Management & Governance

Short term incentive plan (STIP)

STIP is a cash bonus plan, designed to support overall remuneration policy by:

• focusing participants on achieving calendar year performance goals which contribute to sustainable shareholder value; and
• providing significant bonus differential based on performance against challenging personal, business, and other targets, including safety.

The committee reviews and approves individual performance against relevant targets and objectives annually. Executive directors' and the Group executive Business Resources STIP payments are linked to three performance criteria: Group financial performance, Group safety performance, personal performance and, in the case of Dick Evans, who is also a product group executive, product group financial and safety performance. Product group chief executives' STIP payments are linked to Group and product group financial performance, product group safety performance and personal performance. Group and product group financial performance is partly measured on an actual underlying net earnings basis and partly on a basis normalised for fluctuations in market prices and exchange rates.

The target level of cash bonus for executives for 2008 is 60 per cent of salary, the same as 2007. Executives may receive up to twice their target (ie, up to 120 per cent of salary) for exceptional performance against all criteria.

• STIP awards for 2007