Report on directors' remuneration
Notes contentsMain elements of remuneration
Total remuneration is made up of fixed and performance-linked elements, with each element supporting different objectives.
Element | Objective | Performance period | Performance conditions |
---|---|---|---|
Base salary | Reflects competitive market level, role and individual contribution | Not applicable | Normally reviewed annually taking into account the remuneration of directors and executives in similar positions in comparable companies, individual performance and the approach to pay across the company as a whole |
Annual incentives | Motivates achievement of annual strategic goals | One year | Subject to achievement of targets for sales, earnings per share or profit, working capital and cash |
Bonus share matching | Encourages executive directors and other senior executives to acquire and hold Pearson shares. Aligns executives’ and shareholders’ interests | Three years | Subject to achievement of target for earnings per share growth |
Long-term incentives | Drives long-term earnings and share price growth and value creation. Aligns executives’ and shareholders’ interests | Three years | Subject to achievement of targets for relative total shareholder return, return on invested capital and earnings per share growth |
Consistent with its policy, the committee places considerable emphasis on the performance-linked elements i.e. annual incentives, bonus share matching and long-term incentives. Our assessment of the relative importance of fixed and performance-related remuneration for each of the directors based on our policy and the data set out in this report is as follows:
Proportion of total compensation
chart descriptionNote The method for valuing thedifferent elements of remuneration is summarised in the table in Benchmarking.
We will continue to review the mix of fixed and performance-linked remuneration on an annual basis, consistent with our overall philosophy.