 (and 28 July 2009 re. appointment as Chairman)	5 months
C F Girling	11 February 2011	24 months
P J López Jiménez	21 January 2003	Rolling contract (3 months' notice)
D G Savage	1 August 2011	29 months
R T Scholes	8 February 2002	N/A - Retired May 2011

The determination of the Non-executive Directors’ remuneration, including that of the Chairman, has been delegated by the Board to the Executive Directors, who are guided by independent surveys of fees paid to non-executive directors of similar companies. The fees paid to Non-executive Directors in the year, shown on the following page, are inclusive of the additional work performed for the Company in respect of membership of the Board Committees and reflect the time commitment and responsibilities of their roles. Non-executive Directors cannot participate in any of the Company’s short- or long-term incentive arrangements.

The Non-executive Directors fees for 2012 have increased by approximately 3%.

Relative performance

The graph below shows the Company’s performance, measured by TSR, compared with the performance of the FTSE All-Share Index. This index has been selected because it best reflects the Company’s international nature and size. The graph looks at the value, by the end of 2011, of £100 invested in Keller on 31 December 2006 compared with the value of £100 invested in the FTSE All-Share Index.

 

Total Shareholder Return

[INSERT GRAPH HERE]

 

 

 

Audited Information

Directors’ emoluments for the year ended 31 December 2011

REPLACE TABLE

¹ The pension contribution noted above in respect of J R Atkinson is paid as a salary supplement in lieu of a Company pension contribution in 2011 (2010: £123,000) following the closure of the Scheme to future benefit accrual on 31 March 2006.

² Mr Rubright and Dr Sondermann are paid in US dollars and euros respectively. Their basic salaries for 2012 and 2011, expressed in local currency, are shown on page 33.

³ The pre-tax gains arising from the exercise of options on the date of exercise.

A maximum annual cash bonus of 150% of basic annual salary was set for the Executive Directors for the year ended 31 December 2011. The 2011 bonus targets for Mr Atkinson and Mr Hind were linked to the achievement of Group EPS, PBT and average net debt targets (up to 130% of salary); and to personal, strategic objectives (up to 20% of salary). The 2011 bonus targets for Mr Rubright and Dr Sondermann were linked to the achievement of Group EPS and PBT targets (up to 20% of salary); to divisional operating profit and average net debt targets (up to 110% of salary); and to personal, strategic objectives (up to 20% of salary). The baselines for the 2011 Group financial performance targets at which no bonus was payable (as adjusted for actual 2011 exchange rates) were PBT of £41m, EPS of 46p and average net debt of £110m. The financial performance targets attracting maximum bonus are considered commercially sensitive and are not, therefore, disclosed.

*Mr Atkinson waived his entitlement to bonus for 2011 in the sum of £50,436. Bonuses awarded to the other Executive Directors were as shown in the table above.

In March 2011, the Executive Directors were paid bonuses originally awarded in March 2008 (in respect of the 2007 financial year) which had been deferred for a period of three years. Actual payments, which reflected movements in the Company’s share price over the deferral period, were as follows: Mr Atkinson £53,381, Mr Hind £35,160, Mr Rubright £97,866 and Dr Sondermann £72,207.

Directors’ pension rights

Company pension contributions for Directors to defined contribution schemes were as follows:

Director	2011 £000	2010 £000
J W G Hind	54	53
R M Rubright	60	58
Dr W Sondermann	57	55
Total	171	166

The changes during the year in the accrued pension entitlements of Mr Atkinson under the Scheme and of Dr Sondermann under the defined benefit pension arrangements operated by Keller Grundbau GmbH are shown in the table below. The amount shown as accrued pension at the end of the year is that which would be paid annually on retirement, based on service to the end of the year.

Director	Transfer value of accrued benefit at beginning of year £000	Transfer value of accrued benefit at end of year £000	Increase in transfer value during the year less member contributions £000	Accrued pension at end of year £000	(Decrease)/ increase in accrued pension including inflation £000	Increase in accrued pension excluding inflation £000	Transfer value of increase in accrued pension excluding inflation less member contributions £000
J R Atkinson	1,791	2,004	213	98	3	0	0
Dr W Sondermann	85	85	0	5	0	0	3

Directors’ interests in the Performance Share Plan

Director	Awards held at 1 January 2010	Awards granted during the year	Awards exercised during the year	Awards lapsed during the year	Awards held at 31 December 2010	Exercise Price (per exercise)	Date from which exercisable	Expiry date
J R Atkinson
6 March 2008	58,594	–	–	58,594	–	100.0p	06/03/11	05/09/11
5 March 2009	82,495	–	–	–	82,495	100.0p	05/03/12	04/09/12
5 March 2010	62,232	–	–	–	62,232	100.0p	05/03/13	04/09/13
3 March 2011	–	67,936	–	–	67,936	100.0p	03/03/14	02/09/14
J W G Hind
6 March 2008	38,594	–	–	38,594	–	100.0p	06/03/11	05/09/11
5 March 2009	59,356	–	–	–	59,356	100.0p	05/03/12	04/09/12
5 March 2010	44,7766	–	–	–	44,776	100.0p	05/03/13	04/09/13
3 March 2011	–	48,879	–	–	48,879	100.0p	03/03/14	02/09/14
R M Rubright
6 March 2008	41,921	–	–	41,921	–	100.0p	06/03/11	05/09/11
5 March 2009	72,557	–	–	–	72,557	100.0p	05/03/12	04/09/12
5 March 2010	54,734		–	–	54,734	100.0p	05/03/13	04/09/13
3 March 2011		59,463	–	–			03/03/14	02/09/14
Dr W Sondermann
6 March 2008	37,716	–	–	37,716	-	100.0p	06/03/11	05/09/11
5 March 2009	59,124	–	–	–	59,124	100.0p	05/03/12	04/09/12
5 March 2010	50,419		–	–	50,419	100.0p	05/03/13	04/09/13
3 March 2011	–	55,041	–	–	55,041	100.0p	03/03/14	02/09/14

The market value of the shares on the dates of grant were: 6 March 2008: 696.0p; 5 March 2009: 523.0p; 5 March 2010: 655.5p; and 3 March 2011: 610.0p.

The 2008, 2009, 2010 and 2011 awards are subject to two performance conditions linked to EPS and TSR, as detailed on page 34.

In the three-year performance period ended 31 December 2011, EPS growth was negative and the Company’s TSR ranked number 504 out of 550 live companies in the FTSE All-share Index, the TSR comparator group for the 2009 grant. Accordingly, none of the performance share awards granted on 6 March 2009 will be exercisable.

The market value of the shares at 31 December 2011 was 266.5p and the range during the year was 239.25p to 698.5p.

There have been no variations to the terms and conditions or performance criteria for share options or performance share awards granted to Executive Directors during the financial year.

On behalf of the Board

Gerry Brown
Chairman
Remuneration Committee

27 February 2012