Directors' Report: GovernanceGlanbia plc Annual Report 2011Committee reportswww.glanbia.com53Composition of the Remuneration Committee and attendance at meetingsThe Remuneration Committee comprises six Non-Executive Directors, of which three members constitute a quorum. The Remuneration Committee met eight times during 2011.The Group Managing Director and the Group Human Resources/Operations Development Director attend Committee meetings by invitation only. They absent themselves when their remuneration is discussed and no Director is involved in considering their own remuneration. The Group Secretary acts as secretary to the Remuneration Committee.Advice and assistance to the Remuneration CommitteeThe Remuneration Committee received independent external advice from Towers Watson Remuneration Consultants, particularly in the formulation and design of the executive remuneration policy 2012-2014, market trends and competitive positioning of remuneration packages, as required. Towers Watson is a member of the Remuneration Consultants Group and adheres to the Voluntary Code of Conduct in relation to executive remuneration consulting. Legal advice to the Remuneration Committee has been provided by Arthur Cox, who also provided other legal services to the Group during the year. The Remuneration Committee also received assistance and advice on remuneration policy, when required, during the year from the Group HumanResources/Operations Development Director, Brian Phelan.Remuneration Committee reportDear Shareholder,I am pleased to present the Remuneration Committee Report for the year ended 31 December 2011. The report details the remuneration principles, policy and actual remuneration of the Group's Executive Directors for that period. The report also details the proposed changes to executive remuneration policy, which was reviewed by the Remuneration Committee in 2011 and which will be effective from 2012 to 2014 inclusive. The revised executive remuneration policy was approved by the Board in November 2011. The key objectives of the 2012-2014 policy are to ensure that Glanbia's remuneration policy represents:> an executive reward system designed to drive superior performance and sustainable, growth for the Group;> best practice in executive reward; and> latest governance practice.An advisory non-binding resolution to approve this report and an ordinary resolution to approve an amended 2008 LTIP will be put to the Annual General Meeting ('AGM') on 9 May 2012.Jerry Liston Remuneration Committee Chairman Jerry Liston Remuneration Committee ChairmanMembers. Jerry Liston (B.A., MBA)(Committee Chairman). Liam Herlihy (Group Chairman). Martin Keane (Vice-Chairman). Henry Corbally (Vice-Chairman). John Callaghan (FCA, FIB). Paul Haran (B.Sc., M.Sc.)Executive remuneration principles and policyRemuneration policy is based on attracting, retaining and motivating executives to ensure that they perform in the best interests of the Group and its shareholders by growing and developing the business. Performance-related elements of remuneration are designed to form an appropriate portion of the overall remuneration package of Executive Directors. These link remuneration to Group performance and individual performance, whilst aligning the interests of Executive Directors with those of shareholders.Key responsibilities> Determine and agree with the Board the framework or broad policy for remuneration of the Non-Executive Directors, the Executive Directors and other senior executives as required.> Determine, within the agreed policy, individual total compensation packages for the Non-Executive Directors, the Executive Directors and other senior executives as required.> Recommend to the Board any employee share-based incentive schemes, award levels and vesting and any performance conditions to be used for such schemes.> Consider and approve Executive Directors' and other senior executives total compensation arrangements annually.The full terms of reference of the Remuneration Committee can be found on the Company's website www.glanbia.com or can be obtained from the Group Secretary.
Directors' Report: Governance54Glanbia plc Annual Report 2011Committee reportswww.glanbia.comThis framework is applied, as far as possible, to all senior executives, in addition to Executive Directors, to create a consistent global approach to driving sustainable performance and to provide a competitive benefits package. The principles and policy are also applied, as far as possible, across the Group below senior executive level, taking account of seniority and local market practice. It is our aim to ensure that our remuneration arrangements are fully aligned with our approach to risk management. Remuneration policy and design 2012 - 2014Executive remuneration policy and design is reviewed by the Remuneration Committee on a three year basis and accordingly was reviewed in 2011, with the advice of Towers Watson Remuneration Consultants. Element DescriptionPurposePolicy and design for 2011Base Salary (fixed)Annual fixed pay.Recognise market value of role and reflect individual skills and experience.Set by reference to the relevant local market median based on an external independent evaluation of the role.Annual Incentive (variable)Annual payment only earned if agreed target performance is achieved.Incentivise Executive Directors to achieve specific short term business and personal performance objectives during a one year period.Incentivise Executive Directors to achieve specific performance goals which are linked to the Group's business plans.Range of incentive potential of 0% to 100% of Base Salary based on growth in annual adjusted Earnings Per Share ('EPS') and achievement of personal objectives.Long Term Incentives (variable)Award shares in the Company if target performance is achieved over a three year period.Focus on long-term performance.Promote stability and retention.Balance longer term risk/reward.Aligns Executive Directors' interests with those of shareholders and incentivises them to pursue superior results over a three year period within the limits of the Group's risk appetite.Incentivise Executive Directors to deliver superior earnings growth and total shareholder returns.Align the interests of Executive Directors to shareholders interests.Maximum individual annual award level of 115% of Base Salary, other than in exceptional circumstances. Vesting level determined by reference to relative Total Shareholder Return ('TSR') and annual adjusted EPS performance - each representing 50% of maximum vesting level. Key elements of remuneration for Executive Directors for 2011Summary of aspects of the remuneration policy that the 2011 review sought to address and outcomesRemuneration policy aspectOutcomeGreater linkage of Executive Directors' remuneration to performance.Potential levels of Annual and Long Term Incentives increased.Superior performance required to receive material increases in variable pay element.Linkage to long term sustainability and alignment to Group risk management policy.Achieved by:> deferral of portion of Annual Incentive which is converted into shares;> requirement to hold shares received pursuant to the Long Term Incentive; and> proposed shareholding requirement levels.Stronger Long Term Incentives and introduction of an additional performance measure in the amended 2008 LTIP.Achieved with the addition of an appropriate Group investment measure, as determined by the Remuneration Committtee, and less relative TSR and EPS dependence.Flexibility and discretion in plans.Remuneration Committee flexibility for change and review of performance criteria where deemed appropriate.Alignment with shareholders/ share value growth.Significant proportion of Annual Incentive linked to share awards and share ownership requirements.Reflect latest governance.Achieved by:> Share ownership guidelines; and> Claw back potential on Annual Incentive deferral to reflect best practice.