Annual Report and Accounts 2014

 

Remuneration Report

remuneration pic

The Remuneration Committee comprises three independent non-executive Directors, Leslie Van de Walle (Chairman), Róisín Brennan and David Byrne, and the Chairman of the Board, Michael Buckley. The members of the Committee have significant financial and business experience, including in the area of executive remuneration. Further biographical details regarding the members of the Remuneration Committee are set out on this page.

Introduction

Dear Shareholder,

As Chairman of DCC’s Remuneration Committee, I am pleased to present the Remuneration Report for the year ended 31 March 2014 which has been prepared by the Committee and approved by the Board.

Our remuneration policy seeks to incentivise executive Directors and other senior Group executives to create shareholder value and consequently their remuneration is weighted towards performance related elements with targets incentivising delivery of strategy over the short and long term.

DCC achieved another strong result in the year to 31 March 2014, with operating profit growth in each of the five divisions and overall Group operating profit 11.5% ahead of the prior year. Adjusted earnings per share grew by 11.7% and it is proposed that the dividend for the year will be increased by 10%. Return on capital employed increased to 16.2% from 15.6% in the prior year, substantially ahead of the Group’s cost of capital.

DCC has generated a total shareholder return of 266.2% in the last five years and 452.9% over the last ten years as demonstrated in the charts below.

The charts above show the growth of a hypothetical €100 holding in DCC plc shares since 1 April 2009 and 1 April 2004 respectively, relative to the FTSE 350 index.

Bonuses

The bonuses earned by the executive Directors in respect of the year ended 31 March 2014 are set out at this page and they primarily reflect the growth of 11.7% in Group adjusted earnings per share in the year and achievement of a range of developmental and personal objectives.

Vesting of Long Term Incentives

In December 2013, the Remuneration Committee determined that 42.4% of the share options granted in August 2010 under the DCC plc Long Term Incentive Plan 2009 (‘LTIP’) had vested, based on performance under the TSR and EPS conditions (this compares to the estimated vesting of 50% included in last year’s Report). Further details on this vesting are set out on this page.

The extent of vesting of the share options granted in November 2011 will be determined by the Remuneration Committee in December 2014. It is currently estimated that 59.3% of the share options granted will vest.

Further details in relation to the LTIP are set out on this page. Awards made to executive Directors under the LTIP in November 2013 are set out on this page.

Remuneration Review

Over the past year, the Committee has carried out a detailed review of the remuneration structures in place in DCC, with particular reference to the existing LTIP.

The principal objectives of the LTIP are to support the continued delivery of long term sustainable value to shareholders and to attract, retain and motivate key individual executives by rewarding them in a fair and balanced way for the successful implementation of strategy. Our review involved consideration of two key matters:

  • the effectiveness of the LTIP, as at present structured, in meeting its objectives and specifically whether the growth in shareholder value achieved was being properly reflected in the reward to executives; and
  • a comparison of our remuneration structures and outcomes, in particular our LTIP and short term incentive plans, with market practice.

The principal changes proposed to the LTIP relate to the quantum of awards, the performance conditions, the vesting period and threshold vesting levels.

A letter setting out the background to and details of the proposed changes to the LTIP was sent, on behalf of the Committee, to the Company’s major shareholders (representing over 33% of the issued share capital), to the Association of British Insurers and to various proxy voting agencies. The Chairman of the Board, Michael Buckley, and I subsequently engaged with these shareholders and with a number of the organisations to hear their views on the proposed changes. This engagement was constructive and helpful to the Committee. The feedback received from shareholders and the organisations was taken into account in formulating the final proposals, which are set out in detail on this page and are subject to the approval of all shareholders at the 2014 Annual General Meeting.

Format of Report and Shareholder Votes

In last year’s report, I commented on the introduction by the UK Department of Business, Innovation and Skills of draft reporting regulations for directors’ remuneration and noted that we had incorporated a number of these draft regulations into our Remuneration Report, on the basis that they represented best practice. In October 2013, the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 (the ‘UK Regulations’) came into effect in the UK. While DCC, as an Irish incorporated company, is not subject to these regulatory requirements, we are conscious of the need for our reporting to reflect best practice, in particular given our listing on the London Stock Exchange, and have sought to substantially apply the UK Regulations to this report on a voluntary basis.

As DCC is voluntarily adopting the UK Regulations, the votes at the 2014 Annual General Meeting on the Remuneration Policy (this page) and on the Annual Report on Remuneration (pages 98 to 108) will be on an advisory rather than on a binding basis. While the votes will not be binding, they continue our practice of giving our shareholders a 'say on pay'.It is our intention to operate in line with the approved Policy. We welcome and will consider any shareholder feedback on our Remuneration Policy and Annual Report on Remuneration.

Conclusion

I am satisfied that the Committee has implemented the Group’s existing remuneration policy in the year ended 31 March 2014 in a manner that properly reflects the performance of the Group in the year.

I believe that the changes proposed to the LTIP will better align our remuneration policy with the Group’s strategic objectives and also reflect best practice. They take appropriate account of the views of the major shareholders consulted and I would recommend all shareholders to vote in favour of their adoption at the 2014 Annual General Meeting.

The responsibilities of the Remuneration Committee are summarised in the table below and are set out in full in its Terms of Reference, which are available on the DCC website www.dcc.ie under Investor Relations/Corporate Governance.

On behalf of the Remuneration Committee

Leslie Van de Walle

Chairman, Remuneration Committee

20 May 2014

 

Role and Responsibilities

  • To determine and agree with the Board the policy for the remuneration of the Chief Executive, other executive Directors and certain Group senior executives (as determined by the Committee).
  • To determine the remuneration packages of the Chairman, Chief Executive, other executive Directors and senior executives, including salary, bonuses, pension rights and compensation payments.
  • To oversee remuneration structures for other Group and subsidiary senior management and to oversee any major changes in employee benefits structures throughout the Group.
  • To nominate executives for inclusion in the Company’s long term incentive schemes, to grant options or awards under these schemes, to determine whether the criteria for the vesting of options or awards have been met and to make any necessary amendments to the rules of these schemes.
  • To ensure that contractual terms on termination or redundancy, and any payments made, are fair to the individual and the Company.
  • To be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the Committee.
  • To obtain reliable, up to date information about remuneration in other companies of comparable scale and complexity.
  • To agree the policy for authorising claims for expenses from the Directors.

Remuneration Policy Report

DCC’s Remuneration Policy ('the Policy') is set out below. As an Irish incorporated company, DCC is not required to comply with the UK legislation which requires UK companies to submit their remuneration policies to a binding shareholder vote. However, we are conscious of the need for our remuneration policies, practices and reporting to reflect best corporate governance practice and therefore it is intended to submit this Policy to an advisory, non-binding vote at the 2014 Annual General Meeting.

The Company intends to operate its remuneration arrangements in line with the Remuneration Policy, which will take effect from the date of the 2014 Annual General Meeting and is subject to the approval by shareholders of the proposed changes to the DCC plc Long Term Incentive Plan 2009 ('LTIP'), which are incorporated in the Remuneration Policy.

The Policy is designed and managed to support a high performance and entrepreneurial culture, taking into account competitive market positioning.

The Board seeks to align the interests of executive Directors and other senior Group executives with those of shareholders, within the framework set out in the UK Corporate Governance Code. Central to this policy is the Group’s belief in long-term, performance based incentivisation and the encouragement of share ownership.

The basic policy objective is to have overall remuneration reflect performance and contribution, while having basic pay rates and the short term element of incentive payments at the median of a market capitalisation comparator group.

The Remuneration Committee seeks to ensure:

  • that the Group will attract, motivate and retain individuals of the highest calibre;
  • that executives are rewarded in a fair and balanced way for their individual and team contribution to the Group’s performance;
  • that executives receive a level of remuneration that is appropriate to their scale of responsibility and individual performance;
  • that the overall approach to remuneration has regard to the sectors and geographies within which the Group operates and the markets from which it draws its executives; and
  • that risk is properly considered in setting remuneration policy and in determining remuneration packages.

DCC’s strategy of fostering entrepreneurship requires well designed incentive plans that reward the creation of shareholder value through organic and acquisitive growth while maintaining high returns on capital employed, strong cash generation and a focus on good risk management. The typical elements of the remuneration package for executive Directors and other senior Group executives are base pay, pension and other benefits, annual performance related bonuses and participation in long term performance plans which promote the creation of sustainable shareholder value.

The Remuneration Committee takes external advice from remuneration consultants on market practice to ensure that remuneration structures continue to support the key remuneration policy objectives.

The primary comparator group for benchmarking is a group of 60 FTSE companies, 30 of whom have market capitalisations just below DCC’s and 30 of whom have market capitalisations just above DCC’s (‘the market capitalisation comparator group’).

The Remuneration Committee also considers it useful to use a set of other comparators as secondary references to ensure rigorous and comprehensive benchmarking, being the FTSE 250 and a group of Irish listed industrial companies which can be taken to be broadly comparable to DCC.

Key elements of pay of executive Directors and other senior Group management under the proposed Policy are set out in the table below:

 

Table+-

Element and
link to strategy

Operation

Maximum Opportunity

Base Salary

 

 

Attract and retain skilled and experienced senior executives.

Base salaries are reviewed annually on 1 April.

The factors taken into account include:
- Role and experience

- Company performance
- Personal performance

- Competitive market practice

- Benchmarking, principally against the ‘market capitalisation comparator group’.

 

When setting pay policy, account is taken of movements in pay generally across the Group.

No prescribed maximum base salary or maximum annual increase.

General intention that any increases will be in line with the general increase across the Group.

Increases may be higher in certain circumstances such as changes in role and responsibility or significant changes in market practice.

Benefits

 

 

To provide market competitive benefits.

Benefits include the use of a company car, life/disability cover, club subscriptions or cash equivalent.

 

No maximum level has been set as payments depend on individual Director circumstances.

Annual Bonus

 

 

To reward the achievement of annual performance targets.

Bonus payments to executive Directors and other senior Group executives are based upon meeting pre-determined targets for a number of key measures, including Group earnings and divisional operating profit and overall contribution and attainment of personal objectives. The contribution and personal targets are focussed on areas such as delivery on strategy, organisational development, risk management and talent development/succession planning.

The measures, their weighting and the targets are reviewed on an annual basis.

The current measures for the executive Directors, and their weighting, are set out on this page. The targets are considered commercially confidential and will not be disclosed on a prospective basis, but may be disclosed retrospectively.

In regard to Mr. Breen, any actual bonus earned in excess of 100% of salary, once the appropriate tax and social security deductions have been made, will be invested in DCC shares which will be made available to him after three years, or on his employment terminating if earlier, together with accrued dividends.

Bonus levels are determined by the Committee after the year end based on actual performance achieved. The Committee can apply appropriate discretion in specific circumstances in respect of determining the bonuses to be awarded. In particular, the Committee has the discretion to reduce bonuses in the event that a predetermined target return on capital employed is not achieved.

A formal clawback policy is in place for the executive Directors and other senior Group, divisional and subsidiary management, under which bonuses are subject to clawback for a period of three years in the event of a material restatement of financial statements or other specified events. Further details on clawback policy are set out on this page.

The Committee has discretion in relation to bonus payments to joiners and leavers.

The maximum bonus potential, as a percentage of base salary, for the executive Directors is as follows:

Executive Director

% of Base Salary

Tommy Breen

120%

Donal Murphy

100%

Fergal O’Dwyer

100%

The maximum bonus potential, as a percentage of base salary, for other senior Group executives ranges between 40% and 60% of base salary.

Long Term Incentive Plan (‘LTIP’) – reflects changes which are subject to approval by shareholders at the 2014 AGM

To align the interests of executives with those of the Group’s shareholders and to reflect the Group’s culture of long term performance based incentivisation.

The LTIP provides for the Remuneration Committee to grant nominal cost options to acquire shares to Group employees, including executive Directors.

The vesting period is normally 5 years from the date of grant, with the extent of vesting being determined over the first 3 years, based on the performance conditions set out below.

In addition to the detailed performance conditions, an award will not vest unless the Remuneration Committee is satisfied that the Company’s underlying financial performance has shown a sustained improvement in the three year period since the award date.

The extent of vesting for awards granted to participants will be determined by the Remuneration Committee, in its absolute discretion, based on the performance conditions set out below.

Return on Capital Employed (‘ROCE’):

Up to 40% of an award will vest depending on ROCE achieved in excess of the Group’s weighted average cost of capital (‘WACC’) over a three year period with the Remuneration Committee to set a range for threshold and maximum vesting at the time of each award in the light of development activity, including any significant corporate transactions, and three year plans for the Group.

Percentage excess over WACC

% of total award vesting

Below % set as threshold

0%

At % set as threshold

10%

Between % set as threshold and % set as maximum

10%-40% pro rata

Above % set as maximum

40%

The range set will be disclosed in the Annual Report on Remuneration.

The calculation of ROCE will be consistent with the Group financial statements.

 

The market value of the shares subject to the options granted in any period of 12 months may not, at the date of the grant, exceed 200% of base pay.

 

 

Earnings per Share (‘EPS’):

Up to 40% of an award will vest depending on EPS growth over a three year period starting on 1 April in the year in which the award is granted compared with the change in the UK Retail Price Index (RPI) as follows:

Annualised EPS growth in excess of annualised change in RPI

% of total award vesting

Less than 3%

0%

At 3%

10%

3% - specified maximum %

10%-40% pro rata

Above specified maximum %

40%

The intention is that the specified maximum percentage (level of excess over RPI) will be set at the time of each award in the light of development activity, including any significant corporate transactions, and three year plans for the Group and prevailing business and economic circumstances. The range set will be disclosed in the Annual Report on Remuneration.

 

 

 

Total Shareholder Return (‘TSR’):

Up to 20% of an award will vest depending on TSR performance over a three year period, starting on 1 April in the year in which the award is granted, compared with the FTSE 350 Index ('the Index').

TSR

% of total award vesting

Below the Index

0%

At the Index

5%

Between the Index and 8% p.a. out-performance

5%-20% pro rata

Above 8% p.a. out-performance of the Index

20%

No re-testing of the performance conditions is permitted.

The performance conditions and their relative weighting may be modified by the Remuneration Committee in accordance with the Rules of the LTIP, provided that they remain no less challenging and are aligned with the interests of the Company’s shareholders.

In the case of participants other than the executive Directors, the Remuneration Committee will have discretion to utilise additional specific divisional ROCE and profit growth performance conditions, provided that they remain no less challenging and are aligned with the interests of the Company’s shareholders. These additional conditions will not account for more than 20% of vesting, with a corresponding reduction in the percentage of vesting dependent on the ROCE performance condition.

A formal clawback policy is in place, under which awards are subject to clawback in the event of a material restatement of financial statements or other specified events. Further details on this clawback policy are set out on this page.

 

Pension

 

 

To reward sustained contribution

A small number of senior Group executives, including the executive Directors, are participants in a defined benefit pension scheme.

Other senior Group executives participate in a defined contribution pension scheme. The pension scheme gives the Company full discretion to pay appropriate pension levels and the Company reviews market and benchmarking data for pension contributions for each employee group.

 

Defined benefit pensions are provided through an Irish Revenue approved retirement benefit scheme, up to pension caps, as introduced by the Irish Finance Act 2006 and amended by subsequent Acts (see this page). All of the executives affected have elected to cease accruing pension benefits at the cap and to receive a taxable non-pensionable cash allowance in lieu of pension benefits foregone. All cash allowances have been calculated based on independent actuarial advice, approved by the Remuneration Committee, as the equivalent of the reduction in liability of the Company arising from the pension benefits foregone.

The Company contributes to a defined contribution pension scheme for other senior Group executives at rates reflecting their seniority and experience. The contribution levels also reflect market benchmarking data.

Pensionable salary is calculated as 105% of base salary and does not include any performance related bonuses or benefits.

 

 

 

Payments from Existing Awards+-

Subject to the achievement of the applicable performance conditions, executive Directors are eligible to receive payment from any award made prior to the approval and implementation of the Remuneration Policy detailed in this report.

Clawback Policy+-

Bonus payments made to executives may be subject to clawback for a period of three years from payment in certain circumstances including:

  • a material restatement of the Company’s audited financial statements;
  • a material breach of applicable health and safety regulations; or
  • business or reputational damage to the Company or a subsidiary arising from a criminal offence, serious misconduct or gross negligence by the individual executive.

The changes proposed to the LTIP, as summarised in the table on this page include the giving of discretion to the Remuneration Committee to reduce or impose further conditions on awards prior to vesting in the circumstances as outlined above.

Remuneration Policy for Recruitment of New Executive Directors+-

In determining the remuneration package for a new executive Director, the Remuneration Committee would be guided by the principle of offering such remuneration as is required to attract, retain and motivate a candidate with the particular skills and experience required for a role, if it considers this to be in the best interests of the Company and the shareholders. The Remuneration Committee will generally set a remuneration package which is in accordance with the terms of the approved Remuneration Policy in force at the time of the appointment, though the Committee may make payments outside of the Policy if required in the particular circumstances and if in the best interests of the Company and the shareholders. Any such payments which relate to the buyout of variable pay (bonuses or awards) from a previous employer will be based on matching the estimated fair value of that variable pay and will take account of the performance conditions and the time until vesting of that variable pay.

Other than in such buyout situations, it is the Company's policy not to offer any additional bonuses or awards on recruitment.

For an internal appointment, any variable pay element awarded in respect of the prior role and any other ongoing remuneration obligations existing prior to appointment would be honoured.

Remuneration Policy for Other Employees+-

While the Remuneration Committee’s specific oversight of individual executive remuneration packages extends only to the executive Directors and a number of senior Group executives, it aims to create a broad policy framework, to be applied by management to senior executives throughout the Group, through its oversight of remuneration structures for other Group and subsidiary senior management and of any major changes in employee benefits structures throughout the Group.

DCC employs approximately 10,200 people in 13 countries. Remuneration arrangements across the Group differ depending on the specific role being undertaken, the industry in which the business operates, the level of seniority and responsibilities, the location of the role and local market practice.

Consultation with Employees+-

Although the Remuneration Committee does not consult with employees on the Directors Remuneration Policy, it does consider remuneration arrangements and trends across the broader employee population when determining the Policy.

Consultation with Shareholders+-

The Committee engages in dialogue with major shareholders on remuneration matters, particularly in relation to planned significant changes in policy. The Committee also takes into account the views of shareholder organisations and proxy voting agencies.

As set out in the Chairman’s Introduction on this page, during the year the Remuneration Committee undertook a detailed consultation process in regard to the proposed changes to the LTIP.

The Committee acknowledges that shareholders have a right to have a ‘say on pay’ by putting the Remuneration Policy and the Annual Report on Remuneration to two separate advisory votes at the 2014 Annual General Meeting, building on our practice each year (since 2009) of putting the Remuneration Report to a shareholder advisory vote.

The table below shows the voting outcome at the 2013 AGM in relation to the 2013 Directors’ Remuneration Report.

Vote

Total votes cast

Total votes for

Total votes against

Total abstentions

Advisory vote on 2013

Remuneration Report

61,124,138

 

60,291,185

(98.64%)

832,953

(1.36%)

42,110

 

Exit Payments Policy+-

The provisions on exit in respect of each of the elements of pay are as follows:

Salary and Benefits

Exit payments are made only in respect of base salary excluding benefits for the relevant notice period. For the Chief Executive the notice period is 12 months and for the other executive Directors the notice period is 3 months. In all cases, the notice period applies to both the Company and the executive.

Annual Bonus

The Remuneration Committee can apply appropriate discretion in respect of determining the bonuses to be awarded based on actual performance achieved and the period of employment during the financial year.

Long Term Incentive Plan

To the extent that a share award or option has vested on the participant’s cessation date, the participant may exercise the share award or option during a specified period following such date but in no event may the share award or option be exercised later than the expiry date as specified in the award certificate.

In general, a share award or option that has not vested on the participant’s cessation date immediately lapses.

The Committee would normally exercise its discretion when dealing with a participant who ceases to be an employee by reason of certain exceptional circumstances e.g. death, injury or disability, redundancy, retirement or any other exceptional circumstances. In such circumstances, any share award or option that has not already vested on the participant’s cessation date would be eligible for vesting on a date determined by the Remuneration Committee. The number of shares, if any, in respect of which the share award or option vests would be determined by the Remuneration Committee.

In the event that a participant ceases to be an employee by reason of a termination of his employment for serious misconduct, each share award and option held by the participant, whether or not vested, will automatically lapse immediately upon the service of notice of such termination, unless the Committee in its sole discretion determines otherwise.

Pension

The rules of the Company’s defined benefit pension scheme, of which the executive Directors are members, contain detailed provisions in respect of termination of employment.

Service Contracts+-

With the exception of Tommy Breen, Chief Executive, who has a service agreement with a notice period of twelve months, none of the other Directors has a service contract with the Company or with any member of the Group. Mr. Breen’s service contract provides that either he or the Company can terminate his employment by giving 12 months’ notice in writing. The Company may, at its sole discretion, require that Mr. Breen, instead of working out the period of notice, cease employment immediately in which case he would receive compensation in the form of base salary only in respect of the notice period. The service contract also provides for summary termination (i.e. without notice) in a number of circumstances, including material breach or grave misconduct. The service contract does not include any provisions for compensation for loss of office, other than the notice period provisions set out above.

Mr. O’Dwyer and Mr. Murphy have letters of appointment which provide for 3 months’ notice periods.

Share Ownership Guidelines+-

DCC’s remuneration policy has at its core recognition that the spirit of ownership and entrepreneurship is essential to the creation of long term high performance and that share ownership is important in aligning the interests of executive Directors and other senior Group executives with those of shareholders.

A set of share ownership guidelines is in place, effective from 1 April 2011, under which the Chief Executive, other executive Directors and other senior Group executives are encouraged to build, over a five year period, a shareholding in the Company with a valuation relative to base salary as follows:

Executive

Share ownership guideline

 

 

Chief Executive

3 times annual base salary

Other executive Directors

2 times annual base salary

Senior Group executives

1 times annual base salary

The position of the executive Directors and senior Group executives under the Share Ownership Guidelines is reviewed annually by the Remuneration Committee. The position of the executive Directors as at 31 March 2014 is set out in the Annual Report on Remuneration on this page.

Scenarios Charts +-

The current value and composition of the executive Directors’ remuneration packages at minimum, median and maximum performance are set out in the charts below. As all of the Directors are paid in euro, the Remuneration Committee considers it appropriate that the figures disclosed in this report continue to be presented in euro.

159521.png

Notes:

1. Fixed = base salary, benefits and pension

2. Annual = bonus

3. Long = maximum value of options that can be granted under the DCC plc Long Term Incentive Plan 2009 (175% of base salary for the year to 31 March 2015).

4. Total pay for minimum performance comprises base salary, benefits and pension (fixed).

5. Total pay for median performance comprises base salary, benefits and pension (fixed), 50% of maximum bonus potential (annual) and 50% of maximum LTIP value (long).

6. Total pay for maximum performance comprises base salary, benefits and pension (fixed), 100% of maximum bonus potential (annual) and 100% of maximum LTIP value (long).

7. In calculating any value that may be delivered in shares, no account has been taken of any potential increase or decrease in share price.

Policy for non-executive Directors+-

Element and link to strategy

Operation

Maximum Opportunity

Fees

 

 

The fees paid to non-executive Directors reflect their experience and ability and the time demands of their Board and Board committee duties.

A basic non-executive Director fee is paid for Board membership. Additional fees are paid to the members and the Chairmen of Board Committees, to the Chairman and to the Deputy Chairman/Senior Independent Director.

The remuneration of the Chairman is determined by the Remuneration Committee for approval by the Board. The Chairman absents himself from the Committee meeting while this matter is being considered.

The remuneration of the other non-executive Directors is determined by the Chairman and the Chief Executive for approval by the Board.

The fees are reviewed annually, taking account of any changes in responsibilities and benchmarking advice from external remuneration consultants on the level of fees in a range of comparable Irish and UK companies.

 

No prescribed maximum annual increase.

In accordance with the Articles of Association, shareholders set the maximum aggregate ordinary remuneration (basic fees, excluding fees for committee membership and chairman fees). The current limit of €575,000 was set at the 2010 Annual General Meeting. It is proposed to seek the approval of shareholders, at the 2014 Annual General Meeting, for an increase in the limit to €650,000.

Non-executives Directors do not participate in the Company’s LTIP and do not receive any pension benefits from the Company. An office is provided for the use of the Chairman.

 

 

 

Non-executive Directors Letters of Appointment+-

The terms and conditions of appointment of non-executive Directors are set out in their letters of appointment, which are available for inspection at the Company’s registered office during normal office hours and at the Annual General Meeting of the Company.

Annual Report on Remuneration

This section of the Remuneration Report sets out how the Group’s Remuneration Policy, as described on this page, will operate in the year to 31 March 2015, gives details of remuneration outcomes for the year ended 31 March 2014 and explains how the Remuneration Committee works.

Operation of Remuneration Policy in the year to 31 March 2015+-

Long Term Incentives

As set out in the Chairman’s introduction on this page, over the past year the Committee has carried out a detailed review of the remuneration structures in place in DCC, with particular reference to the existing long term incentive plan, the DCC plc Long Term Incentive Plan 2009 (‘LTIP’). Arising from the review, the Committee has concluded that there is a need to make changes to the LTIP to ensure that it:

  • meets its stated objectives;
  • better reflects DCC’s strategic objectives, in particular return on capital employed;
  • better balances our remuneration towards the long term and so ensures the alignment of executives’ interests with those of our shareholders;
  • aligns our reward levels with market practice, to ensure the attraction and retention of key individuals; and
  • reflects best practice in delivering pay for performance, with particular regard to the extension of the vesting period and the introduction of clawback.

The proposed changes to the LTIP are set out in the table below:

Rationale for change

Current LTIP

Proposed Changes to LTIP

Quantum:

To align award levels with the market capitalisation comparator group and to better balance our remuneration towards the long term.

 

Maximum Award Level

Maximum level of award of 120% of base pay.

Maximum Award Level

Increase in the level of maximum award to 200% of base pay.

The Remuneration Committee’s current intention is that the maximum level for awards made during the year to 31 March 2015 will be 175% of base pay.

 

Performance Conditions:

To align LTIP more closely with strategic objectives.

Performance Conditions Weighted

60% Relative TSR

40% EPS.

Performance Conditions Weighted

40% ROCE

40% EPS

20% Relative TSR.

 

ROCE:

To align the LTIP more closely with strategic objectives.

ROCE

Not a performance condition in the current LTIP.

 

ROCE

Adoption of ROCE as a performance condition.

It is proposed that threshold and maximum vesting would be determined on the basis of ROCE targets achieved well in excess of the Group’s weighted average cost of capital (‘WACC’), with the Remuneration Committee to set a range for threshold and maximum vesting at the time of each award in the light of development activity, including any significant corporate transactions, and three year plans for the Group.

The Remuneration Committee has set a ROCE range for threshold and maximum vesting of 13%-17% for awards made during the year to 31 March 2015.

Calculation of ROCE will be consistent with the Group financial statements.

 

TSR:

To measure relative performance against a more suitable comparator group.

Relative TSR

Vesting measured against a subset of the FTSE 250 (excluding financial companies).

Median vesting at median of comparator group and maximum vesting at upper quartile.

 

Relative TSR

To be measured against the FTSE 350 Index.

Threshold vesting at the Index and maximum vesting at the Index plus 8% per annum compound growth.

 

EPS:

To align with operations of the Group and therefore reflect UK inflationary measures – namely RPI.

 

EPS

Median vesting at EPS growth equal to Irish CPI plus 3% per annum compound and maximum vesting at EPS growth equal to Irish CPI plus 7% per annum compound.

EPS

Threshold vesting at EPS growth equal to UK RPI plus 3% per annum compound and maximum vesting at EPS growth equal to UK RPI plus a specified percentage per annum compound.

It is proposed that the specified percentage for maximum vesting will be set at the time of each award in the light of development activity, including any significant corporate transactions, and three year plans for the Group and prevailing business and economic circumstances.

The Remuneration Committee has set EPS growth equal to UK RPI plus 7% per annum compound for maximum vesting of awards made during the year to 31 March 2015.

 

Threshold Vesting:

To reflect current best practice.

 

40% vesting at median.

Reduce to 25% vesting at threshold.

Vesting Period:

To reflect developments in investor views on share retention.

 

Performance Period

3 years.

Vesting Period

Equivalent to the Performance
Period.

Leaving Employment

In general, a share award or option that has not vested on the participant’s cessation date immediately lapses.

The Committee would normally exercise its discretion when dealing with a participant who ceases to be an employee by reason of certain exceptional circumstances e.g. death, injury or disability, redundancy, retirement or any other exceptional circumstances. In such circumstances, any share award or option that has not already vested on the participant’s cessation date would be eligible for vesting on a date determined by the Remuneration Committee. The number of shares, if any, in respect of which the share award or option vests would be determined by the Remuneration Committee.

Performance Period

Remains at 3 years.

Vesting Period

Vesting Period is lengthened to 5 years, 2 years after the end of the Performance Period.

Leaving Employment

A similar provision will apply to a cessation of employment during the full 5 year Vesting Period.

A similar provision will apply to those certain exceptional circumstances during the full 5 year Vesting Period.

 

Flexibility:

To ensure the LTIP best supports shareholder value and operates on the basis of demanding targets.

 

Flexibility

The performance conditions may be changed and the requirements of the performance conditions may be modified by the Remuneration Committee after discussions with the Irish Association of Investment Managers.

 

Flexibility

The calibration ranges for the ROCE and the EPS performance conditions will be reviewed each year by the Remuneration Committee to ensure appropriate levels of stretch and incentivisation.

The performance conditions and their relative weighting may be modified by the Remuneration Committee in accordance with the Rules of the LTIP, provided that they remain no less challenging and are aligned with the interests of the Company’s shareholders.

 

In addition, the LTIP should aid succession planning in enabling the Company to operate a certain level of flexibility and ensure that participants have appropriate line of sight to their strategic and business goals.

Flexibility on Performance Conditions below Board level

Not currently used.

Flexibility on Performance Conditions below Board level

It is proposed that, for participants below Board level, the Remuneration Committee will have discretion to introduce additional specific divisional ROCE and profit growth performance conditions, provided that they remain no less challenging and are aligned with the interests of the Company’s shareholders. These additional conditions will not account for more than 20% of vesting, with a corresponding reduction in the percentage of vesting dependent on the ROCE performance condition.

 

Clawback:

A formal clawback policy is in place in respect of short term incentives and it is intended to apply a similar policy to the LTIP to ensure alignment with delivering shareholder value.

There are no claw back or malus
type arrangements in the current LTIP.

Clawback arrangements will be introduced into the LTIP to allow the Remuneration Committee reduce or impose further conditions on awards prior to vesting in the event of material misstatement of financial statements or other specified events.

 

Rules:

The LTIP rules should reflect practice in the country of listing.

Reflect Irish practice.

The LTIP rules will be amended to reflect UK practice.

 

 

 

 

Salary+-

The salaries of the executive Directors for the year to 31 March 2015, together with comparative figures, are as follows:

Executive Director

Salary

Year to March 2015

Salary
Year ended March 2014

Tommy Breen

€715,000

€700,000

Donal Murphy

€420,000

€410,000

Fergal O’Dwyer

€440,000

€430,000

 

 

 

This is the first increase in Mr. Breen’s salary since June 2008, when he became Chief Executive. The increases for the executive Directors over recent years are shown in the table below.

% Increase in Year

Executive Director

2014/2015

2013/2014

2012/2013

2011/2012

2010/2011

Tommy Breen

2.1%

0.0%

0.0%

0.0%

0.0%

Donal Murphy

2.4%

2.5%

0.0%

0.0%

7.0%

Fergal O’Dwyer

2.3%

7.5%

0.0%

0.0%

7.0%

 

 

 

 

 

 

The increase in Mr. O’Dwyer’s salary in 2013/2014 followed a benchmarking exercise which showed his salary was positioned towards the lower quartile of the primary comparator group.

The salaries of other senior Group executives have been increased during 2014/2015 by approximately 3.0% overall, with individual increases reflecting development in roles and responsibilities.

Bonus

The maximum bonus potential for the executive Directors for the year to 31 March 2015 is set out in the table below:

Executive Director

Maximum bonus potential

Tommy Breen

120% of salary

Donal Murphy

100% of salary

Fergal O’Dwyer

100% of salary

 

 

The Committee has set performance targets for the year which will determine the extent of payment of bonuses to the executive Directors, as follows:

Executive Director

Performance Targets

Tommy Breen

70% based on growth in Group adjusted earnings per share and 30% based on overall contribution and attainment of personal objectives.

Donal Murphy

20% based on growth in Group adjusted earnings per share, 40% based on growth in DCC Energy operating profit and 40% based on overall contribution and attainment of personal objectives.

Fergal O’Dwyer

70% based on growth in Group adjusted earnings per share and 30% based on overall contribution and attainment of personal objectives.

 

 

Bonuses for other senior Group executives are based upon meeting pre-determined targets which relate to Group earnings, divisional operating profit and overall contribution and attainment of personal objectives.

Growth in Group adjusted earnings per share and in divisional operating profit is measured against pre-determined ranges, with zero payment below threshold up to full payment at the maximum of the range. The Committee considers that information on the ranges is commercially confidential and therefore it is not being disclosed on a prospective basis but, to the extent no longer commercially confidential, will be disclosed retrospectively.

Benefits+-

No changes are proposed to the benefits payable to the executive Directors for the year to 31 March 2015. Benefits include the use of a company car, life/disability cover, club subscriptions or cash equivalent.

Retirement Benefits+-

No changes are proposed to retirement benefits payable to the executive Directors for the year to 31 March 2015. As noted on this page, a small number of senior Group executives, including the executive Directors, are participants in a defined benefit pension scheme.

The Irish Finance Act 2006 established a cap on pension assets by introducing a penalty tax charge on pension assets in excess of the higher of €5 million or the value of individual accrued pension entitlements as at 7 December 2005. The Irish Finance Act 2011 reduced these thresholds to the higher of €2.3 million or the value of individual accrued pension entitlements as at 7 December 2010. As a result of this change the Remuneration Committee decided that the executive Directors and the other senior Group executives, who are members of the defined benefit scheme, would have the option of continuing to accrue pension benefits as previously or to cap their benefits in line with the 2011 limits. All of the executive Directors elected to cap their benefits and receive a taxable non-pensionable cash allowance in lieu of pension benefits foregone.

Other senior Group executives participate in a defined contribution pension scheme.

Remuneration outcomes for the year ended 31 March 2014+-

Executive and non-executive Directors’ remuneration details

The table below sets out the details of the remuneration payable in respect of Directors who held office for any part of the
financial year:

 

Salary and Fees

Bonus

Benefits

Retirement
Benefit Expense

LTIP1

Audited

Total

 

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

 

€’000

€’000

€’000

€’000

€’000

€’000

€’000

€’000

€’000

€’000

€’000

€’000

Executive Directors

 

 

 

 

 

 

 

 

 

 

 

 

Tommy Breen

700

700

765

700

85

84

365

338

1,123

575

3,038

2,397

Donal Murphy

410

400

362

400

32

32

102

96

535

275

1,441

1,203

Fergal O’Dwyer

430

400

406

300

33

32

254

232

535

275

1,658

1,239

Total for executive

Directors

1,540

1,500

1,533

1,400

150

148

721

666

2,193

1,125

6,137

4,839

 

 

 

 

 

 

 

Non-executive Directors

 

 

 

 

 

 

Michael Buckley

190

190

-

-

-

-

-

-

-

-

190

190

Róisín Brennan

68

68

-

-

-

-

-

-

-

-

68

68

David Byrne

103

103

-

-

-

-

-

-

-

-

103

103

Pamela Kirby2

35

-

-

-

-

-

-

-

-

-

35

-

Jane Lodge

80

39

-

-

-

-

-

-

-

-

80

39

Kevin Melia

68

68

-

-

-

-

-

-

-

-

68

68

John Moloney

68

68

-

-

-

-

-

-

-

-

68

68

Bernard Somers3

-

53

-

-

-

-

-

-

-

-

-

53

Leslie Van de Walle

84

81

-

-

-

-

-

-

-

-

84

81

 

 

 

 

 

 

 

Total for non-executive

Directors

696

670

-

-

-

-

-

-

-

-

696

670

 

 

 

 

 

 

 

 

 

 

 

Ex gratia pension to dependant of retired Director

10

10

Payment to former Director for services in respect of a successful legal claim in favour of the DCC Group4

-

192

Total

 

 

 

 

 

 

 

 

 

 

6,843

5,711

 

 

 

 

 

 

 

 

 

 

 

Notes:

1. The basis of the calculation of these LTIP values is set out under Long Term Incentive Plan on this page.

2. Pamela Kirby was appointed as a Director on 3 September 2013.

3. Bernard Somers retired on 5 November 2012.

4. In the year to March 2013, a payment was made to a former Director, who retired in 2004, for services provided over a number of years post retirement, in respect of a successful Taiwanese legal claim in favour of the DCC Group.

Fees+-

Fees are payable only to non-executive Directors and include Board Committee fees.

Salaries+-

The salaries of the Executive Directors for the year ended 31 March 2014 represented increases over the prior year as shown in the table below:

Executive Director

Salary

% increase

Tommy Breen

€700,000

0.0%

Donal Murphy

€410,000

2.5%

Fergal O’Dwyer

€430,000

7.5%

 

 

 

The salaries of other senior Group executives increased by 3.7% overall during the year, with individual increases reflecting development in roles and responsibilities.

Determination of Bonuses for the year ended 31 March 2014+-

The growth in Group adjusted earnings per share in the year ended 31 March 2014 of 11.7% was at the 92nd percentile of the range set by the Remuneration Committee at the beginning of the year for that part of bonuses relating to Group adjusted earnings per share.

The Remuneration Committee noted that operating profit growth of 4.0% was achieved in DCC Energy against a backdrop of very mild weather during the winter months of December 2013 to February 2014 and reflected the successful integration of acquisitions completed in prior years and cost efficiency initiatives. It also noted that significant progress had been made in regard to the strategic objectives for the division. Consequently the Committee exercised appropriate discretion in determining an award to Mr. Murphy of 30% (out of a maximum potential of 40%) in respect of this component of his bonus potential.

The Committee concluded that there had been very strong achievement of the targets set in respect of overall contribution and attainment of personal objectives, in particular with regard to delivery on strategy and organisational development.

The resultant bonus payout levels for the year ended 31 March 2014 were as follows:

 

Tommy Breen

Donal Murphy

Fergal O’Dwyer

 

% of Salary

% of Salary

% of Salary

Component

Max %

Payout %

Max %

Payout %

Max %

Payout %

Group EPS

84.0

77.3

20.0

18.4

70.0

64.4

DCC Energy Operating Profit

-

-

40.0

30.0

-

-

Contribution / Personal

36.0

32.0

40.0

40.0

30.0

30.0

 

120.0

109.3

100.0

88.4

100.0

94.4

 

 

 

 

 

 

 

In regard to Mr. Breen, the bonus earned in excess of 100% of salary, once the appropriate tax and social security deductions have been made, will be invested in DCC shares which will be made available to him after three years, or on his employment terminating if earlier, together with accrued dividends.

Retirement Benefit Expense+-

As outlined on this page, the executive Directors have elected to cease accruing pension benefits at the pension cap and to receive a taxable, non-pensionable cash allowance in lieu of pension benefits foregone. All cash allowances have been calculated based on independent actuarial advice approved by the Remuneration Committee as the equivalent of the reduction in liability of the Company arising from the pension benefits foregone. Retirement Benefits Expense comprises an amount of €365,000 for Tommy Breen, being a cash allowance of €545,000 less the value of a reversal of previously funded benefits of €180,000, a cash allowance of €102,000 for Donal Murphy and a cash allowance of €254,000 for Fergal O’Dwyer.

Executive Directors’ Defined Benefit Pensions

The table below sets out the change in the accrued pension benefits to which executive Directors have become entitled during the year ended 31 March 2014 and the transfer value of the change in accrued benefit, under the Company’s defined benefit pension scheme:

 

Change in accrued

pension benefit (excl inflation)

during the year1

€’000

Transfer value

equivalent to the

change in accrued

pension benefit1

€’000

Total accrued

pension benefit

at year end2

€’000

Executive Directors

Tommy Breen

(10)

(180)

318

Donal Murphy

0

0

115

Fergal O’Dwyer

0

0

162

Total

(10)

(180)

595

 

 

 

 

Notes:

1. The pensions of the executive Directors have been capped in line with the provisions of the Irish Finance Acts as detailed on this page.

2. Figures represent the total accrued pension payable from normal retirement date, based on pensionable service at 31 March 2014.

Long Term Incentive Plan+-

The LTIP awards granted in November 2010 vested in December 2013 based on TSR performance and EPS performance over the three year period ended 31 March 2013 (these being the performance conditions of the LTIP prior to the proposed changes outlined on this page).

An analysis was conducted by Towers Watson to measure the level of DCC’s TSR performance relative to the FTSE 250 peer group over a 36 month period to 31 March 2013. The Group’s TSR performance gave rise to a vesting of 27.4% of the total award.

DCC’s adjusted EPS increased by 4.9% annualised over the three year period. CPI increased by an annualised 1.9% over the same period. Based on the excess of 3% annualised, this gave rise to a vesting of 15% of the total award.

Consequently, the Remuneration Committee determined that 42.4% of the 2010 awards had vested. The value of the LTIP for the year ended 31 March 2013 is based on the number of options which vested in December 2013 and the share price at the date of vesting of €34.31 (£28.68). (These final values for 2013 differ from those shown in the 2013 Annual Report which were based upon estimated vesting of 50% and the share price as at 31 March 2013).

The LTIP awards granted in November 2011 will vest in November 2014 based on TSR performance and EPS performance over the three year period ended 31 March 2014. The Group’s TSR performance is expected to give rise to a vesting of 43.8% of the total award. The EPS performance condition is expected to give rise to a vesting of 15.6% of the total award. Consequently, 59.4% of the 2011 awards are expected to vest. The value of the LTIP for the year ended 31 March 2014 is estimated using the number of options expected to vest in November 2014 and the share price at 31 March 2014 of €39.36 (£32.60).

Chief Executive’s Remuneration+-

The charts below show the total remuneration for the Chief Executive for the five years from 1 April 2009 to 31 March 2014 and map the total remuneration against the five year trend in EPS and TSR, using a base of 100 for 2010 for comparator purposes.

Notes:

1. Total remuneration paid to the Chief Executive for the years 2010 to 2014 inclusive. Further details in relation to remuneration paid in 2014 and 2013 is set out on this page.

2. Fixed pay comprises salary, benefits and retirement benefits expense.

3. Variable pay comprises the annual bonus; the percentage shown is the value of the bonus paid as a percentage of the maximum opportunity.

4. Long term pay comprises the value of awards under the DCC plc 1998 Employee Share Option Scheme (for 2010 and 2011) and the DCC plc Long Term Incentive Plan 2009 (for 2012 to 2014); the percentage shown is the value of the awards vested as a percentage of the maximum opportunity (actual vesting for 2010 to 2013 and estimated vesting for 2014).

Key Performance Indicator Chart+-

The chart below shows the change in executive Director pay and key performance indicators for the year ended 31 March 2014 versus the prior year. A base of 100 is used for the prior year, for comparator purposes.

160815.png

Non-executive Directors’ Remuneration +-

The basic non-executive Director fee amounts to €60,000 per annum and additional fees are paid to the members and the Chairmen of Board Committees, to the Chairman and to the Deputy Chairman/Senior Independent Director. There have been no increases in these fees since 1 April 2009 with the exception of the fee for the Chairman of the Remuneration Committee which increased from €5,000 to €7,500 with effect from 1 January 2012, in view of the significantly increased responsibilities which this role now entails.

The Chairman, Michael Buckley, received a total fee of €190,000 for the year ended 31 March 2014, inclusive of the basic fee and committee fees. This fee is unchanged since 1 April 2010, when it was reduced from the previous level of €225,000.

The Deputy Chairman and Senior Independent Director, David Byrne, received a total fee of €103,000, again inclusive of the basic fee and committee fees. This fee is unchanged since 1 April 2009.

Executive and Non-executive Directors’ and Company Secretary’s Interests+-

The interests of the Directors and the Company Secretary (including their respective family interests) in the share capital of DCC plc at 31 March 2014 (together with their interests at 31 March 2013) are set out below:

 

No. of Ordinary Shares

At 31 March 2014

No. of Ordinary Shares

At 31 March 2013*

Directors

 

 

Michael Buckley

12,000

12,000

Tommy Breen

250,000

295,000

Róisín Brennan

-

-

David Byrne

1,200

1,200

Pamela Kirby**

2,500

-

Jane Lodge

3,000

-

Kevin Melia

1,250

1,250

John Moloney

2,000

2,000

Donal Murphy

85,413

85,413

Fergal O’Dwyer

240,389

264,389

Leslie Van de Walle

670

670

Company Secretary

 

 

Gerard Whyte

144,400

144,400

* or date of appointment if later.

** Pamela Kirby was appointed on 3 September 2013.

 

 

All of the above interests were beneficially owned. Apart from the interests disclosed above, the Directors and the Company Secretary had no interests in the share capital or loan stock of the Company or any other Group undertaking at 31 March 2014.

The shareholdings held by the executive Directors are substantially in excess of the share ownership guidelines in place, which are set out on this page of this report.

The Company’s Register of Directors Interests (which is open to inspection) contains full details of Directors’ shareholdings and share options.

Executive Directors’ and Company Secretary’s Long Term Incentives+-

DCC plc Long Term Incentive Plan 2009

Details of the executive Directors’ and the Company Secretary’s awards, in the form of nominal cost options, under the DCC plc Long Term Incentive Plan 2009 are set out in the table below:

Number of options

At 31

March

2013

Granted in year

Lapsed in year

At 31

March

2014

Performance period

Earliest exercise

date

Market price on award

 

 

 

 

 

 

 

 

Executive Directors

 

 

 

 

 

 

 

Tommy Breen

13,887

-

-

13,887

1 April 2009 – 31 March 2012

20 August 2012

€15.63

 

39,529

-

(22,769)

16,760

1 April 2010 – 31 March 2013

15 November 2013

€21.25

 

48,000

-

-

48,000

1 April 2011 – 31 March 2014

15 November 2014

€17.50

 

37,070

-

-

37,070

1 April 2012 – 31 March 2015

12 November 2015

€22.66

 

-

24,706

-

24,706

1 April 2013 – 31 March 2016

12 November 2016

£28.54

 

138,486

24,706

(22,769)

140,423

 

 

 

 

 

 

 

 

 

 

 

Donal Murphy

5,456

-

-

5,456

1 April 2009 – 31 March 2012

20 August 2012

€15.63

 

18,894

-

(10,883)

8,011

1 April 2010 – 31 March 2013

15 November 2013

€21.25

 

22,857

-

-

22,857

1 April 2011 – 31 March 2014

15 November 2014

€17.50

 

17,652

-

-

17,652

1 April 2012 – 31 March 2015

12 November 2015

€22.66

 

-

12,059

-

12,059

1 April 2013 – 31 March 2016

12 November 2016

£28.54

 

64,859

12,059

(10,883)

66,035

 

 

 

 

 

 

 

 

 

 

 

Fergal O’Dwyer

6,034

-

-

6,034

1 April 2009 – 31 March 2012

20 August 2012

€15.63

 

18,894

-

(10,883)

8,011

1 April 2010 – 31 March 2013

15 November 2013

€21.25

 

22,857

-

-

22,857

1 April 2011 – 31 March 2014

15 November 2014

€17.50

 

17,652

-

-

17,652

1 April 2012 – 31 March 2015

12 November 2015

€22.66

 

-

12,647

-

12,647

1 April 2013 – 31 March 2016

12 November 2016

£28.54

 

65,437

12,647

(10,883)

67,201

 

 

 

 

 

 

 

 

 

 

 

Company Secretary

 

 

 

 

 

 

 

Gerard Whyte

3,038

-

-

3,038

1 April 2009 – 31 March 2012

20 August 2012

€15.63

 

8,647

-

(4,981)

3,666

1 April 2010 – 31 March 2013

15 November 2013

€21.25

 

10,500

-

-

10,500

1 April 2011 – 31 March 2014

15 November 2014

€17.50

 

8,109

-

-

8,109

1 April 2012 – 31 March 2015

12 November 2015

€22.66

 

-

5,559

-

5,559

1 April 2013 – 31 March 2016

12 November 2016

£28.54

 

30,294

5,559

(4,981)

30,872

 

 

 

 

 

 

 

 

 

 

 

DCC plc 1998 Employee Share Option Scheme

Details as at 31 March 2014 of the executive Directors’ and the Company Secretary’s options to subscribe for shares under the DCC plc 1998 Employee Share Option Scheme are set out in the table below.

Number of options

Options exercised

in year

At 31

March

2013

Exercised in year

Lapsed in year

At 31

March

2014

Weighted average option price

at 31 March 2014

Normal Exercise

Period

Exercise price

Market price at date of exercise

 

 

 

 

 

 

 

 

 

Executive Directors

 

 

 

 

 

 

 

 

Tommy Breen

 

 

 

 

 

 

 

 

Basic Tier

100,000

-

-

100,000

€19.20

Nov 2007 – May 2018

-

-

Second Tier

0

-

-

0

-

-

-

-

Donal Murphy

 

 

 

 

 

 

 

 

Basic Tier

45,000

-

-

45,000

€18.23

Nov 2007 – May 2018

-

-

Second Tier

0

-

-

0

-

-

-

-

 

 

 

 

 

 

 

 

 

Fergal O’Dwyer

 

 

 

 

 

 

 

 

Basic Tier

72,500

-

-

72,500

€18.52

Nov 2007 – May 2018

-

-

Second Tier

0

-

-

0

-

-

-

-

 

 

 

 

 

 

 

 

 

Company Secretary

 

 

 

 

 

 

 

 

Gerard Whyte

 

 

 

 

 

 

 

 

Basic Tier

45,000

-

-

45,000

€17.94

Nov 2007 – May 2018

-

-

Second Tier

0

-

-

0

-

-

-

-

 

 

 

 

 

 

 

 

 

Notes:

Executive Directors and other senior executives participated in the DCC plc 1998 Employee Share Option Scheme. The ten year period during which share options could be granted under this Scheme expired in June 2008. Over the life of the Scheme, the total number of basic and second tier options granted, net of options lapsed, amounted to 7.1% of issued share capital, of which 1.2% is currently outstanding. Basic tier options may not normally be exercised earlier than three years from the date of grant and second tier options not earlier than five years from the date of grant. Basic tier options may normally be exercised only if there has been growth in the adjusted earnings per share of the Company equivalent to the increase in the Consumer Price Index plus 2%, compound, per annum over a period of at least three years following the date of grant. Second tier options may normally be exercised only if the growth in the adjusted earnings per share over a period of at least five years is such as would place the Company in the top quartile of companies on the ISEQ index in terms of comparison of growth in adjusted earnings per share and if there has been growth in the adjusted earnings per share of the Company equivalent to the increase in the Consumer Price Index plus 10%, compound, per annum in that period.

The market price of DCC shares on 31 March 2014 was £32.60 and the range during the year was £22.45 to £32.89.

Additional information in relation to the DCC plc Long Term Incentive Plan 2009 and the DCC plc 1998 Employee Share Option Scheme appears in note 10.

Share Ownership Guidelines+-

The shareholdings held by the executive Directors as at 31 March 2014, as shown below, are substantially in excess of the guidelines set out on this page.

Executive

Number of shares held as at 31 March 2014

Shareholding as a multiple of base salary for the year ended 31 March 2014

Share ownership guideline

Tommy Breen

250,000

14.3

3.0

Donal Murphy

85,413

8.3

2.0

Fergal O’Dwyer

240,389

22.3

2.0

 

 

 

 

The shareholdings in the table comprise only the shares held by the executive Directors. Unvested and unexercised share options are not included. The shareholdings are calculated based on the share price at 31 March 2014 of £32.60 (€39.96).

Governance+-

Composition

The Remuneration Committee comprises three independent non-executive Directors, Leslie Van de Walle (Chairman), Róisín Brennan and David Byrne, and the Chairman of the Board, Michael Buckley. Each member’s length of tenure at 31 March 2014 is set out in the table opposite. Further biographical details regarding the members of the Remuneration Committee are set out on this page.

161142.png

Meetings

The Committee met six times during the year ended 31 March 2014 and there was full attendance by all members of the Committee. The main agenda items included remuneration policy and the operation of the DCC plc Long Term Incentive Plan 2009, in particular consideration of the proposed changes outlined earlier in this Report, remuneration trends and market practice, the remuneration packages of the Chairman, the Chief Executive, the other executive Directors and certain senior Group executives, pension matters, grants of share options under the Company’s LTIP and approval of this report.

The Chief Executive and the Head of Group Human Resources may be invited to attend meetings of the Committee, except when their own remuneration is being discussed. No Director is involved in consideration of his or her own remuneration. The Company Secretary acts as secretary to the Remuneration Committee.

Annual Evaluation of Performance

As detailed on this page, the Board conducts an annual evaluation of its own performance and that of its Committees, Committee Chairmen and individual Directors. This process concluded that the performance of the Remuneration Committee and of the Chairman of the Remuneration Committee were satisfactory.

Reporting

The Chairman of the Remuneration Committee reports to the Board at each meeting on the activities of the Committee.
The Chairman of the Remuneration Committee attends the Annual General Meeting to answer questions on the report on the Committees’ activities and matters within the scope of the Committee’s responsibilities.

External Advice

The Remuneration Committee seeks independent advice when necessary from external consultants. Towers Watson acts as independent remuneration advisors to the Committee and during the year provided advice in relation to market trends, competitive positioning and developments in remuneration policy and practice. Towers Watson is a signatory to the Remuneration Consultants Group Code of Conduct and any advice was provided in accordance with this code.  In light of this, and the level and nature of the service received, the Committee remains satisfied that the advice is indeed objective and independent.

In the year to 31 March 2014, Towers Watson received fees of €69,750 in respect of advice provided to the Committee in regard to executive Director remuneration. Towers Watson also provided services to the Group on benchmarking, incentive design, Directors Remuneration Report and in relation to the LTIP.

Mercer acts as pension advisors to the Committee and provides specific advice on pension practice and developments and act as actuaries and pension advisors to a number of companies in the Group.