Long-term incentives
Long term incentives (audited)
The Company currently operates a long-term incentive plan under the Wolseley plc 2002 Long Term Incentive Scheme ('2002 Scheme'), which was approved by shareholders in December 2002 and amended at the 2004 Annual General Meeting. The 2002 Scheme (as amended) provides for awards of ordinary shares in the capital of the Company, subject to the Company meeting TSR targets over single three-year periods. All awards are made subject to the achievement of stretching performance conditions and TSR has been selected as the appropriate performance measure to align more closely the interests of the Executive Directors and senior executives with those of shareholders over the long term. The 2002 Scheme rewards the relative outperformance of the Company against a defined list of comparator companies. Calculations of TSR are independently carried out and verified before being approved by the committee.
The lists of comparator companies for awards made under the 2002 Scheme are based upon the constituent members of the FTSE 100 as at the respective dates of grant, excluding banks, telecommunications, IT and utility companies but together with CRH plc and Travis Perkins plc, which compete in the same sector as the Company. A similar group of companies will be selected for the 2008 awards under the 2002 Scheme.
The 2002 Scheme is discretionary. The committee's current policy is to make annual awards to the Group Chief Executive, Executive Directors and other senior executives. Awards are made in shares, save where there are material securities or tax law constraints in overseas jurisdictions where the scheme would be operated, in which case conditional awards in cash would be considered.
A total of 1,226,282 shares (2007: 763,185 shares) were conditionally granted in October 2007 to 127 employees (2007: 118) under the 2002 Scheme. Details of the awards conditionally made to the Executive Directors in office during the year under the 2002 Scheme and outstanding at 31 July 2008 are shown in the table below:
| Name of Director | Interests in shares held at 1 Aug 2007 |
Interests awarded during the year1 |
Interests lapsed during the year2 |
Interests in shares held at 31 July 083 |
|---|---|---|---|---|
| C A S Hornsby | 168,435 | 134,643 | 40,281 | 262,797 |
| R H Marchbank | 86,721 | 57,942 | 23,595 | 121,068 |
| F W Roach | 60,163 | 57,571 | 6,905 | 110,829 |
| S P Webster | 117,271 | 68,746 | 34,884 | 151,133 |
1 The share price on the date of grant of the award was 810 pence per share.
2 Awards granted in 2004 did not pass their TSR performance conditions and all awards lapsed.
3 The performance periods range from 1 August 2006 to 31July 2010.
The maximum amount that can be granted under the amended 2002 Scheme for each award is 200 per cent of base salary per annum; however, awards made to date have not exceeded 125 per cent, or 150 per cent in the case of the Group Chief Executive, of base salary. Each year the committee assesses the proportion of awards that should be made up of both share options and long term incentive awards.
The vesting levels for Long Term Incentive Scheme ('LTIS') awards are shown in the following graph:
Wolseley LTIS vesting - 2005 awards onwards (TSR)
Extant awards remain subject to the achievement of performance conditions following a participant's agreed retirement and vesting is determined at the end of the performance period.
The following table sets out the percentage of each award which has vested and the percentage of each extant award, had it vested on 31 July 2008:
| Year of award | Percentage vested on maturity or indicative vesting percentage based on performance as at 31 July 2008 |
|---|---|
| 2002 | 100% (vested 31 July 2005) |
| 2003 | 34.5% (vested 31 July 2006) |
| 2004 | 0% (vested 31 July 2007) |
| 2005 | 0% (at 31 July 2008) |
| 2006 | 0% (performance after 24 months) |
| 2007 | 0% (performance after 12 months) |