Report of the Directors
Governance

Remuneration Report

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Outcomes – Actual Remuneration for 2011/12

This section provides details of the actual payments and awards to directors in 2011/12. Full numerical details are provided in the tables below.

In order to fully illustrate the relationships between actual payments, on target payments and stretch (maximum) payments, graphs of the relevant data are shown to the right for each of the four executive directors. This does not include share option exercises from awards made in prior years. See below for further details.

Basic Salary 2011/12

The changes in basic salary for each of the directors are illustrated in the table below.

Name Basic salary at
1st August 2010
(£)
Basic salary at
1st August 2011
(£)
Increase
(%)
Neil Carson 750,000 776,250 3.5
Robert MacLeod 406,600 421,000 3.5
Larry Pentz 390,000 403,650 3.5
Bill Sandford 345,000 357,100 3.5

Comparison to Other Pay Awards in Johnson Matthey

Pay awards throughout Johnson Matthey’s global operations have generally ranged between 0% and 10% in the last year, depending on local pay conditions and on local business and economic conditions. Pay awards in the UK have generally been around the 3% level with some local variations dependent on business conditions.

LTIP Vesting in 2011/12 and Historical Information

The 2008 share allocation vested in July 2011. The performance condition was met to the extent that 52.42% of the allocated shares were released.

Details of LTIP awards, performance and vesting details are provided below.

  Year of allocation Year of
vesting
% salary
awarded
Shares
awarded
Compound
annual growth in
underlying EPS
in the period
Shares
released
Value at time
of release
(£)
Neil Carson              
  2007 2010 150 56,704 1.68% 0 0
  2008 2011 150 56,239 9.96% 29,480 614,233
  2009 2012 120 71,611 19.60% 71,611 Vesting July 2012
  2010 2013 150 72,393 n/a    
  2011 2014 175 69,096 n/a    
Robert MacLeod              
  2007 2010 n/a 0 1.68% 0 0
  2008 2011 n/a 0 9.96% 0 0
  2009 2012 170* 55,072 19.60% 55,072 Vesting July 2012
  2010 2013 120 31,397 n/a    
  2011 2014 140 29,979 n/a    
Larry Pentz              
  2007 2010 120 22,327 1.68% 0 0
  2008 2011 120 21,853 9.96% 11,455 238,672
  2009 2012 100 31,116 19.60% 31,116 Vesting July 2012
  2010 2013 120 30,115 n/a    
  2011 2014 140 28,744 n/a    
Bill Sandford              
  2007 2010 120 15,268 1.68% 0 0
  2008 2011 120 15,318 9.96% 8,029 167,289
  2009 2012 100 25,575 19.60% 25,575 Vesting July 2012
  2010 2013 120 26,640 n/a    
  2011 2014 140 25,429 n/a    
*
See above.

Summary Statement of Directors’ Emoluments 2011/12

  Date of
service
agreement
Date of
appointment
Basic salary
£’000
Payment
in lieu of
pension(1)
£’000
Annual
cash
bonus
£’000
Annual
deferred
bonus(2)
£’000
Benefits
£’000
Total
excluding
pension
£’000
Total
prior year
excluding
pension
£’000
Executive                  
Neil Carson (3) 1.8.99 1.8.99 768 192 578 289 22 1,849 1,687
Robert MacLeod (4) 3.2.09 22.6.09 416 104 314 78 19 931 822
Larry Pentz (5) 1.1.06 1.8.03 399 57 301 75 59 891 810
Bill Sandford 21.7.09 21.7.09 353 88 266 67 17 791 774
Total     1,936 441 1,459 509 117 4,462 4,093
  Date of
letter of
appointment
Date of
appointment
Fees
£’000
Total
excluding
pension
£’000
Total
prior year
excluding
pension
£’000
Non-executive (6)          
Sir John Banham (Chairman) (7) 10.12.05 1.1.06 91 91 293
Alan Ferguson 10.1.11 13.1.11 57(9) 57 11
Sir Thomas Harris 22.1.09 1.4.09 50 50 50
Michael Roney 29.3.07 1.6.07 56(10) 56 50
Tim Stevenson (Chairman Designate) (8) 10.1.11 29.3.11 225 225
Dorothy Thompson 22.5.07 1.9.07 50 50 50
Alan Thomson (7) 1.8.02 24.9.02 18(9) 18 60
Robert Walvis (7) 1.8.02 24.9.02 18(10) 18 58
Total     565 565 572

The aggregate amount of remuneration receivable by directors and non-executive directors totalled £5,027,000 (2011 £4,665,000).

Notes

(1)
Neil Carson, Bill Sandford and Robert MacLeod no longer accrue pensionable service in the Johnson Matthey Employees Pension Scheme. Messrs Carson and Sandford ceased to accrue with effect from 31st March 2006 and Mr MacLeod ceased to accrue with effect from 31st March 2011. They now receive an annual cash payment in lieu of pension equal to 25% of basic salary. Larry Pentz accrued pension during the year up to the Annual Allowance and received a cash supplement of 21% of basic salary thereafter. These payments are taxable under the PAYE system.
(2)
This is the element of the annual bonus which is payable as shares but is deferred for three years.
(3)
Neil Carson is a non-executive director of AMEC plc. His fees for the year in respect of this non-executive directorship were £54,375. This amount is excluded from the table above and retained by him.
(4)
Robert MacLeod is a non-executive director of Aggreko plc. His fees for the year in respect of this non-executive directorship were £61,750. This amount is excluded from the table above and retained by him.
(5)
Larry Pentz is a non-executive director of Victrex plc. His fees for the year in respect of this non-executive directorship were £48,000. This amount is excluded from the table above and retained by him.
(6)
Non-executive fees (other than for the Chairman) were reviewed on 1st April 2010 for the period from 1st April 2010 to 31st March 2013. The fees are £50,000 per annum, with the fee for chairmanship of the Audit Committee being £10,000 per annum and the Management Development and Remuneration Committee being £8,000 per annum. Sir John Banham’s fees were reviewed on 1st August 2010 for the period 1st August 2010 to 19th July 2011 (the date of his retirement). The Chairman and the non-executive directors do not receive any pension benefits, LTIP allocations, share option grants or bonus payments.
(7)
Sir John Banham, Alan Thomson and Robert Walvis retired on 19th July 2011.
(8)
Tim Stevenson was Chairman Designate until Sir John Banham’s retirement on 19th July 2011, after which he became Chairman.
(9)
Includes £10,000 per annum for chairmanship of the Audit Committee. Alan Ferguson was appointed Chairman of the Audit Committee on 19th July 2011. Alan Thomson previously carried out this role and retired on 19th July 2011.
(10)
Includes £8,000 per annum for chairmanship of the Management Development and Remuneration Committee. Michael Roney was appointed Chairman of the Management Development and Remuneration Committee on 19th July 2011. Robert Walvis previously carried out this role and retired on 19th July 2011.

Pension Benefits

Disclosure of directors’ pension benefits has been made under the requirements of the Financial Services Authority’s Listing Rules and in accordance with the Companies Act 2006. The information below sets out the disclosures under the two sets of requirements.

  Age as at
31st March
2012
Total
accrued
pension as at
31st March
2011(1)
£’000 pa
Total
accrued
pension as at
31st March
2012(1)
£’000 pa
Change in
accrued
pension
after allowing
for inflation
£’000 pa
Transfer
value as at
31st March
2011(2)
£’000
Transfer
value as at
31st March
2012(2)
£’000
Directors’
contributions(3)
£’000
Change in
transfer
value less
directors’
contributions
£’000
Neil Carson 54 353 365 (6) 6,402 7,655 1,253
Robert MacLeod 47 9 9 81 106 25
Larry Pentz (4) 56 111 116 2 1,371 1,702 331
Bill Sandford 58 179 185 (3) 3,779 4,390 611

Notes

(1)
The total accrued pension represents the pension which would be paid annually on normal retirement, based on pensionable service to 31st March 2012 (except in the case of Neil Carson and Bill Sandford whose pensionable service ceased on 31st March 2006 and Robert MacLeod whose pensionable service ceased on 31st March 2011). The element of the pension earned before 31st March 2010 would be subject to an actuarial reduction if retirement precedes age 60, and the element of the pension earned from 1st April 2010 will be reduced if taken before age 65.
(2)
The transfer values have been calculated in accordance with GN11 issued by the actuarial profession. For UK based pension benefits the assumptions used are the same as those in the calculation of cash equivalent transfers from JMEPS. For US based pension benefits the assumptions used are the same as those used for accounting disclosure. No allowance has been made in the transfer values for any discretionary benefits that have been or may be awarded.
(3)
Members are not required to pay contributions towards their pension benefits. Any voluntary contributions paid by executive directors are not shown except where these are matched by the company. Larry Pentz paid voluntary contributions into the supplemental defined contribution account amounting to 3% of his April 2011 salary, this contribution was matched by the company.
(4)
Larry Pentz is a US citizen but became a member of JMEPS on 1st January 2006. Prior to that he was a member of the Johnson Matthey Inc. Salaried Employees Pension Plan (a non-contributory defined benefit arrangement) and also of a US savings plan (401k). He also has benefits in a Supplemental Executive Retirement Plan (SERP). The pension values reported above are the aggregate for his separate membership of the UK and US pension schemes and the SERP. The total accrued pension as 31st March 2011 has been restated to include all of his pension benefits. US entitlements have been converted to sterling by reference to exchange rates on 31st March 2011 and 31st March 2012. Mr Pentz’s US pension was fixed on 31st December 2005. The sterling equivalent of it has fluctuated over the year as a result of exchange rate movements. Of the change in the accrued benefit and the transfer value £300 and £3,020, respectively, is due to currency movements.
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