Land Securities

The Remuneration Committee aims to pay salaries at around mid-market levels, with bonuses and share awards for superior performance against the Company’s business targets. Accordingly, a substantial proportion of the Executive Directors’ remuneration is delivered through performance-related pay, with incentives to outperform industry performance benchmarks.

Remuneration packages for Executive Directors are benchmarked by the Committee using research prepared by Hewitt New Bridge Street ('HNBS'), a specialist remuneration consultant. The research is carried out by creating two comparator groups. The first is a group of large Real Estate and Utilities companies (which have a high fixed asset value relative to their market capitalisation and are considered good comparators) and the second is companies with a similar market capitalisation to the Company.

The Committee also has oversight for pay awards and policy across the Group, with particular focus on the remuneration of senior managers, whose pay is also the subject of benchmarking research prepared by HNBS. The Committee ensures, where appropriate, that the types of incentives offered to senior managers are similar to those offered to Executive Directors, with similar performance and vesting criteria.

The Remuneration Committee’s objective is to align individual reward with the Group’s performance both in the short and long term. The remuneration package we offer our Executive Directors seeks to do this in the following way: 

1. Basic salaries reflecting an individual’s on-going performance and contribution to the business.
2. Annual bonuses tailored to reward high performance against key objectives and superior relative performance of the Group compared against property industry benchmarks.
3. Long-Term Incentive Plan rewards for Executive Directors aligned with our long-term business objectives and value created for shareholders.
4. 25% of any bonus awarded in relation to achievement against the Group’s key business priorities will be deferred into the Company’s shares for three years. 50% of any award made in relation to exceptional outperformance against property industry benchmarks is deferred into the Company’s shares for two years. Deferral operates as a strong retention tool.
5. Within five years of joining the Board, all Executive Directors must own shares with a value of at least one and a half times their basic salary and, in the case of the Chief Executive, twice his basic salary.

More details on how these forms of incentive are structured and how they were applied to remuneration in the year under review are set out in our annual report.

The salaries for Executive Directors are set out in the table below which also shows the amounts of their bonuses paid in cash and deferred into shares. An explanation of the basis for the award of these bonuses appears in the Remuneration policies section of our annual report. For a full audited remuneration table, please refer to the Directors' emoluments table in our annual report.

The Committee has awarded Executive Directors pay increases averaging 3.1%, with the amounts shown in the table below. Pay increases awarded across the rest of the Group for the coming year average 2.7%. This compares with the previous year, where average increases of 2.0% were awarded to Executive Directors as against 2.4% for the rest of the Group. In the year prior to that, no salary increase was awarded to Executive Directors. Pay increases take effect from 1 July 2011.

During the course of the 2010/11 year, the Remuneration Committee considered a number of matters which included a review of:

• research compiled by the Group’s external benefit consultants benchmarking Executive Director and senior managers’ salaries against those paid to executive directors and senior managers at other companies within both the Real Estate and Utilities sectors and other listed companies with similar market capitalisations
• salaries of Executive Directors and senior managers, together with overall levels of salary increases across the Group
• achievement against key business targets under the annual bonus scheme
• achievement against the performance conditions for the Long-term Incentive and Matching Share Plans
• proposed share incentive awards to Executive Directors and senior managers
• Directors’ compliance with Share Ownership Guidelines
• pension arrangements across the Group in the light of legislative changes.

We pay our Chairman a fee of £300,000 and each Non-executive Director a base fee of £60,000. These fees were set in autumn 2009 and were not increased during the year under review. Non-executive Directors are paid further amounts for specific duties and responsibilities, such as chairing a Board Committee, but are not paid additional fees for attending Board Committee meetings. 

The table below summarises what we paid our Non-executive Directors in the year 2010/11.