REMUNERATION REPORT

 

* In the case of Mr Fallon, shares in Euromoney are included of which he is an executive Director.

PENSIONS

The Group operates a two-tier defined benefit pension scheme for senior employees (including most of the Company’s executive Directors), details of which are given below. It is the Company’s policy that annual bonuses, payments under the Executive Bonus Scheme and benefits in kind are not pensionable.

Prior to 6th April, 2006, the Committee reviewed in detail the impact of the pensions tax regime operating from that date. It developed a new policy, designed to be neutral in terms of cost compared to existing expenditure on pensions. This new policy incorporated the removal of the pensionable earnings cap for pension accruing after 6th April, 2006.

Individual executive Directors were affected very differently by these changes and for some it was not tax-efficient to accrue further pension for service from 6th April, 2006. However, it is for individual Directors to decide when to opt out of the scheme, in which case a cash allowance is paid. On this basis, three executive Directors, Mr Sinclair, Mr Williams and Mr Dacre, decided to opt out of the Group’s pension scheme with effect from 6th April, 2006. Cash allowances paid in lieu of pensions are shown below. Under the prescribed transitional arrangements, their accrued pension at that date will remain linked to future increases in pensionable earnings and they will continue to be eligible for death in service benefits.

Prior to 6th April, 2006, two of the Company’s executive Directors were subject to HM Revenue & Customs’ pensionable earnings cap and a funded unapproved retirement benefits scheme was put in place for them on the same terms as for other capped senior executives. The assets of this scheme are held independently from the Group’s finances and are administered by Trustees.

NON-EXECUTIVE DIRECTORSHIPS

The Company allows its executive Directors to take a very limited number of outside directorships. Individuals retain the payments received from such services since these appointments are not expected to impinge on their principal employment. This does not apply where a Group executive serves as a non-executive Director of a company because the Group has a significant interest, as in the case of Mr Williams’ directorship of GCap Media plc. In this case, all fees are paid to the Company.

SERVICE CONTRACTS

Contracts of service are negotiated on an individual basis as part of the overall remuneration package and their length is inevitably conditioned by external competitive pressures. For this reason, the contracts of some of the executive Directors exceed the one year recommended in the Code. The Committee believes that the length of contract should be appropriate to the individual. Thus where DMGT employs individuals with unique talents within the areas of business within which it operates, the Committee believes that they should have longer contracts.

The Chairman and Messrs Sinclair, Williams, Dutton, Fallon and Beatty have contracts of up to one year in duration. Mr Dacre has a rolling two-year contract which the Committee considers wholly appropriate for his particular responsibilities and for the industry in which he works. The Committee differentiates between what might be termed “corporate executives” and “media executives” whom it wishes to tie in to the Group and to prevent from working for competitors. Mr Dacre is a media executive.

Details of these service contracts are set out below:

In the event of earlier termination of their contracts, each Director is entitled to compensation equal to their basic salary, benefits, pension entitlement and, as appropriate, bonus or profit share for their notice period.

The contracts of Mr Sinclair and Mr Williams are subject to mitigation and in the event of the Director obtaining alternative employment during the notice period do not provide for further payment after such event. This mitigation does not apply to their pension benefit. Share options would be treated as for any member of the scheme, depending on the reason for termination of the contract. Mr Sinclair is entitled, on a change of control of the Company, to give notice under his contract within 60 days of the change of control, and to receive compensation for basic salary and benefits for his notice period.

Mr Fallon has a second service contract with Euromoney Publications (Jersey) Limited (‘EPJ’), a subsidiary of Euromoney dated 4th May, 1993. This contract has the same terms as his first contract, except that termination does not include a car allowance as Mr Fallon does not receive this benefit from EPJ.

Non-executive Directors are appointed for specified terms and are subject to re-election by the Ordinary shareholders at the Annual General Meeting following appointment, and thereafter at least every three years. Each appointment can be terminated before the end of the three-year period, with no notice or fees due. The dates of the appointment or subsequent re-appointment of the non-executive Directors are set out below:

Directors retiring by rotation and standing for re-election at the forthcoming Annual General Meeting are shown in the Director's Report.

NON-EXECUTIVE DIRECTORS’ REMUNERATION

The remuneration of non-executive Directors is determined by the Board. Fees payable are reviewed annually, including a comparison with the level of fees paid by other companies of similar size and complexity; these fees are shown in the table below. A recommendation to the Board on this subject is then made. The basic fee as a Director was raised to £30,000 per annum on 1st October, 2006. No increase is being made for the year to 28th September, 2008.

In addition, fees are paid for membership of Board committees. Committee fees range from £4,000 per annum to £12,500 per annum, except that the Audit Committee chairman receives a fee of £20,000 per annum which was raised to £25,000 with effect from 1st October, 2007. No other increases are being made for the year to 28th September, 2008.

AUDITED INFORMATION

DIRECTORS’ REMUNERATION

The total amounts of the remuneration and other benefits of the Directors of the Company for the years ended 30th September, 2007 and 1st October, 2006 are shown below for Directors:

The emoluments of the Directors are shown below:

NOTES TO DIRECTORS’ REMUNERATION

(i) The figures for fees and salary include fees for Directors of subsidiaries including for the Viscount Rothermere, Mr Sinclair and Mr Williams as directors of Euromoney. For non-executive Directors they also include Committee fees, where applicable.

(ii) Cash allowances include an allowance paid to each of Messrs Sinclair, Williams and Dacre, in lieu of continued membership of the DMGT Senior Executives Pension Fund, from 6th April, 2006. The Viscount Rothermere, Mr Sinclair and Mr Williams also receive a cash allowance instead of having a company car and Mr Dacre instead of the Company providing Central London accommodation.

(iii) Benefits in kind include the taxable value of company cars, fuel allowances and company contributions to medical insurance plans.

(iv) Group adjusted earnings per share for the year ended 30th September, 2007 (before amortisation and impairment of intangible assets, and exceptional items) have shown an increase in the year of 6.3% which, under the Scheme, results in a bonus of 26.56 being earned by Lord Rothermere, 15.94 by Mr Sinclair and 13.28% by Mr Williams.

Of the potential bonus for individual performance targets, Mr Sinclair was awarded 40% out of 40%, and Mr Williams 32.5% out of 50%.

Mr Fallon is entitled to 6.49% of the pre-tax profit earned by Euromoney, which has a comprehensive profit sharing scheme that links the pay of its executive directors to the profits of that group.

Mr Beatty earned a bonus, based on meeting performance targets at Associated Newspapers.

(v) Pension contributions are those made to money purchase schemes as set out below.

(vi) The Viscount Rothermere, Mr Sinclair, Mr Williams and Mr Fallon retained fees of £25,000 (2006 £18,000), £36,000 (2006 £44,000), £23,000 (2006 £8,800) and £22,000 (2006 £36,000) respectively from their outside non-executive directorships.

DMGT LONG TERM INCENTIVE PLAN (LTIP)

The LTIP, established in 2001 and revised in 2006, is designed to align the interests of participants and shareholders by requiring participants to make a substantial investment in the Company as a condition to participating in the LTIP. Further, the LTIP will only provide rewards for participants if the Company achieves exceptional returns for shareholders; this is achieved by calibrating participants’ rewards by reference to the Company’s performance against a peer group of comparable media companies. This peer group was chosen to reflect a range of listed companies in the businesses and locations principally occupied by DMGT. The LTIP is supervised by the Committee and is operated in conjunction with an employee discretionary trust (the ‘Trust’). The Trust will acquire ‘A’ Ordinary Non-Voting Shares in the Company (‘shares’) to satisfy awards under the LTIP. The Committee intends to operate the LTIP annually.

Prospective participants are invited by the Committee to agree to commit shares in the Company to the LTIP at a market price. Initially invitations were made in tranches over a period of two to four years.

Individuals are given six months to make commitments in order to allow for them to make purchases of shares, where appropriate. Once an individual has agreed to commit shares which are owned by him or by his close family, the Trustee of the Trust (‘the Trustee’) decides whether to make an award of an equal number of shares to those committed.

Awards under the LTIP have been made to six executive Directors. In 2007, each eligible Director was invited to commit shares up to 50% of his salary. Having received agreements to commit shares, the Trustee made the awards set out in the table below.