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## REMUNERATION REPORT (AUDITED) 

The new scheme will comprise two components for our most senior executives in the 2014 financial year: 

1. a proportion of long term options; and 

2. a smaller proportion of deferred performance shares granted at the end of the year for achieving milestones in the year: 

• in order to align the majority of the incentive with growth in shareholder returns, options will be granted following our 2013 AGM with an exercise price set at that time. These options will only vest if the absolute total shareholder return growth performance condition is satisfied. This condition will be tested between July 2016 and June 2017. Performance conditions are set out below; 

• a smaller percentage of incentive opportunity will be in the form of deferred performance shares. These shares will be granted for achieving annual milestones in the transformation strategy. These milestones will be set at the start of each year by the Board in line with the strategic plan. These milestones are set to reflect specific accountabilities for our management including variously revenue, earnings, market share and cost reduction targets at Group and/or business level. The specific targets are currently being finalised for 2014 and we will report on achievements against these targets and the associated outcomes in our 2014 Remuneration Report; and 

• in order to align the value of these rewards with our longer term prospects, half of the shares granted following testing of performance in 2014 will be deferred for 12 months (i.e. until 2015) and the other half for two years (i.e. until 2016). The shares will be forfeited if the executive resigns or is terminated for poor performance during the deferral period. 

The following diagram shows how the scheme will operate and the objectives that it aims to achieve. 

<img src='content_image/275265.jpg'>

