REG - ITV PLC - Annual Report and Accounts 2014 <Origin Href="QuoteRef">ITV.L</Origin> - Part 5
26/03/2015 10:31
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109 4,427 8,399
Ian Griffiths 550 461 14 14 864 713 944 2,150 0 0 138 81 2,510 3,419
1,450 1,302 33 34 2,387 2,116 2,704 4,226 0 3,950 363 190 6,937 11,818
Share awards 2013 - in the 2013 Annual Report and Accounts part of the amount shown was the indicative vesting value of the
2011 PSP awards that were subject to performance conditions measured to 31 December 2013. Consistent with the regulations,
the figures shown in the table above represent the subsequent value received on the vesting date of 10 March 2014 using the
share price on that day (197.2p), an increase of £54,132 in total.
Share awards 2014 - the amount shown is the indicative value of the 2012 PSP awards that were subject to performance
conditions measured to 31 December 2014. The value was calculated using the average share price for the final quarter of
2014 (206.2p). See page 87 for further information.
Further information in relation to each of the elements of remuneration for 2014 set out in the table above is detailed
below. An explanation for 2013 is set out in detail in our 2013 Annual Report and Accounts, which can be found on our
website www.itvplc.com/investors.
Salary
Salaries are paid in line with our Remuneration Policy.
Taxable benefits
The benefits provided to the Executive Directors include the cost of private medical insurance and car-related benefits.
Bonus (cash and shares)
The bonus paid in respect of the financial year includes amounts that will be compulsorily deferred into shares for a three
year period as set out below.
% ofmaximumbonusopportunityearned Valuedeferred intoshares underthe DSA £000 Value paid in cash£000 Total value £000
Adam Crozier 94.0% 508 1,015 1,523
Ian Griffiths 95.2% 288 576 864
Annual incentives are provided to Executive Directors through the bonus, with one-third of any award deferred into shares
under the Deferred Share Award Plan (DSA). The performance conditions that apply to the bonus are set on an individual
basis and are closely linked to the Company's corporate, financial and strategic priorities. This enables the Committee to
reward both annual financial performance delivered for shareholders, and performance against specific financial,
operational or strategic objectives set for each Director, which are closely linked to the strategic priorities of the
business.
When considering performance outcomes the Committee looks beyond formulaic results to ensure the outcomes align with
overall business performance.
The majority of the bonus (60%) was based upon the achievement of corporate and financial targets.
The remainder of the bonus (40%) was based upon the Committee's assessment of the contribution the executive has made to
the overall strategy through the delivery of specific targets. Both Executive Directors had a number of common objectives
aligned to our strategic priorities and particularly relating to international expansion and repositioning of our digital
channels.
During the year, particular achievements, in addition to the delivery of the stretching business plan, related to the
rebalancing of the business by reducing our dependence on UK advertising and driving new revenue streams. This was achieved
particularly in our Online, Pay & Interactive business where revenue was up 30%. We invested in three digital content
businesses and launched two new channels, ITVBe and our first pay channel, ITV Encore. We continued to grow our
international production business both organically and by acquisition, with 24% growth in international production revenue
and the completion of three acquisitions including Leftfield, our biggest to date.
Adam Crozier was also assessed against the success of the relationship between ITV Studios and ITV Broadcast and there was
an increase in ITV Studios' share of ITV output to 60%.
Ian Griffiths was also assessed against the outcome of a comprehensive review of the London property portfolio to ensure
that it remains fit for purpose over the coming decade and, in particular, the establishment of the London Television
Centre pension funding partnership in March 2014.
The Strategic Report sets out more detail of our achievements in the year.
The Committee ensured that the maximum bonus opportunity could only be achieved for significant out performance of all
corporate, financial and individual targets, with on-target performance achieving a 60% payout of the maximum bonus
opportunity.
The table below provides a summary of the performance measures, the level of performance achieved against the targets and
the resulting level of payout.
ITV plc EBITA (before exceptional items) 45% 105.8% 105.8% 100% 100% 1 2 3 4
Profit to cash conversion 10% 108.44% 108.44% 100% 100% 1 2 3 4
Cost savings 5% 128.33% 128.33% 100% 100% 1
Individual targets 40% 85% 88% 85% 88% 1 2 3 4
128.33%
100%
100%
1
Individual targets
40%
85%
88%
85%
88%
1 2 3 4
The Board believes that the bonus performance targets are commercially sensitive information and will remain so until two
years after the end of the financial year, while they are used in the business planning process for subsequent years. The
targets will be disclosed once they are no longer commercially sensitive.
Share awards
We are required to show share awards in the remuneration table on page 86 according to the year in which the performance
period for each performance condition came to an end. 100% of the awards made in 2012 under the PSP were subject to
performance conditions measured to 31 December 2014.
The indicative value of these awards is set out below.
Adam Crozier 1,137,904 710,271 853,428 1,759,769 142.4%
Ian Griffiths 610,396 380,455 457,797 943,977 142.4%
Ian Griffiths
610,396
380,455
457,797
943,977
142.4%
The vesting figures shown in the table above reflect 75% of the total award that met performance conditions on 31 December
2014 and will become exercisable on 28 March 2015.
The share price used to value the shares at 31 December 2014 is the average share price for the final quarter of 2014
(206.2p).
When considering performance outcomes the Committee looks beyond formulaic results to ensure the outcomes align with
overall business performance.
Details of the performance achieved for the 2012 PSP awards are below. A gateway condition of minimum cumulative adjusted
EPS (26.15p) was met before any portion of the award could vest.
Cumulative adjusted EPS 1 50% 26.15p = 30% vesting
28.76p = 100% vesting
Vesting on a straight-line basis between 34.2p 100%
Family SOV 2 25% Maintain 2011 level = 50% vesting
+2% on 2011 level = 100% vesting
Vesting on a proportionate basis between (5.09%) 0%
Total non-NAR growth 3 4 25% 5% growth pa = 30% vesting
10% growth pa = 100% vesting
Vesting on a straight-line basis between 12.94% 100%
10% growth pa = 100% vesting
Vesting on a straight-line basis between
12.94%
100%
Pension
Pension contributions represent a cash allowance in lieu of pension with a value of 25% of base salary for both Executive
Directors. The cash allowance does not form part of the base salary for the purposes of determining incentives.
Non-executive Directors
The table below sets out in a single figure the total remuneration for Non-executive Directors for the financial year.
Notes Fees Taxable Benefits Total
2014£000 2013£000 2014£000 2013£000 2014£000 2013£000
Peter Bazalgette 1 65 35 - - 65 35
Mike Clasper 2 - 96 - - - 96
Roger Faxon 62 61 - - 62 61
Mary Harris 3 27 - - - 27 -
Andy Haste 4 112 81 - - 112 81
Lucy Neville-Rolfe 5 37 64 - - 37 64
Archie Norman 500 500 - - 500 500
John Ormerod 87 86 - - 87 86
890 923 - - 890 923
1. Peter Bazalgette joined the Remuneration Committee on 1 June 2014.
2. Mike Clasper stepped down from the Board on 31 December 2013.
3. Mary Harris was appointed to the Board on 28 July 2014.
4. Andy Haste was appointed as SID on 1 January 2014.
5. Lucy Neville-Rolfe stepped down from the Board on 17 July 2014.
LTIP awards made in 2014
The LTIP was approved by shareholders at the AGM in May 2014. On 30 May 2014 awards were made under the LTIP to both
Executive Directors in the form of nil-cost options, subject to performance over the period to
31 December 2016. 50% of any shares that vest can be exercised from the vesting date, the remaining 50% will be subject
to a one-year holding period as follows:
Adam Crozier 30 May 2014 225 1,103,543 £2,025,000 31.12.16 30.05.17 50%-30.05.17
50%-30.05.18
Ian Griffiths 30 May 2014 225 674,387 £1,237,500 31.12.16 30.05.17 50%-30.05.17
50%-30.05.18
31.12.16
30.05.17
50%-30.05.17
50%-30.05.18
The number of nil-cost options was calculated using the average share price over a three-day period prior to the award date
(183.5p).
The length of holding periods will continue to be phased in over the next two years. For awards made in 2015, 50% of any
shares that vest will be subject to a one year holding period, and 50% to a two year holding period. For awards made in
2016, 100% of any shares that vest will be subject to a two year holding period.
The Committee sets targets for the LTIP taking into account external forecasts, internal budgets, business priorities, and
risks and uncertainties. Targets are set to be appropriately stretching in this context, with maximum performance set at a
level which is considered to be the delivery of exceptional performance.
The awards made in 2014 are subject to performance measures and targets as set out below. Awards will be subject to an
initial cumulative adjusted EPS performance gateway equal to that required for threshold performance (37.1p) before any
portion of the award can vest.
Cumulative adjusted EPS 1 50% 37.1p 42.3p
Family SOV 2 20% 23.05% 23.51%
Total non-NAR growth 3 4 10% 5% growth pa 10% growth pa
International Production revenue 4 10% 5% growth pa 15% growth pa
Online, Pay & Interactive revenue 3 10% 5% growth pa 18% growth pa
Online, Pay & Interactive revenue
3
10%
5% growth pa
18% growth pa
Threshold vesting for all targets is 20%. Vesting between threshold and maximum is on a straight-line basis.
When assessing performance against the Family SOV target, the Committee will also have regard to the health of the main ITV
channel.
Payments to past Directors or for loss of office
No payments were made during the year.
Consideration of Directors' remuneration
The Directors who were members of the Committee when matters relating to the Executive Directors' remuneration for the year
were considered are set out on page 83.
The Committee obtains advice from various sources in order to ensure it makes informed decisions. The Chief Executive and
Group Finance Director are invited to attend Committee meetings as appropriate. No individual is involved in decisions
relating to their own remuneration.
The Group HR Director is the main internal adviser and provides updates on remuneration, employee relations and human
resource issues.
Deloitte acted as the independent adviser on remuneration policy and the external remuneration environment during 2014 and
provided advice on benchmarking, shareholder consultation and new long term incentive arrangements. Total fees for the
advice provided to the Committee during the year amounted to £94,000. During the year Deloitte also provided the Group with
advice on tax, corporate finance, and pensions matters, and acted on a consultancy basis to provide internal audit support
under separate engagement terms.
The Committee has formally reviewed the work undertaken by Deloitte for the Committee and elsewhere in the Company and is
satisfied that the advice they have received has been objective and independent.
Following a review Deloitte stepped down as adviser and FIT Remuneration Consultants were appointed from
28 November 2014. FIT have any other connection with the Company.
Shareholder voting
At the AGM held on 15 May 2014, votes cast by proxy and at the meeting in respect of the Executive Directors' remuneration
were as follows:
Remuneration Policy 2,272,594,109 96.04 93,825,641 3.96 2,366,419,750 366,266,825
Annual Remuneration Report 2,029,807,767 77.48 589,837,862 22.52 2,619,645,629 113,040,089
Long Term Incentive Plan 2,530,024,205 95.11 130,060,452 4.89 2,660,084,657 72,604,427
22.52
2,619,645,629
113,040,089
Long Term Incentive Plan
2,530,024,205
95.11
130,060,452
4.89
2,660,084,657
72,604,427
The Company recognises that a number of shareholders did not support the Annual Remuneration Report and understands that
the main reason for this was the Company making increases to a number of remuneration elements (base salary, long-term
incentives and pension) in the same year. Further information can be found in the Chairman's letter on page 82.
Historic performance
The graph below shows the TSR performance of the Company against the FTSE 100 index over the six year period to 31 December
2014.
Chief Executive remuneration
The table below provides a summary of the total remuneration received by the Chief Executive over the last six years,
including details of the annual bonus payout and long term incentive award vesting level in each year.
2014 Adam Crozier 4,427 94 75
2013 Adam Crozier 8,399 93 87
2012 Adam Crozier 2,915 91 12
2011 Adam Crozier 2,158 88 -
2010 Adam Crozier (for the 8 month period served) 1,350 95 -
2010 John Cresswell (for the 4 month period served) 661 83 -
2009 Michael Grade 2,583 94 -
2009
Michael Grade
2,583
94
-
The long term incentive award vesting percentage relates to the proportion of the award that met performance conditions in
the relevant financial year.
The table below provides details of the percentage change in the base salary, benefits and bonus of the Chief Executive
between 31 December 2013 and 31 December 2014 compared to the average percentage change for other employees.
Notes % change inbase salary % change inbenefits % changein bonuspayment
Chief Executive 1 7.05 (2.37) 8%
All employees 2, 3 5.16 0.24 3.34%
1. Benefits include the cost of medical insurance and car-related benefits. The level of benefits remains the same as for
2013. The percentage decrease in benefits received by the Chief Executive is due to a minor decrease in both the cost of
private healthcare and car related costs.
2. As the majority of employees are based in the UK, overseas employees have not been included.
3. The percentage change in benefits is the average change for all employees (excluding the Chief Executive) with any of
the same benefits as the Chief Executive.
Spend on pay
The table below shows pay for all employees compared to other key financial indicators.
Notes 2014 £m 2013£m % Change
Employee pay 1 239 235 1.6
Ordinary dividend 152 115 32
Special dividend 160 157 2
Employee headcount 2 5,536 5,480 0.01
1. Employee pay is the total remuneration paid to all UK PAYE employees through the main UK payroll. This is shown on a
different basis to last year's report where employee pay consisted of base salary only.
2. Employee headcount is the average number of UK PAYE employees who were paid through the main UK payroll.
Remuneration Policy in 2015
The following provides details of how the Remuneration Policy will be implemented in 2015.
Executive Directors
Salary
Executive Directors' base salaries were increased with effect from 1 January 2015 as follows.
1 January2015 £000 1 January2014 £000 % Change
Adam Crozier 918 900 2%
Ian Griffiths 561 550 2%
In line with the Remuneration Policy, salary increases for Executive Directors followed those of the wider employee
population.
Taxable benefits and pension
These will be provided in line with the Remuneration Policy.
Bonus (cash and shares)
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