Tullett Prebon plc Annual Report 2010 The Tullett Prebon Long Term Incentive Plan (‘LTIP’) was approved by shareholders in 2006. The initial grants were made in 2008 at 200% of salary plus bonus. Subsequent awards are limited to 300% of annual salary. Details of awards made are set out below. Total remuneration levels for Executive Directors Comparable levels of remuneration for Executive Directors in similar companies have been reviewed, with the aid of professional advice. The review confirmed that Tullett Prebon’s approach is in line with normal practices adopted in the inter-dealer broker sector. The Remuneration Committee has also taken into account the pay and employment conditions of other employees in the Company, particularly the remuneration of Senior Management, in determining Executive Directors’ remuneration. The Company aims to reward all employees according to the nature of their role, their performance and market forces, and therefore does not have a policy on the ratio of Executive Directors’ remuneration to that of other groups of employees in the Company. The relative importance of the fixed and variable elements of remuneration for the Executive Directors has been carefully considered by the Remuneration Committee. Apart from fixed salaries, all other elements of remuneration are related to performance. Including the value of the LTIP awards as at the date of grant in total remuneration, for 2010 the proportion of remuneration that is related to performance for Terry Smith was 90% (2009: 90%) and for Paul Mainwaring was 84% (2009: 87%). As the 2010 operating margin is less than 17.5%, none of the awards made in 2008 will vest. 2009 Awards For awards made in 2009, minimum vesting of 25% of the awards will be achieved if the ranking percentile of the Company’s TSR over the three years to 31 December 2011 relative to the TSR over that period of all other companies comprising the FTSE 250 (excluding investment trusts) at 1 January 2009 is 50th, with maximum vesting of 100% if the ranking percentile is 25th or better, subject in both cases to achieving in 2011 ROCE of not less than 25% on operating assets and goodwill, including on future acquisitions. The Remuneration Committee considers that relative TSR meets investors’ expectations of outperformance against a peer group for LTIP vesting and the ROCE measure provides a financial performance hurdle. The awards made in 2009 are in the form of share options, exercisable for £1 in total. 2010 Awards For two-thirds of the awards made in 2010, minimum vesting of 25% of the awards will be achieved if the ranking percentile of the Company’s TSR over the three years to 31 December 2012 relative to the TSR over that period of all other companies comprising the FTSE 250 (excluding investment trusts) at 1 January 2010 is 50th, with maximum vesting of 100% if the ranking percentile is 25th or better. For one-third of the awards made in 2010, minimum vesting of 25% of the awards will be achieved if the Company’s annualised TSR over the three years to 31 December 2012 is equal to RPI +4.5%, with maximum vesting of 100% if annualised TSR is equal to RPI +9.5% or above. Vesting of awards is subject in all cases to achieving in 2012 a ROCE of not less than 25% on operating assets and goodwill, including on future acquisitions. The Remuneration Committee considers that the use of both relative and absolute TSR measures meets investors’ expectations of outperformance against a peer group for LTIP vesting and the ROCE measure provides a financial performance hurdle. The awards made in 2010 are in the form of share options, exercisable for £1 in total. Long term share incentive plans Tullett Prebon Long Term Incentive Plan Shareholder approval was granted in November 2006 for the discretionary long term incentive plan, the LTIP. The principal aim of the Tullett Prebon LTIP is to improve operating performance. The first awards under this plan were made in 2008. 2008 awards For awards made in 2008, minimum vesting of awards will be achieved if annual revenue growth is 5% per annum for the three years to 31 December 2010 with maximum vesting of awards if annual revenue growth is 10% per annum over the same period, subject in both cases to achieving in 2010 operating margins of 17.5% and a return on capital employed (‘ROCE’) of not less than 25% on operating assets and goodwill, including on future acquisitions. The Remuneration Committee selected these measures as they were consistent with business objectives at that time. The awards made in 2008 are in the form of share options, exercisable for £1 in total. The Remuneration Committee attached an investment condition to LTIP awards made in 2008 under which holders of those awards are required to use one-half of their annual bonuses in respect of 2008 and 2009 to purchase shares in the Company in order to retain their right to the award. Shares acquired under the investment condition are required to be held until the first date on which the awards become exercisable (March 2011). 35 SHAREHOLDER INFORMATION FINANCIAL STATEMENTS GOVERNANCE CHAIRMAN’S STATEMENT & BUSINESS REVIEW
