annual report and financial statements 2009

Directors' remuneration report

The Directors present the Directors' Remuneration Report for the year ended 31 December 2009. A resolution to approve the Report will be proposed at the Company's AGM (Resolution 9). The auditors are required to report to the shareholders on the audited section of the Report and to state whether in their opinion it has been prepared in accordance with the Companies Act 2006. The Report therefore has separate sections containing unaudited and audited information.

UNAUDITED SECTION

REMUNERATION COMMITTEE

The remuneration of the Executive Directors is fixed by the Remuneration Committee which during the year comprised the three Non-executive Directors, namely M I Gunston (Chairman), J E Brown and J S Reis, with the Managing Director, E J Boot, in attendance.

The Executive Directors, E J Boot, J T Sutcliffe and D Greaves, determine the remuneration of the Non-executive Directors.

To assist the Directors in determining the appropriate policy and levels of remuneration, reference is made, in addition to comparisons of policies with peer companies, to a variety of published sources.

REMUNERATION POLICY

The Company's policy on Directors' remuneration is to ensure that the Directors are competitively rewarded on a basis that is comparable with similar companies, taking into account the need to attract, motivate and retain Directors of an appropriate calibre to achieve the Company's objectives, without making excessive payments. Directors' basic salaries and benefits are reviewed annually, taking into account individual performance, the recommendations of the Group Managing Director and published remuneration information. Benefits include the provision of a Company car or a cash allowance alternative, permanent health insurance and private medical insurance. The value of benefits is not pensionable and is set out for each Director in the table of Directors' remuneration.

Non-executive Directors are remunerated on the basis of their anticipated time commitment and the responsibilities entailed in their role. There are no service agreements in place for the Non-executive Directors and they do not participate in any of the Company's incentive arrangements. Any newly appointed Non-executive Director is expected to serve an initial period of at least three years. Terms and conditions relating to Non-executive Directors are available for inspection.

E J Boot, J T Sutcliffe and D Greaves each have a one year rolling service agreement. The service agreement of D Greaves will terminate on 30 June 2010 when he retires from the Company. Termination of these arrangements would therefore be subject to their contractual terms and conditions.

The Executive Directors participate in an annual bonus scheme. This is calculated by reference to pre-tax profits achieved in the year, compared with budget, and as recommended by the Remuneration Committee. The annual bonus payable to E J Boot is partly pensionable, but for all other Executive Directors the bonus is not pensionable.

The Executive Directors participate in the Henry Boot PLC 2000 Sharesave Scheme. The scheme was approved by shareholders and is subject to HMRC rules. A grant of options was made on 1 November 2006 at an exercise price of 155.4p, a 15% discount to the prevailing market price. A further grant of options was made on 22 October 2008 at an exercise price of 77p, a 10% discount to the prevailing market price. There are no performance criteria attached to the exercise of these options which are capable of exercise for a six month period three years from the date of grant.

The Executive Directors have participated in the 1996 Henry Boot PLC Long-Term Incentive Plan, which was introduced in 1996 and which was subsequently replaced by the Henry Boot 2006 Long-Term Incentive Plan in 2006. The principle of a long-term incentive scheme for senior executives is one that the Remuneration Committee and the Company believes readily aligns the interests of Executive Directors and shareholders, whilst providing the motivation and incentive for the Directors to perform at the highest levels. Under the provisions of the Henry Boot 2006 Long-Term Incentive Plan, approved by shareholders at an Extraordinary General Meeting on 20 July 2006, participants may receive a provisional allocation of shares up to 120% of basic salary calculated by reference to the share price at that time. This limit can only be exceeded in exceptional circumstances at the discretion of the Remuneration Committee. Those allocated to J T Sutcliffe in 2008 were made on this latter basis. Awards under the Plan, which usually vest in three years, are subject to three performance conditions over that three year period. These are the per annum increase in net asset value per share compared to an industry standard investment property annual index, the increase in profitability compared to the Retail Prices Index and Total Shareholder Return (TSR) compared to the median of a comparator group of the FTSE Small Cap Index. These targets ensure that the actual awards at the vesting date are aligned closely with the factors that drive shareholder return. The award of shares made to E J Boot and D Greaves in September 2009 covering the performance period 2006, 2007 and 2008 constituted 50% of the original allocation.

E J Boot is a member of the Henry Boot Staff Pension and Life Assurance Scheme, a defined benefit pension scheme. J T Sutcliffe is a member of the Henry Boot Group Stakeholder Pension Scheme, a defined contribution scheme. D Greaves is beyond normal retirement age. Both schemes also provide a lump sum death in service benefit and a pension for dependents of members on their death in service and, on death after retirement, a pension for dependents. Normal retirement age is 65.

FIVE YEAR TSR PERFORMANCE

The line graph below shows the cumulative TSR over the last five years for a holding of shares in the Company compared with the performance of the FTSE Small Cap Index. This comparator index has been chosen as the most appropriate index, as the Company, but for the free float restrictions, would be included as a constituent of this index.

Five year TSR performance graph

AUDITED SECTION

DIRECTORS' REMUNERATION

The emoluments of the Directors, excluding pension contributions, were:


LONG-TERM INCENTIVE PLAN AWARDS

PERFORMANCE SHARES

All data prior to 21 May 2007 has been restated to take into account the 4 for 1 bonus issue that took effect on that date.

The number of shares at 1 January 2009 are the awards achievable under the Long-Term Incentive Plans' maximum performance conditions.

Of the shares awarded on 20 July 2006, 50% vested on 2 September 2009 on the attainment of a per annum increase in net asset value per share compared to an industry standard investment property annual index and 50% lapsed due to the failure to attain the required increase in profitability compared to the Retail Prices Index.

Details of performance conditions applicable to the 1996 and 2006 Plans can be found within the Directors' Remuneration Report.

There have been no variations to the terms and conditions or performance criteria for the Long-Term Incentive Plans' during the financial year.

SAVINGS RELATED SHARE OPTIONS

Details of options granted to Directors under the Henry Boot PLC 2000 Sharesave Scheme are as follows:

Details of the Scheme are set out in note 27 of the Financial Statements.

There have been no variations to the terms and conditions for share options during the financial year. Options granted under the 2000 Sharesave Scheme are not subject to performance criteria.

The market price of the ordinary shares at 31 December 2009 was 92.5p and the range during the year was 56.5p to 113.0p.

DIRECTORS' PENSION INFORMATION
1. DEFINED BENEFIT SCHEME

The transfer value has been calculated on the basis of actuarial advice in accordance with Actuarial Guidance Note GN11.

Notes

  1. Mr E J Boot's transfer values as at 1 January 2009 and 31 December 2009 are based on a currently capped final pensionable salary of £331,002.
  2. The transfer values include changes due to revaluation in deferment.
  3. The increase in accrued benefit during the year is net of any increase for revaluation in deferment and the transfer value thereof calculated in accordance with the Trustees' chosen transfer value basis less an estimate of the Director's contributions for the year.
  4. The accumulated benefit accrued at 31 December 2009 represents the pension entitlement which would be preserved in the Scheme if the member had left service on 31 December 2009.
  5. Benefits and contributions relating to Additional Voluntary Contributions are not included in the above table.
2. DEFINED CONTRIBUTION SCHEME

J T Sutcliffe is a member of the defined contribution scheme. Contributions paid by the Company in the year were £44,290.

On behalf of the Board


J T SUTCLIFFE

COMPANY SECRETARY

1 APRIL 2010

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