and Interests
Remuneration Committee
The Remuneration Committee comprises three independent non-executive
Directors, Maurice Keane (Chairman), Róisín Brennan and David Byrne,
and the Chairman of the Board, Michael Buckley.
The role and responsibilities of the Remuneration Committee are set out in its written terms of reference, which are available on request and on the Company’s website www.dcc.ie. The principal responsibilities of the Committee are:
| • | determining the policy for the remuneration of the Chairman, the Chief Executive, the other executive Directors and certain senior Group management, |
| • | determining their remuneration packages, including salary, bonuses, pension rights and compensation payments, and |
| • | the granting of awards under the Company’s long term incentive schemes. |
The Remuneration Committee consults with the Chief Executive on remuneration for the other executive Directors and for senior Group management. The Remuneration Committee is authorised to obtain access to professional advice if deemed desirable. It has engaged Mercer to make recommendations in relation to and assist in the implementation of a proposed new long term incentive plan, as detailed on page 55.
Remuneration Policy
The Company’s policy in relation to remuneration is to ensure that
employment and remuneration conditions for the Group’s senior executives
properly reward and motivate them to perform in the best interests of
the shareholders in the long term, within the framework set out in the
Combined Code on Corporate Governance.
The typical elements of the remuneration package for senior executives are basic salary, performance related annual bonuses, pension benefits and other taxable benefits (principally the use of a company car) and participation in the Company’s long term incentive schemes.
Directors’
Remuneration
Executive Directors’ Remuneration
Salaries
The salaries of executive Directors are reviewed annually on 1 January
having regard to personal performance, Company performance and competitive
market practice. No fees are payable to executive Directors.
There have been no increases in the salaries of executive Directors for the year commencing on 1 January 2009.
Performance related annual bonuses
Performance related annual bonuses are payable to the executive Directors
in respect of the financial year to 31 March. The maximum bonus potential,
as a percentage of basic salary, for each executive Director is reviewed
and set annually and ranged between 60% and 100% of basic salary for
the year ended 31 March 2009.
The performance targets, which are set annually, are based on growth in Group earnings and in divisional operating profit, measured on a constant currency basis, against a pre-determined range, and the overall contribution and personal performance of each executive Director, including Group development. The approximate weighting of the performance targets is 60% to 80% for profit and 20% to 40% for personal contribution.
Pension benefits
The Company funds pension schemes for executive Directors which aim
to provide, on the basis of actuarial advice, a pension of two thirds
of pensionable salary at normal retirement date. Pensionable salary
is calculated as 105% of basic salary and does not include any performance
related bonuses or benefits.
Non-Executive Directors’ Remuneration
The remuneration of the non-executive Directors is determined by the
Board. The fees paid to non-executive Directors reflect their experience
and ability and the time demands of their Board and Board Committee
duties.
The basic non-executive Director fee amounts to €60,000 per annum. Additional fees are paid to members and the Chairmen of Board committees.
The Chairman of the Board receives a total fee of €225,000 and the Deputy Chairman/Senior Independent Director receives a total fee of €103,000, in both cases inclusive of the basic fee and committee fees.
There have been no increases in the fees of non-executive Directors for the year commencing on 1 April 2009.
Non-executives Directors do not participate in the Company’s long term incentive schemes and do not receive any pension benefits from the Company.
An office is provided for the use of the Chairman.
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.
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| 2009 €’000 |
2008 €’000 |
2009 €’000 |
2008 €’000 |
2009 €’000 |
2008 €’000 |
2009 €’000 |
2008 €’000 |
2009 €’000 |
2008 €’000 |
||||||
| Executive Directors | |||||||||||||||
| Tommy Breen | 677 | 514 | 642 | 411 | 25 | 22 | 189 | 149 | 1,533 | 1,096 | |||||
| Donal Murphy4 | 100 | - | 180 | - | 7 | - | 34 | - | 321 | - | |||||
| Fergal O’Dwyer | 365 | 347 | 246 | 240 | 22 | 21 | 123 | 116 | 756 | 724 | |||||
| Jim Flavin5 | 133 | 832 | - | - | 5 | 38 | 20 | 119 | 158 | 989 | |||||
| Total for executive Directors | 1,275 | 1,693 | 1,068 | 651 | 59 | 81 | 366 | 384 | 2,768 | 2,809 | |||||
| Non-executive Directors | |||||||||||||||
| Michael Buckley6 | 201 | 69 | - | - | - | - | - | - | 201 | 69 | |||||
| Tony Barry7 | 56 | 61 | - | - | - | - | - | - | 56 | 61 | |||||
| Róisín Brennan | 73 | 69 | - | - | - | - | - | - | 73 | 69 | |||||
| David Byrne8 | 25 | - | - | - | - | - | - | - | 25 | - | |||||
| Paddy Gallagher9 | 41 | 64 | - | - | - | - | - | - | 41 | 64 | |||||
| Maurice Keane | 77 | 69 | - | - | - | - | - | - | 77 | 69 | |||||
| Kevin Melia4 | 23 | - | - | - | - | - | - | - | 23 | - | |||||
| John Moloney10 | 10 | - | - | - | - | - | - | - | 10 | - | |||||
| Bernard Somers | 93 | 79 | - | - | - | - | - | - | 93 | 79 | |||||
| Alex Spain11 | - | 41 | - | - | - | - | - | - | - | 41 | |||||
| Total for non-executive Directors | 599 | 452 | - | - | - | - | - | - | 599 | 452 | |||||
| Ex gratia pension to dependant of retired Director | 10 | 10 | |||||||||||||
| Total | 3,377 | 3,271 | |||||||||||||
Notes
| 1 | Fees are payable only to non-executive Directors and include Board Committee fees. |
| 2 | In the case of the executive Directors, benefits relate principally to the use of a company car. |
| 3 | Executive Director pension contributions in the year ended 31 March 2009 were made to a defined benefit scheme for Tommy Breen, Donal Murphy and Fergal O’Dwyer and to a defined contribution arrangement for Jim Flavin. |
| 4 | Kevin Melia and Donal Murphy were appointed as Directors on 1 December 2008. |
| 5 | Jim Flavin resigned as a Director on 27 May 2008. |
| 6 | Michael Buckley was appointed Chairman on 27 May 2008. |
| 7 | Tony Barry retired as a Director on 28 February 2009. |
| 8 | David Byrne was appointed as a Director on 1 January 2009. |
| 9 | Paddy Gallagher retired as a Director on 1 December 2008. |
| 10 | John Moloney was appointed as a Director on 2 February 2009. |
| 11 | Alex Spain retired as a Director on 30 June 2007. |
Executive Directors’ Defined Benefit Pensions
The table below sets out the increase in the accrued pension benefits
to which executive Directors have become entitled during the year ended
31 March 2009 and the transfer value of the increase in accrued benefit,
under the Company’s defined benefit pension scheme:
| Increase in
accrued pension benefit (excl inflation) during the year1 €’000 |
Transfer value
equivalent to the increase in accrued pension benefit2 €’000 |
Total accrued pension benefit at year end3 €’000 |
|
| Executive Directors | |||
| Tommy Breen | 64 | 761 | 255 |
| Donal Murphy4 | 2 | 17 | 70 |
| Fergal O’Dwyer | 16 | 168 | 145 |
| Total | 82 | 946 | 470 |
Notes
| 1 | Increases are after adjustment for inflation over the year and reflect additional pensionable service and salary. |
| 2 | The transfer value equivalent to the increase in accrued pension benefit has been calculated on the basis of actuarial advice in accordance with Actuarial Guidance Note GN11. The transfer values do not represent sums paid to or due to the Directors named, but are the amounts that would transfer to another pension scheme in respect of the increase in accrued pension benefit during the year. |
| 3 | Figures represent the total accrued pension payable from normal retirement date, based on pensionable service at 31 March 2009. |
| 4 | The increase in accured pension benefit and the transfer value in the case of Donal Murphy relate to the period from his appointment as a Director on 1 December 2008. |
Share Options
DCC plc 1998 Employee Share Option Scheme
Executive Directors and other senior executives participated in the
DCC plc 1998 Employee Share Option Scheme. As the ten year period during
which share options could be granted under this Scheme expired in June
2008, no further grant of such options will be made.
The percentage of share capital which could be issued under the Scheme, the phasing of the grant of options and the limit on the value of options which could be granted to any individual complied with guidelines published by the institutional investment associations. The Scheme provided for the grant of both basic and second tier options, in each case up to a maximum of 5% of the Company’s issued share capital.
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 3.4% 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.
Directors are encouraged to hold their options beyond the earliest exercise date.
Details as at 31 March 2009 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 2008 |
Granted in year |
Exercised in year |
Lapsed in year |
At 31 March 2009 |
Weighted average option price at 31 March 2009 € |
Normal Exercise Period |
Weighted average exercise price € |
Weighted average market price at date of exercise € |
|
| Executive Directors | |||||||||
| Tommy Breen | |||||||||
| Basic Tier | 245,000 | 20,000 | 45,000 | - | 220,000 | 13.59 | June 2001 – May 2018 |
7.09 | 13.52 |
| Second Tier | 190,000 | - | 45,000 | - | 145,000 | 9.17 | June 2003 – Nov 2012 |
7.10 | 13.52 |
| Donal Murphy1 | |||||||||
| Basic Tier | 85,000 | - | - | - | 85,000 | 13.77 | Aug 2001 – May 2018 |
- | - |
| Second Tier | 45,000 | - | - | - | 45,000 | 9.70 | Aug 2003 – Nov 2012 |
- | - |
| Fergal O’Dwyer | |||||||||
| Basic Tier | 197,500 | 15,000 | 45,000 | - | 167,500 | 12.87 | June 2001 – May 2018 |
7.09 | 13.52 |
| Second Tier | 165,000 | - | 45,000 | - | 120,000 | 8.94 | June 2003 – Nov 2012 |
7.10 | 13.52 |
| Jim Flavin2 | |||||||||
| Basic Tier | 428,416 | - | 333,416 | 95,000 | - | - | - | 8.60 | 15.53 |
| Second Tier | 395,000 | - | 275,000 | 120,000 | - | - | - | 7.15 | 15.44 |
| Company Secretary | |||||||||
| Gerard Whyte | |||||||||
| Basic Tier | 100,000 | 10,000 | 14,000 | - | 96,000 | 13.13 | June 2001 – May 2018 |
7.21 | 13.74 |
| Second Tier | 80,000 | - | 14,000 | - | 66,000 | 9.22 | June 2003 – Nov 2012 |
7.21 | 13.74 |
| 1 | Donal Murphy was appointed as a Director on 1 December 2008. The opening balances above relate to the position at the date of his appointment. |
| 2 | Jim Flavin resigned as a Director on 27 May 2008. |
The market price of DCC shares on 31 March 2009 was €11.40 and the range during the year was €10.05 to €17.00.
DCC Sharesave Scheme
The Group established a Revenue approved save as you earn scheme, the
DCC Sharesave Scheme, in 2000. On 15 June 2001, options were granted
under the Scheme to those Group employees, including executive Directors,
who entered into associated savings contracts. The options were granted
at an option price of €8.79 per share, which represented a discount
of 20% to the then market price as provided for by the rules of the
Scheme. There are no options outstanding under the June 2001 grant.
On 10 December 2004, a second grant of options under this Scheme was
made to Group employees, not including executive Directors, at an option
price of €12.63 per share, which represented a discount of 20% to the
then market price. These options are exercisable between December 2007
and March 2011. At 31 March 2009, Group employees held options to subscribe
for 223,398 ordinary shares under the DCC Sharesave Scheme.
Details of the executive Directors’ and the Company Secretary’s options to subscribe for shares under the DCC Sharesave Scheme are set out below:
| No. of options At 31 March 2009 |
No. of options At 31 March 2008* |
|
| Executive Directors | ||
| Tommy Breen | - | - |
| Donal Murphy | 653 | 653 |
| Fergal O’Dwyer | - | - |
| Company Secretary | ||
| Gerard Whyte | 815 | 815 |
* or date of appointment if later.
Additional information in relation to the DCC plc 1998 Employee Share Option Scheme and the DCC Sharesave Scheme appears in note 10 on page 80.
Review of Long Term Incentive Arrangements
Following the termination of the DCC plc 1998 Employee Share Option
Scheme in 2008, the Remuneration Committee undertook a review of long
term incentive arrangements for executive Directors and senior management,
in which it was advised by independent consultants Mercer. Arising from
the review, it was concluded that the Company should introduce a new
long term incentive plan. Accordingly, following consultation with the
Irish Association of Investment Managers and other significant shareholders,
the DCC plc Long Term Incentive Plan 2009 (‘the Plan’) will be put to
shareholders for approval at the forthcoming Annual General Meeting.
Executive Directors will be eligible to participate in the Plan if approved.
Further details of the proposed Plan are set out in the Notice of Annual
General Meeting and explanatory letter from the Chairman.
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 2009 (together with their interests at 31 March 2008 or date
of appointment, if later) were:
| No. of Ordinary
Shares At 31 March 2009 |
No. of Ordinary
Shares At 31 March 2008* |
|
| Directors | ||
| Michael Buckley | 10,000 | 10,000 |
| Tommy Breen | 279,395 | 214,395 |
| Róisín Brennan | - | - |
| David Byrne | - | - |
| Maurice Keane | 5,000 | 5,000 |
| Kevin Melia | - | - |
| John Moloney | - | - |
| Donal Murphy | 70,460 | 70,460 |
| Fergal O’Dwyer | 254,889 | 214,889 |
| Bernard Somers | 1,000 | 1,000 |
| Company Secretary | ||
| Gerard Whyte | 137,200 | 126,544 |
* or date of appointment if later.
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 2009.
The Company’s Register of Directors Interests (which is open to inspection) contains full details of Directors’ shareholdings and share options.
Directors’ Service Agreements
With the exception of Tommy Breen, Chief Executive, who has a service
agreement with a minimum notice period of twelve months, none of
the other Directors has a service contract with the Company or with
any member of the Group.