Report of the Remuneration Committee

Role and composition of the Remuneration Committee

Responsibility for determining the levels of remuneration of the executive directors has been delegated by the Board to the Remuneration Committee. It is the aim of the Remuneration Committee to ensure that the remuneration policy attracts, retains and motivates the executive directors, and links rewards to corporate and individual performance and enhanced shareholder value.

The principle terms of reference of the Remuneration Committee are:

  • to establish the remuneration policy applicable to the executive directors, including bonuses and other incentive arrangements, to encourage an enhanced performance, and reward individuals for their contribution to the success of the Group;
  • to approve the grant of share options/awards to executive directors;
  • to determine the policy and scope of pension arrangements for the executive directors;
  • to set performance objectives for the Chief Executive and other executive directors;
  • to report to shareholders on the Company’s compliance with the Combined Code, and best practice, in so far as concerns the company's remuneration policies.

The Remuneration Committee consists entirely of non-executive directors.

The Committee invites the Chairman and Chief Executive to attend committee meetings when deemed appropriate.

Policy on remuneration of executive directors

In setting remuneration levels the Remuneration Committee aims to ensure that the executive directors’ remuneration reflects market rates, and takes into consideration the remuneration practices of other Irish and European quoted companies of similar size and scope. It takes independent professional advice in this regard.

The various elements of the remuneration package for executive directors comprise the following:

  • Basic salary and benefits. There was no increase in the basic salaries of the executive directors in 2009. In addition to their basic salary, executive directors’ benefits relate to health insurance premiums and to the use by the executive directors of company cars.
  • Annual bonus. Executive directors receive bonus payments of up to 100% of basic salary based on the attainment of annual performance targets set at the start of each year by the Remuneration Committee, with bonuses paid on a sliding scale if the targets are met. In 2009, the selected performance targets were a combination of Group and divisional profit targets. Russell Shiels and Peter Wilson were awarded bonuses on the basis of divisional profit targets being met, but no other executive director earned any bonus in the year.
  • Pension scheme. The Group operates a defined contribution pension scheme for executive directors. Pension contributions are calculated on basic salary only. Contributions are determined on an individual basis and take into account a number of factors including age, length of service, and number of years to retirement.
  • Share options. Executive directors are entitled to participate in the several Group share option and long-term incentive schemes, details of which are set out below. Participation in the schemes is subject to individual award limits which were approved by shareholders, and comply with IAIM guidelines.

The bonus and share option incentives are designed to provide rewards for achieving objectives that will increase shareholder value. The Remuneration Committee considers that a significant proportion of the executive directors’ total package is linked to corporate and individual performance. The overall packages are reviewed annually by the Remuneration Committee, having regard to personal performance, competitive market practice and comparative information.

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Directors’ remuneration

Executive directors Basic salary
€‘000		 Benefit in kind and
other allowances1
€‘000		 Performance related
bonus
€‘000		 Pension
contributions2
€‘000		 2009
Total
€‘000		 2008
Total
€‘000
Gene M. Murtagh 635 26 - 95 756 756
Dermot Mulvihill3 340 24 - 605 969 851
Russell Shiels4 279 25 220 67 591 504
Peter Wilson4 247 13 148 52 460 344
Noel Crowe 280 16 - 42 338 338
Louis Eperjesi4 & 5 144 16 - 60 220 350

1,925 120 368 920 3,334 3,143
Charge to Consolidated
Income Statement
re share options


207 1,050





3,541 4,193
Non-executive directors 2009 Non-executive fees
€’000		 2008 Non-executive fees
€’000
Eugene Murtagh6 191 191
Brendan Murtagh 70 70
Tony McArdle 70 70
David Byrne 70 70
Brian Hill 70 70
Helen Kirkpatrick 70 70
Danny Kitchen7 58 -
Brian Joyce8 6 70
Eoin McCarthy9 29 70

634 681
  1. Benefits relate to health insurance premiums and the use by directors of company cars
  2. All executive directors participate in defined contribution pension schemes operated by the Group.
  3. The Group made a contribution of €1,417,000 during 2009 to the Group’s occupational pension plan in respect of Dermot Mulvihill, representing accelerated pension contributions up to the date of his retirement at age 62. The proportion charged to the Consolidated Income Statement in respect of this payment for 2009 is €605,000, and the prepayment for 2010 is €406,000, and for 2011 is €406,000. There are claw back arrangements in place should he retire early.
  4. The 2009 salaries and remuneration have been converted to Euro at the following rates USD: 1.3946; STG: 0.8917.
    Russell Shiels’ basic salary was $388,000 (2008: $388,000).
    Peter Wilson’s basic salary was £220,000 (2008: £220,000).
    Louis Eperjesi’s basic salary was £128,333 (2008: £220,000).
  5. Louis Eperjesi resigned as an executive director on 31 July 2009.
    On termination of his employment he also received €298,000 as compensation for loss of office.
  6. Eugene Murtagh also received a contribution to his personal pension scheme of €143,250.
  7. Danny Kitchen was appointed as a non-executive director on 1 March 2009.
  8. Brian Joyce retired as a non-executive director on 30 January 2009.
  9. Eoin McCarthy retired as a non-executive director on 14 May 2009.

Service contracts

No director has a service contract in excess of one year.

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Non-executive directors

The non-executive directors each receive a fee which is is set by the Remuneration Committee on advice from independent professional advisors, and reflects the time commitment involved in the performance of their duties. The non-executive directors do not have service contracts and do not participate in any bonus or share option schemes. The non-executive directors do not receive any pension or other benefits apart from Mr Eugene Murtagh in respect of whom the Company paid a contribution to his personal pension scheme.

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Standard Share Option Scheme

Under the terms of the share option scheme approved by shareholders in May 1998, (the Standard Share Option Scheme), share options were awarded to executive directors and senior management. Since May 2008, no more options can be awarded under the Standard Share Option Scheme, but options awarded before that date can be exercised in accordance with the conditions under which they were granted, up to ten years after the date of grant.

Such options are exercisable only when earnings per share (EPS) growth in the three year period commencing with the accounting period in which the options were granted (or any subsequent period), exceeds the growth in the Irish Consumer Price Index by at least 2% per annum compound. Grants of options under the Standard Share Option Scheme are awarded at the market price of the Company’s shares at the time of the grant. Under the Standard Share Option Scheme, options become exercisable three years after they are granted (at the earliest) and remain exercisable for ten years. The percentage of share capital which can be issued under the scheme and individual grant limits comply with IAIM guidelines. Details of the options granted to the executive directors under the Standard Share Option Scheme are given in the table below.

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Long Term Incentive Plan

The objective of the long-term incentive plan (LTIP), approved by shareholders in May 2001, is to motivate and reward executive directors and senior executives for exceptional performance. Share options granted to an individual under the terms of the LTIP are exercisable only if certain performance criteria are achieved in the three year period commencing with the accounting period in which the options were granted. These conditions are:

  • EPS growth must increase by at least the Irish Consumer Price Index plus 10% per annum compound over the three years; and
  • For 100% of the award to vest, EPS growth must be at or above the 75th percentile compared to a selected peer group of companies. If EPS growth is at the 25th percentile point, 50% of the award will vest, and if EPS growth is between the 25th and 75th percentile point, between 50% and 100% of the award will vest on a sliding scale.

Otherwise the shares do not vest. The percentage of share capital which can be issued under the LTIP and individual grant limits comply with IAIM guidelines.

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Performance Share Plan

The Performance Share Plan (PSP), approved by shareholders in May 2008, rewards the performance of managers and executives based on the overall performance of the Company, thus aligning the interests of management and executive directors with the interests of shareholders. The PSP has replaced the Standard Share Option Scheme which has now expired. Under the terms of the PSP, performance shares are awarded to the executive directors and senior management team. The performance shares will vest only if
certain performance criteria are achieved in the three year period commencing with the accounting period in which the awards are granted. These conditions are:

  • Up to 50% of the award will vest (on a sliding scale) on achievement of average EPS growth of between CPI plus 3.5% and CPI plus 7%;
  • Up to 50% of the award will vest (on a sliding scale) on achievement of total shareholder return (TSR) compared to a selected peer group, where no performance shares vest if performance is at or below the median compared with the selected peer group, and 50% vest if performance is at or above 75th percentile point compared with the selected peer group.
  • A further Exceptional Performance Award (not exceeding 25% of any individual’s total award) can be awarded which only vests (on a sliding scale) if the Company’s TSR ranking is above the 75th percentile point compared with the selected peer group.

The percentage of share capital which can be issued under the PSP and individual grant limits comply with IAIM guidelines.

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Performance graph

Total Shareholder ReturnsThe graph shows the Company's TSR performance against the performance of the ISEQ and the FTSE 250 Indices over the five-year period to 31 December 2009.

Details of share options granted to the directors and secretary under the Standard Share Option Scheme, the Long-Term Incentive Plan and the Performance Share Plan

Director At
31 Dec
2008		 Granted
during
year		 Exercised
or cancelled
during
year		 At
31 Dec
2009		 option price
€Cent		 Average
option price
€Cent		 Earliest
exercise
date		 Latest
expiry
date
Gene M. Murtagh







Standard Share
Option Scheme 		200,000

200,000 565
23/09/2007 23/09/2014
36,195

36,195 1090
05/09/2008 05/09/2015
48,115

48,115 1418
05/09/2009 05/09/2016
93,650

93,650 1900
03/09/2010 03/09/2017
80,000

80,000 810
05/03/2011 05/03/2018
457,960

457,960
1012

Long Term







Incentive Plan 124,052
(23,526)2 100,526 13 13 05/09/2009 05/03/2015
Performance - 20,0001
20,0001 13
27/03/2012 27/03/2019
Share Plan - 128,000
128,000 13
27/03/2012 27/03/2019


148,000
148,000
13

Brendan Murtagh







Standard Share
Option Scheme		 10,097
(10,097)3 - 1090
05/09/2008 05/09/2015
Dermot Mulvihill







Standard Share
Option Scheme		 115,000

115,000 565
23/09/2007 23/09/2014
10,856

10,856 1090
05/09/2008 05/09/2015
29,930

29,930 1418
05/09/2009 05/09/2016
90,000

90,000 1900
03/09/2010 03/09/2017
50,000

50,000 810
05/03/2011 05/03/2018
295,786

295,786
1118

Long Term







Incentive Plan 94,595
(16,415)2 78,180 13 13 05/09/2008 05/03/2015
Performance







Share Plan
82,800
82,800
13 27/03/2012 27/03/2019
Russell Shiels







Standard Share 50,000

50,000 565
23/09/2007 23/09/2014

22,571

22,571 1090
05/09/2008 05/09/2015

15,562

15,562 1418
05/09/2009 05/09/2016

70,000

70,000 1900
03/09/2010 03/09/2017

32,461

32,461 810
05/03/2011 05/03/2018

190,594

190,594
1229

Long Term







Incentive Plan 59,234
(13,338)2 45,896 13 13 05/09/2009 05/03/2015
Performance







Share Plan
64,400
64,400
13 27/03/2012 27/03/2019
Peter Wilson







Standard Share
Option Scheme		 97,014

97,014 565
23/09/2007 23/09/2014
11,884

11,884 1090
05/09/2008 05/09/2015
20,462

20,462 1418
05/09/2009 05/09/2016
70,000

70,000 1900
03/09/2010 03/09/2017
10,742

10,742 810
05/03/2011 05/03/2018
210,102

210,102
1135

Long Term







Incentive Plan 73,992
(12,920)2 61,072
13 05/09/2008 05/03/2015
Performance







Share Plan
64,400
64,400
13 27/03/2012 27/03/2019
Noel Crowe







Standard Share
Option Scheme		 20,000

20,000 135
09/10/2005 09/10/2012
30,000

30,000 330
18/09/2006 18/09/2013
50,000

50,000 565
23/09/2007 23/09/2014
38,192

38,192 1090
05/09/2008 05/09/2015
40,000

40,000 1418
05/09/2009 05/09/2016
37,726

37,726 1900
03/09/2010 03/09/2017
16,199

16,199 810
05/03/2011 05/03/2018
232,117

232,117
965

Long Term







Incentive Plan 78,189
(11,532)2 66,657 13 13 23/09/2007 05/03/2015
Performance







Share Plan
36,800
36,800
13 27/03/2012 27/03/2019
Company secretary
Lorcan Dowd







Standard Share 7,638

7,638 1090
05/09/2008 05/09/2015
Option Scheme 10,000

10,000 1418
05/09/2009 05/09/2016

15,000

15,000 1900
03/09/2010 03/09/2017

15,000

15,000 810
05/03/2011 05/03/2018

47,638

47,638
1326

Long Term







Incentive Plan 12,000

12,000 13 13 03/09/2010 05/03/2015
Performance







Share Plan
27,600
27,600
13 27/03/2012 27/03/2019
  1. Exceptional Performance Award
  2. Cancelled 6 November 2009
  3. Cancelled 31 December 2009

David Byrne S.C.
Chairman, Remuneration Committee