AGM Information • Apr 25, 2014
AGM Information
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If you are in any doubt as to the action you should take, you are recommended to seek your own independent financial advice from a stockbroker, bank manager, solicitor, accountant, or other financial adviser authorised under the UK Financial Services and Markets Act 2000. If you are outside the UK, you should immediately consult an appropriately authorised independent financial adviser.
If you have sold or otherwise transferred all of your Guinness Peat Group plc shares or CDIs, please send this document, together with the accompanying documents (but not the personalised Form of Proxy), as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee.
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(Incorporated and registered in England & Wales with registered number 00103548)
to be held on Thursday 22 May 2014 at 2:00 p.m. at Buchanan, Level 3, 107 Cheapside, London, EC2V 6DN, UK
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A Form of Proxy for use at the Annual General Meeting is enclosed. To be valid, the Form of Proxy should be completed and returned in accordance with the instructions to the Company's registrar at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ (for UK registered members), Computershare Investor Services Limited, Private Bag 92119, Auckland 1142 (for New Zealand registered members) and Computershare Investor Services Pty Limited, GPO Box 3329, Melbourne VIC 3001 (for Australian registered members) as soon as possible but in any event so as to arrive not later than 2:00 p.m. London time on Tuesday 20 May (for UK registered members), 1:00 a.m. Auckland time on Wednesday 21 May (for New Zealand registered members) and 11:00 p.m. Sydney time on Tuesday 20 May (for Australian registered members).
All references to times in this document are to London, UK time, unless otherwise indicated.
(Registered in England & Wales with registered number 00103548)
78 Pall Mall London SW1Y 5ES
Mike Clasper CBE (Chairman) Mike Allen Ruth Anderson Sir Ron Brierley Rob Campbell Scott Malcolm Blake Nixon Waldemar Szlezak
23 April 2014
Dear Shareholder,
I am pleased to be writing to you with details of our Annual General Meeting ("AGM") which we are holding at 2:00 p.m. on Thursday 22 May 2014 at Buchanan, Level 3, 107 Cheapside, London, EC2V 6DN, UK. The formal notice of AGM is set out on pages 6 to 8 of this document.
If you would like to vote on the resolutions but cannot come to the AGM, you can appoint a proxy to exercise all or any of your rights to attend, vote and speak at the AGM by using one of the methods set out in the notes to the notice of AGM on pages 9 to 12 of this document.
The purpose of this letter is to explain certain elements of the business to be considered at the AGM. Resolutions 1 to 10 and 14 to 16 inclusive will be proposed as ordinary resolutions and Resolutions 11 to 13 inclusive will be proposed as special resolutions.
The directors are required by the UK Companies Act 2006 (the "UK Companies Act") to present to the shareholders of the Company at a general meeting the reports of the directors and auditor, and the audited financial statements of the Company, for the year ended 31 December 2013. The reports of the directors and the audited financial statements have been approved by the directors, and the report of the auditor has been approved by the auditor, and a copy of each of these documents may be found in the 2013 Annual Report, starting at page 32, which was published on 28 March 2014 ("2013 Annual Report").
There are new requirements this year in relation to the content of the directors' remuneration report and the approval of the report, following changes made to the UK Companies Act.
In accordance with the new UK Companies Act provisions, the directors' remuneration report in the 2013 Annual Report contains:
The statement by the Remuneration and Nominations Committee Chair and the annual report on remuneration will, as in the past, be put to an annual advisory shareholder vote by ordinary resolution. The policy part of the Report, which sets out the Company's forward looking policy on directors' remuneration (including the approach to exit payments to directors), is subject to a binding shareholder vote by ordinary resolution at least every three years.
The directors' remuneration report is set out in full in the 2013 Annual Report on pages 40 to 50.
Resolution 2 is the ordinary resolution to approve the directors' remuneration report, other than the part containing the directors' remuneration policy. Resolution 2 is an advisory resolution and does not affect the future remuneration paid to any director.
Resolution 3 is the ordinary resolution to approve the directors' remuneration policy which is set out in the directors' remuneration report in the 2013 Annual Report on pages 40 to 46.
As noted in the directors' remuneration policy on page 40 of the 2013 Annual Report, the directors' remuneration policy will commence on the date of the AGM.
Once the directors' remuneration policy has been approved, all payments by the Company to the directors and any former directors must be made in accordance with the policy (unless a payment has been separately approved by a shareholder resolution). If the Company wishes to change the directors' remuneration policy, it will need to put the revised policy to a shareholder vote again before it can implement the new policy. If the directors' remuneration policy remains unchanged, the UK Companies Act requires the Company to put the policy to shareholders for approval again no later than 31 December 2017.
Resolutions 4 to 7 deal with the election and re-election of the directors.
Pursuant to the Company's Articles of Association, two directors must retire from the board at the AGM this year, although they may offer themselves for re-election.
The Company's Articles of Association require any director who was not appointed or reappointed at either of the last two annual general meetings before this meeting to retire, although they may offer themselves for reappointment. Accordingly, Blake Nixon is retiring and seeking re-election. As only one director falls to retire pursuant to that provision this year, another director must retire (selected from those directors who have been in office longest since their appointment). Accordingly it has been determined that Sir Ron Brierley is retiring and seeking re-election.
The Board confirms that following a formal performance evaluation Blake Nixon and Sir Ron Brierley continue to be effective and to demonstrate commitment to the role.
In addition, the Company's Articles of Association require that any person appointed as a director by the directors must retire and seek re-appointment at the next annual general meeting. Accordingly, Mike Clasper CBE, who was appointed on 20 February 2014, and Ruth Anderson who was appointed on 16 April 2014, are retiring and seeking election.
Biographical details for Mike Clasper CBE, Ruth Anderson, Blake Nixon and Sir Ron Brierley can be found in Appendix 1 on page 13 of this document.
The UK Companies Act requires that an auditor be appointed at each general meeting at which accounts are laid, to hold office until the next such meeting. This Resolution seeks shareholder approval for the reappointment of Deloitte LLP. The Audit, Finance and Risk Committee keeps under review the independence and objectivity of the external auditor, further information on which can be found in the 2013 Annual Report on pages 37 to 39. After considering relevant information, the Audit, Finance and Risk Committee recommended to the board of directors that Deloitte LLP be reappointed.
Resolution 9 gives the directors the authority to determine the remuneration of the auditor for the audit work to be carried out by them in the next financial year. The amount of the remuneration paid to the auditor for the next financial year will be disclosed in the next audited accounts of the Company.
The UK Companies Act provides that the directors are not permitted to allot shares (or other relevant securities such as rights to subscribe for, or convert securities into, ordinary shares) unless they are authorised to do so by the Company's shareholders in general meeting. This Resolution will, if passed, renew the directors' authority (given by shareholders at the AGM in 2013) to allot shares and other relevant securities up to the maximum amount set out in the Resolution, and is consistent with the level commonly proposed by other UK listed companies. The maximum figure of £23,453,888 is equivalent to one third of the current issued share capital (excluding treasury shares) as at 22 April 2014. The authority will expire on 21 August 2015 or at the conclusion of the AGM of the Company in 2015, whichever is the earlier.
There are no current plans to issue new shares except in connection with the employee share option schemes, however passing this Resolution will ensure that the directors continue to have the flexibility to act in the best interests of shareholders, when opportunities arise, by issuing new shares.
This Resolution is to enable the directors to allot shares either for a rights issue or other offer of securities to existing shareholders or (up to the specified amount) for cash without first offering them to existing shareholders exactly in proportion to their existing shareholdings (which would otherwise be required under UK statutory pre-emption rights contained in section 561 of the UK Companies Act). This Resolution, if passed, renews the directors' authority (given by shareholders at the AGM in 2013) to allot shares and other equity securities for cash, in appropriate circumstances, subject to the maximum amount set out in the Resolution, and is consistent with the level commonly proposed by other UK listed companies. The maximum amount is five per cent of the issued share capital (excluding treasury shares) as at 22 April 2014. If passed, this authority will expire on 21 August 2015 or at the conclusion of the AGM of the Company in 2015, whichever is the earlier.
This Resolution gives the Company general authority to buy back its own shares in the market as permitted by the UK Companies Act. The number of shares that could be purchased is 210,944,275 (representing approximately 14.99% of the Company's issued share capital as at 22 April 2014 (the latest practicable date prior to publication of this document)). This resolution also sets minimum and maximum prices in accordance with the UK Listing Rules.
The authority granted pursuant to Resolution 12 will expire on 21 November 2015 or at the conclusion of the AGM of the Company in 2015, whichever is the earlier.
UK companies purchasing their own shares are allowed to hold them in treasury as an alternative to cancelling them. If Resolution 12 is passed at the AGM, and the Company buys back its own shares, it is the Company's current intention to cancel all of the shares it may purchase pursuant to the authority granted to it.
The Board is focussed on achieving a strategy which will involve capital management initiatives as the Group's cash flows, continuing obligations to the Group's on-going pension schemes and liabilities permit. Any decision on further distributions to shareholders continues to be deferred while the UK Pensions Regulator's investigation is on-going, however passing this resolution allows the directors the flexibility to act in the best interests of shareholders when opportunities arise. This may result in an exercise of the authority to purchase the Company's ordinary shares if the Board considers this to be in the best interests of the shareholders as a whole.
The total number of options that are outstanding under the GPG Group share option schemes are 84,002,869 as at the close of business on 22 April 2014 (being the latest practicable date prior to the publication of this document). These options equate to 5.97 per cent of the issued share capital of the Company.
If the authority to purchase on market pursuant to Resolution 12 were to be exercised by the Company in full, these options would then represent 7.02 per cent of the issued share capital of the Company.
Under the EU Shareholder Rights Directive, the Company must give at least 21 clear days' notice of any general meeting, but is permitted to call meetings other than the annual general meeting on at least 14 clear days' notice if it obtains annual shareholder approval and it offers a facility for shareholders to vote by electronic means. The directors are therefore proposing Resolution 13 as a special resolution to approve 14 clear days as the minimum period of notice for all general meetings of the Company other than AGMs. The approval will be effective until the Company's next AGM, when it is proposed that the approval be renewed.
As explained in the Company's directors' remuneration policy, the Remuneration and Nominations Committee has determined that it is appropriate to seek shareholder approval for the implementation of a long term incentive plan, a deferred annual bonus plan and a share incentive plan.
A summary of the LTIP, the DABP and the SIP rules is set out in Appendix 2 to this document on pages 14 to 19.
The LTIP, the DABP and the SIP rules are available for inspection during normal business hours (Saturdays, Sundays and public holidays excepted) at 78 Pall Mall, London SW1Y 5ES up until the close of the AGM. The LTIP, DABP and the SIP rules will also be available at the place of the Meeting from 1:45 p.m. on the afternoon of the AGM until its conclusion.
The Board considers the Resolutions will promote the success of the Company and are in the best interests of the Company and its shareholders as a whole. The Directors unanimously recommend that you vote in favour of the Resolutions as they intend to do in respect of their own holdings which amount in aggregate to 41,859,214 shares representing approximately 2.97 per cent of the existing issued ordinary share capital of the Company (excluding treasury shares).
Voting on all resolutions at the AGM will be by way of a show of hands. An audio recording of the AGM will be accessible on the Company's website shortly following the conclusion of the AGM.
Shareholders wishing to contact the Board with questions prior to the AGM should do so via their normal channels or alternatively at the following address: The Company Secretary, Guinness Peat Group plc, 78 Pall Mall, London SW1Y 5ES or email via [email protected] which may only be used for this purpose (see Note 16 on page 11).
Yours sincerely
Mike Clasper CBE Chairman Guinness Peat Group plc
NOTICE IS HEREBY GIVEN that the 2014 Annual General Meeting of Guinness Peat Group plc ("the Company") will be held on Thursday 22 May 2014 at Buchanan, Level 3, 107 Cheapside, London, EC2V 6DN, UK at 2:00 p.m. to consider and, if thought fit, to pass the following Resolutions of which Resolutions 1 to 10 and 14 to 16 inclusive will be proposed as ordinary resolutions and Resolutions 11 to 13 will be proposed as special resolutions:
To receive the directors' reports, auditor's report and the financial statements as set out in the 2013 annual report and accounts for the year ended 31 December 2013 ("2013 Annual Report").
To approve the directors' remuneration report, other than the part containing the directors' remuneration policy, in the form set out in the Company's 2013 Annual Report.
To approve the directors' remuneration policy in the form set out in the directors' remuneration report in the Company's 2013 Annual Report.
To re-elect Blake Nixon as a director.
To re-elect Sir Ron Brierley as a director.
To elect Mike Clasper CBE as a director.
To elect Ruth Anderson as a director.
To re-appoint Deloitte LLP as auditor of the Company, to hold office until the conclusion of the next general meeting at which accounts are laid before the Company.
To authorise the directors to fix the remuneration of the auditor.
That the directors be and they are hereby generally and unconditionally authorised pursuant to section 551 of the UK Companies Act 2006 to exercise all powers of the Company to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company ("Rights") up to an aggregate nominal amount of £23,453,888 provided that this authority shall expire (unless previously varied as to duration, revoked or renewed by the Company in general meeting) on 21 August 2015 or at the conclusion of the AGM of the Company in 2015, whichever is the earlier, save that the Company shall be entitled to make offers or agreements before the expiry of such authority which would or might require shares to be allotted or Rights to be granted after such expiry and the directors shall be entitled to allot shares and grant Rights pursuant to any such offer or agreement as if this authority had not expired; and all unexercised authorities previously granted to the directors to allot shares and grant Rights be and are hereby revoked.
That the directors be and they are hereby empowered pursuant to sections 570 and 573 of the UK Companies Act 2006 to allot equity securities (as defined in section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 above, and/or to sell equity securities held as treasury shares for cash pursuant to section 727 of the UK Companies Act 2006, in each case as if section 561 of that Act did not apply to any such allotment or sale, provided that this power shall be limited to:
And such power, unless renewed or otherwise varied by the Company in general meeting, shall expire upon the expiry of the general authority conferred by Resolution 10 above, save that the Company may make an offer or agreement before this power has expired, which would or might require equity securities to be allotted or equity securities held as treasury shares to be sold after such expiry and the directors may allot equity securities and/or sell equity securities held as treasury shares pursuant to any such offer or agreement as if the authority conferred hereby had not expired. Any earlier power of the directors to allot equity securities as aforesaid be and is hereby revoked.
That the Company be and is hereby generally and unconditionally authorised to make market purchases (within the meaning of section 693(4) of the UK Companies Act 2006) of its own ordinary shares of 5 pence each in the capital of the Company on such terms and in such manner as the directors may from time to time determine, provided that:
That a general meeting, other than an annual general meeting, may be called on not less than 14 clear days' notice.
That:
That:
78 Pall Mall London SW1Y 5ES Registered Number 00103548
REGISTERED OFFICE BY ORDER OF THE BOARD
Chris Healy Company Secretary 23 April 2014
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Mike Clasper is currently Chairman of GPG and its subsidiary Coats plc. He is a Non-Executive Director at Serco Group plc, Chairman of Which? Ltd. and was, until recently, Senior Independent Non-Executive Director of ITV plc. He has served as Chief Executive Officer of BAA plc, Chairman of HM Revenue & Customs, Operational Managing Director at Terra Firma, and held a number of senior management positions at Procter & Gamble.
Ruth Anderson is currently Non-Executive Director and Chair of the Audit Committee at both Ocado Group plc and Travis Perkins plc and sits on the Board of GPG's subsidiary Coats plc. Ruth is a chartered accountant and has spent much of her career at KPMG LLP where she was a member of the UK board for the six years to 2004 and vice chairman for the five years to 2009.
Sir Ron Brierley founded Brierley Investments Ltd in 1961. He was appointed to the Board of Guinness Peat Group plc in March 1990 and continued to apply and develop his established approach within the Company. On 9 December 2010 he retired as Chairman of the Company but remains on the Board as a Non-Executive Director.
Blake Nixon has wide corporate experience in the UK and elsewhere. He is a founding partner of Worsley Associates LLP, an activist fund manager. On 30 June 2011 Blake ceased to be an executive director of GPG plc and became a Non-Executive Director of GPG plc on 1 July 2011.
Awards will be granted, and the LTIP will be administered, by the Board, or a duly authorised committee of the Board. Awards for Executive Directors will be determined and administered by the Remuneration Committee (and references to the Board shall mean the Remuneration Committee in respect of such awards).
Awards under the LTIP ("LTIP Awards") may be granted to employees of the Company or its subsidiaries including Executive Directors (the "Participants").
LTIP Awards are granted subject to performance conditions set by the Board prior to the award date. In the normal course, LTIP Awards vest on the third anniversary of the award date, to the extent the performance conditions have been satisfied. Nothing is payable by a Participant for the grant of an Award.
LTIP Awards will take the form of either:
Participants may receive an additional payment (or Shares of equivalent value) equal to the dividends during the vesting period which would have been paid on the number of Shares that vest.
The maximum market value of the Shares over which a Participant may be granted an LTIP Award in any financial year shall not exceed an amount equal to 150 per cent of the Participant's gross annual basic salary at that time. In exceptional circumstances, this limit may be increased to 250 per cent at the discretion of the Board.
The Board will determine the performance conditions which will apply to the LTIP Awards and which will be measured, ordinarily, over a period of not less than three years (or such shorter period as the Board may determine to be appropriate on the recruitment of an employee). The performance condition proposed for any awards to any future Executive Directors will be set out in the annual report on directors' remuneration.
The Board will be able to reduce vesting levels if it determines the result of the performance conditions do not accurately reflect the financial health of the Company. There will be no provision for re-testing. The Board may alter the performance conditions if events happen after the date of grant that cause the Board to consider that any element of the performance condition is no longer a fair measure of the Company's performance, provided that the revised condition is not considered to be materially less challenging in the circumstances.
An LTIP Award will normally only vest three years after the award date (or such earlier date as the Board may determine to be appropriate in respect of any award granted on the recruitment of an employee), while the Participant remains in office or employment with the Group, and to the extent that the relevant performance conditions have been met.
If the Board so determines, an LTIP Award may be satisfied in whole or in part by a cash payment as an alternative to the issue or transfer of Shares.
An LTIP Award will normally lapse where a Participant ceases to hold office or employment with the Group. However, LTIP Awards will not lapse on death or where the cessation of office or employment with the Group is due to injury, disability, ill-health, redundancy, retirement, the transfer of the Participant's employment out of the Group in connection with a business sale, the employing company with which the Participant holds office or employment ceasing to be a member of the Group, or any other reason if the Board so determines (each being a ''Good Leaver'').
Where a Participant ceases employment for a Good Leaver reason, the LTIP Award will continue and vest on its normal vesting date. However, the Board may determine that the LTIP Award will instead vest on or at any time following the date of cessation. On the death of a Participant, an LTIP Award shall immediately vest. Where a Participant ceases employment for a Good Leaver reason or by reason of death, an LTIP Award in the form of an Option will be exercisable during a period of six months from the date it vests (or such longer period as the Board may permit) or 12 months in the case of death.
In the event of a change of control, LTIP Awards will normally vest and Options may be exercised for a period of six months. In the event of the passing of a resolution for the voluntary winding-up of the Company, Awards will vest and Options will be exercisable for a period of two months. In the event of a demerger of a substantial part of the Group's business, a special dividend or a similar event affecting the value of the Shares to a material extent, LTIP Awards may be adjusted as set out below or the Board may allow Awards to vest, in which case Options may be exercised for a period of two months, or such longer period as the Board may permit. Where the corporate action forms part of an internal re-organisation, unless the Board determines otherwise, an LTIP Award shall not vest, and instead will be rolled-over into an award over shares in the new controlling company of equivalent value.
LTIP Awards will only vest (including for leavers or on a corporate action) to the extent that the relevant performance condition has been satisfied. Where an LTIP Award vests prior to the normal vesting date, the Board will assess performance using such information as it determines to be appropriate.
Where, prior to the normal vesting date, a Participant ceases employment for a Good Leaver reason or there is a corporate action, the number of Shares in respect of which an LTIP Award vests will, unless the Board determines otherwise, be pro-rated on the basis of the number of whole months which have elapsed from the award date to the date of cessation or the corporate action (as applicable).
Awards will be granted, and the DABP will be administered, by the Board, or a duly authorised committee of the Board. Awards for Executive Directors will be determined and administered by the Remuneration Committee (and references to the Board shall mean the Remuneration Committee in respect of such awards).
Awards under the DABP ("DABP Awards") may be granted to employees of the Company or its subsidiaries including Executive Directors (the "Participants").
For DABP Awards, the Board shall specify a proportion of the Participant's annual bonus that shall be subject to compulsory deferral. The Participant shall then be granted a DABP Award over such number of ordinary shares in the Company ("Shares") as have an aggregate market value equal to the amount of the Participant's annual bonus that is deferred. Nothing is payable by a Participant for the grant of an Award.
In the normal course, DABP Awards vest on the third anniversary of the award date. DABP Awards are not subject to further performance conditions, because they are granted in lieu of a portion of the Participant's previously earned annual bonus.
DABP Awards will take the form of either:
Participants may receive an additional payment (or Shares of equivalent value) equal to the dividends during the vesting period which would have been paid on the number of Shares that vest. Where a DABP Award is granted in the form of a Forfeitable Share Award, the Participant shall be entitled to receive any dividends paid on Shares.
A DABP Award will normally only vest three years after the date of grant, while the Participant remains in office or employment with the Group. If the Board so determines, a DABP Award may be satisfied in whole or in part by a cash payment as an alternative to the issue or transfer of Shares.
DABP Awards, which represent previously earned annual bonus, shall lapse on the Participant being dismissed for personal misconduct. Where the Participant ceases to hold office or employment, or gives or receives notice in any other circumstances, DABP Awards shall not lapse, and will normally continue to vest on the normal vesting date, unless the Board accelerates vesting to the date of cessation. On the death of a Participant, a DABP Award shall immediately vest. Where a Participant ceases employment in circumstances in which the DABP Award does not lapse and the award is in the form of an Option, it will be exercisable during a period of six months from the date it vests (or such longer period as the Board may permit) or 12 months in the case of death.
In the event of a change of control, Awards will normally vest and Options may be exercised for a period of six months. In the event of the passing of a resolution for the voluntary winding-up of the Company, Awards will vest and Options will be exercisable for a period of two months. In the event of a demerger of a substantial part of the Group's business, a special dividend or a similar event affecting the value of the Shares to a material extent, Awards may be adjusted as set out below or the Board may allow Awards to vest, in which case Options may be exercised for a period of two months, or such longer period as the Board may permit. Where the corporate action forms part of an internal re-organisation, unless the Board determines otherwise, an Award shall not vest, and instead will be rolled-over into an award over shares in the new controlling company of equivalent value.
The SIP is a UK tax-advantaged all-employee plan governed by relevant statutory provisions.
The SIP will be administered by the Board, or a duly authorised committee of the Board. Shares acquired under the SIP are held within a UK trust required to be established by the relevant legislation.
The SIP will be open to all employees of the Company, and any of its subsidiaries which the Board selects for participation, who meet the eligibility criteria. All eligible employees who are chargeable to income tax as a UK resident must be invited to participate. Other employees may be invited to participate.
The SIP provides for awards to be made in one or more of the following ways:
If dividends are declared in respect of any Shares held in the SIP trust, the Board may allow or require those dividends to be re-invested on behalf of the employee in the acquisition of further Shares ("Dividend Shares").
Free Shares and Matching Shares awarded under the SIP must be held in the SIP trust for a holding period specified by the Board of between three and five years. The holding period will end if the employee ceases to be employed by the Company or an associated company. Dividend Shares must remain in the SIP trust for a holding period of three years unless the participant ceases to be employed by the Company or an associated company. Partnership Shares may also be subject to a holding period if determined by the Board.
Shares in the SIP trust may be subject to such other restrictions as may be imposed by the Board, including forfeiture restrictions.
Participants in the SIP will have the same rights in the event of a change of control of the Company as other shareholders. To the extent that shares in the acquiring company are received, subject to certain statutory requirements, such shares may continue to be held in the SIP trust and receive tax benefits. In other circumstances, shares will cease to be subject to the SIP although restrictions, including forfeiture provisions, may apply.
LTIP Awards may only be granted within a period of 42 days following the date of announcement by the Company of its interim or final results (or as soon as practicable thereafter if the Company is restricted from being able to grant LTIP Awards during such period).
DABP Awards under the DABP will normally be granted as soon as reasonably practicable following the determination of the annual bonus.
Award under the LTIP or DABP may be granted at other times if the Board determines that exceptional circumstances exist which justify the grant of an Award.
Awards under the LTIP and DABP may not be granted more than ten years after approval by the Company's shareholders in general meeting.
Shares may be newly issued, transferred from treasury or market purchased for the purposes of the Plans.
The number of Shares subject to outstanding options or awards granted within the previous 10 years and the number of Shares issued for the purpose of options and awards granted within the previous 10 years shall not exceed 10 per cent of the Company's ordinary share capital in issue immediately prior to the proposed date of grant under all employees' share schemes adopted by the Company.
This limit does not include rights to Shares which have been released, lapsed or otherwise become incapable of exercise or vesting. Any option or award which the Board has determined will only be satisfied with existing Shares (or which is granted on such terms), will not be subject to or counted in calculating the above limit. Treasury shares will count as new issue shares for the purpose of this limit for so long as institutional investor bodies consider that they should be so counted.
Awards are non-transferable (other than to a Participant's personal representatives following his or her death) and do not form part of pensionable earnings.
The number of Shares subject to Options and Awards granted under the LTIP and DABP may be adjusted, in such manner as the Board may determine, following any variation of share capital of the Company or a demerger of a substantial part of the Group's business, a special dividend or a similar event affecting the value of Shares to a material extent.
The Board may apply clawback under the LTIP and DABP where at any time before or within three years of vesting if it determines that the financial results of the Company were misstated (including in assessing the amount of any bonus by reference to which the number of Shares subject to a DABP Award was calculated), an error was made in any calculation or in assessing performance (where applicable), which resulted in the number of Shares in respect of which the Option or Award was granted or vested being more than it should have been. The Board may also apply a clawback where the Participant has been dismissed for misconduct.
A clawback may be satisfied in a number of ways, including by reducing the amount of any future bonus, by reducing the vesting of any subsisting or future options or awards (other than taxadvantaged options or awards), by reducing the number of Shares under any vested but unexercised Option and/or by either one or both of a requirement to make a cash payment or transfer of shares to the Company.
The clawback provisions will not apply following the occurrence of a takeover or similar corporate event.
The Board may amend the rules of the Plans as it considers appropriate, subject to any relevant legislation, provided that no modification may be made which confers any additional advantage on participants relating to eligibility, plan limits, the basis of individual entitlement, the price payable for the acquisition of Shares and the provisions for the adjustment of options and awards without prior shareholder approval, except in relation to performance conditions or minor amendments to benefit the administration of such plans, to take account of a change in legislation, or to obtain or maintain favourable tax, exchange control or regulatory treatment for participants or the Company (or other Group companies).
The Plans contain provisions which permit the Board to establish further plans for the benefit of overseas employees based on the relevant rules of the Plans but modified as necessary or desirable to take account of overseas tax, exchange control or securities laws. Any new Shares issued under such further plans would count towards the individual (where applicable) and overall plan limit outlined above.
The Company may establish an employee benefit trust, to operate in conjunction with the LTIP and/or DABP and otherwise to benefit employees and former employees of the Company and its subsidiaries.
The Company and its subsidiaries may fund the EBT by loan or gift to acquire Shares by market purchase, by subscription or from treasury. Any Shares issued to the EBT (where the trust does not acquire Shares by market purchase) will be treated as counting against the plan limit contained in the rules of the Plans.
The EBT will be constituted by a trust deed between the Company and an offshore independent professional trustee. The power to appoint and remove the trustee rests with the Company. The EBT will not, without prior shareholder approval, be able to make an acquisition of Shares where it would then hold more than 5 per cent of the Company's issued share capital from time to time.
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