Extract from IDS Executive Compensation Review 319

British Energy splits short- and long-term incentives

When a company enters a new phase in its development, the executive remuneration structures are often reviewed to keep them aligned to their objective of supporting the delivery of relevant business targets. These were the circumstances that faced British Energy, which following a restructuring process recently completed a review of its incentive arrangements for directors and other senior managers.

Following the review, a new incentive scheme was introduced which covers only directors and senior managers reporting directly to the chief executive and looks towards the achievement of longer-term targets in line with the way the business is heading. This required the introduction of two separate short- and long-term incentive plans to replace a single long-term deferred bonus scheme which was introduced three years ago. This article provides an insight into the revised annual bonus arrangements, long-term incentives and performance share plan targets. Tables show a summary of the long-term incentive plan and remuneration levels for directors at 31 March 2007, as well as details on the remuneration committee recommendations.