Annual Report and Accounts 2009

Remuneration Report


The Remuneration Committee (also referred to in this Report as the ‘Committee‘) has adopted the principles of good governance relating to Directors' remuneration as set out in the 2008 Combined Code on Corporate Governance (the ‘Combined Code‘). This Report has been prepared in accordance with the Companies Act 2006 (the ‘Act‘), The Large and Medium Sized Companies and Group (Accounts and Reports) Regulations 2008 and the Listing Rules of the Financial Services Authority.

It is a requirement that the Company‘s auditors report to shareholders on certain parts of this Report and state whether in their opinion those parts of it have been properly prepared in accordance with the above Regulations. Accordingly, the Report has been divided into separate sections consisting of unaudited and audited information. A resolution to approve this Report will be proposed at the Annual General Meeting of the Company on 29 April 2010. Details of the resolution and its status as an advisory vote are set out on Notice of Meeting and Notes to the Notice of Meeting respectively.

This Report has been prepared by the Remuneration Committee on behalf of the Board.

2009 was a very challenging year for the Company as it sought to renegotiate its financial covenants with various debt providers. This lengthy and complicated process created some degree of uncertainty for the Company and its stakeholders pending the agreement of a revised set of covenants on 30 April 2009. In light of this, the Committee had to ensure that its remuneration policy and practices were appropriate having regard to both the Company‘s circumstances and the need to secure a solid financial platform for the benefit of all stakeholders in order to then be able to focus on delivering value for shareholders over the medium term. Following the agreement of the revised set of financial covenants and the implementation of the subsequent Placing and Open Offer, the Committee embarked on a consultation exercise with its major shareholders and representative bodies on remuneration for its Executive Directors, the outcome of which is included in this Report.

As set out in more detail in this Report, during the year, the Committee made a number of changes to its existing policy in order to reflect the challenging market conditions and these are summarised in brief below:

  • Base salary 2009: no salary increases were implemented for any Executive Director in 2009 (and no increases were made during 2008).The Executive Directors together with the Group Company Secretary and General Counsel have also each elected to waive their increases for 2010;
  • Short Term Incentive Arrangement (‘STIA‘): STIAs for 2009 were capped at 75% of the normal maximum for the Group Chief Executive and the Group Finance Director. The deferral requirement of an element of the STIA into shares in the Company for three years was retained but lowered from 50% to 25% to reflect the reduced STIA potential. In addition, no element of the STIA was based on personal objectives. A clawback mechanism was also introduced on the deferred element of the STIA to be applied in the event of a material misstatement of the Company‘s accounts;
  • Temporary Short Term Synergy Incentive: the purpose of this incentive was, principally, to reward a small number of executives for achieving substantial synergy savings arising out of the 2007 merger between Taylor Woodrow and George Wimpey. Although the Incentive was approved by shareholders as part of the 2007 Remuneration Report it was not implemented for either 2008 or for 2009. The Incentive has now been cancelled without any payment being made to any executive;
  • Non Executive Director Fees: no increase in fees to Non Executive Directors were made during the year (and no increases were made during 2008);
  • Chairman‘s Fees: as reported last year, the Chairman determined that in the light of the prevailing difficult market conditions affecting the Company at that time, his annual fees for 2009 should be reduced from £270,000 per annum to £200,000 per annum; and
  • Long Term Incentive Plan (‘LTIP‘) Awards: following the consultation exercise, the 2009 LTIP awards made to Executive Directors and senior executives have an effective performance period of four years rather than the usual three year period. The level of conditional award made to each participant was reduced by 10% Performance targets were made more challenging to achieve and also made more appropriate to the Company‘s position and the expectations of all shareholders following the completion of the Placing and Open Offer.

Remuneration Report | Part1 | Part2