Letter from the Remuneration Committee Chairman.
Dear Shareholder
I am pleased to be writing to you in my capacity as the new chairman of the Remuneration Committee (the ‘Committee’). This is the first year that Regus has provided such a letter from the Committee to shareholders – it is my intention to provide an overview of the main aspects of the work of the Committee every year to be read in conjunction with the main Remuneration Report (the ‘Report’) below.
I hope that you will note that we have revised the format and level of disclosure of the Report to take into account shareholder comments and views which we have received during the year.
Executive pay and remuneration packages continue to make headlines and I am fully aware that you, as shareholders, will be reading both this letter and the Report with these in mind. At Regus, we have always linked salary, bonuses and long-term incentives with performance. We need to provide remuneration packages that will attract, retain and motivate people of the highest calibre and experience but we seek to ensure that pay outs are proportionate and are made only if performance demands it.
This philosophy can be seen in action in this Report:
2013 Base Salary Decisions
During 2012, the Committee decided to award Mark Dixon a base salary increase of 3.9% with effect from 1 January 2013. The Committee felt the salary increase for Mr Dixon was appropriate and was in line with the range of salary increases awarded to higher achievers within the wider workforce. No salary increase has been awarded to Mr Yates for 2013 as the Committee determined that his base salary continues to be both competitive and reasonable.
2012 Annual Bonus out-turns
Given the financial performance of the business in 2012, in particular the increase in operating profit referred to in page 10, the Committee considered it appropriate to award the Chief Executive Officer and Chief Financial Officer a maximum bonus equal to 100% of salary. 50% of this bonus will be deferred into Investment Shares under the Regus Co-Investment Plan.
Long-term Incentives
2012 out-turns
The Committee assessed performance for certain Matching Shares and LTIP awards previously made to Mr Dixon under the Co-Investment Plan in 2008, 2009 and 2010 and determined that 25% of the relevant awards should vest based on EPS performance. The remainder of these awards will lapse. The Committee also assessed performance for the awards to Mr Dixon under the Regus plc 2008 Value Creation Plan. As the share price targets had not been met by 31 March 2012, no VCP Entitlements vested during 2012. The final Measurement Date for awards under this plan is 31 March 2013, and it is currently anticipated that the award will lapse in full.
2013 Matching Share Awards
In 2013, the Committee intends to make Matching Share awards to the executive directors and other senior executives under the Co-Investment Plan, based on the Investment Shares deferred from 2012. This will be the first award since 2010. These awards will vest in equal tranches over three, four and five years subject to achieving stretching Earnings Per Share and Total Shareholder Return targets over these periods. The Committee believes that these performance conditions help to align the reward of our Executive Directors and senior executives with the delivery of significant value for our shareholders.
Agenda for 2013
During the course of 2013, the Committee will be preparing for the new executive remuneration reporting requirements being introduced in the UK. We look forward to receiving your support for the Directors’ Remuneration Report at the 2013 AGM.
Alex Sulkowski
Chairman of the Remuneration Committee
5 March 2013
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