Directors’ remuneration report
Dear Shareholder
This report provides details of the role of the Remuneration Committee and the work it has undertaken during the year.
It also sets out the remuneration policy for the directors of Severn Trent Plc and discloses the amounts paid to them in the year ended 31 March 2010.
This report is subject to a shareholder vote and has been prepared in accordance with the requirements of the Companies Act 2006, the principles of the Combined Code on Corporate Governance and best practice guidelines.
A resolution to approve the Directors’ remuneration report will be proposed at the AGM.
Remuneration Committee
The Remuneration Committee determines, on behalf of the board, the company’s policy on the remuneration of executive directors and the Chairman of the board. The committee determines the total remuneration packages and contractual terms and conditions for these individuals. The committee is also consulted on the remuneration policy for the next band of senior executive managers. The policy framework for remunerating all senior executive managers is consistent with the approach taken for executive directors.
The committee is comprised exclusively of independent non-executive directors of the company, with the exception of Sir John Egan, the company Chairman, who was independent on his appointment to the board.
The members of the Remuneration Committee are Dr Bernard Bulkin, Sir John Egan, Martin Lamb and me.
| Remuneration Committee attendance in 2009/10 | |
|---|---|
| Richard Davey | 4/4 |
| Dr Bernard Bulkin | 4/4 |
| Sir John Egan | 4/4 |
| Martin Lamb (appointed to Committee 22 January 2010) | 1/1 |
With the exception of Sir John Egan, the committee members have no personal financial interest, other than as shareholders, in the matters to be decided. As stated above, as company Chairman, Sir John Egan’s fees are set by the committee and he is not party to this discussion. In setting performance related remuneration, the committee has regard to the provisions set out in Schedule A to the Combined Code.
Advisers
To ensure that the company’s remuneration practices are market competitive, the committee has access to detailed external research on market data and trends from experienced specialist consultants.
The committee has received material advice from Hewitt New Bridge Street (a trading name of Hewitt Associates Ltd), which has been appointed by the committee for the purpose of providing this advice. Hewitt New Bridge Street, the principal adviser to the committee, has not provided any other services to the company.
The Chief Executive, Tony Wray, and the Human Resources Director, Alec Luhaste, also attended the committee meetings to provide advice and respond to specific questions. Such attendances specifically excluded any matter concerning their own remuneration. The Company Secretary, Fiona Smith, acts as secretary to the committee.
Richard Davey
Chairman of the Remuneration Committee
The Remuneration Committee assists the board by focusing on the activities detailed below, reporting to the board on decisions and actions taken, and making any necessary recommendations:
- the remuneration policy and its application to the CE and executives reporting to the CE;
- the adoption of annual and longer term incentive plans;
- determination of levels of reward to the CE and approval of reward to executives reporting to the CE;
- setting the Chairman’s fee; and
- the communication to shareholders on remuneration policy and the committee’s work on behalf of the board.
The full terms of reference for the committee can be found on the company’s website (www.severntrent.com) and are also available from the Company Secretary.