Directors' remuneration report

"The Company is committed to open and transparent dialogue with its shareholders on remuneration as well as other governance matters. As a matter of course the Remuneration Committee will consult with key institutional shareholders and various representative bodies about the incentive arrangements of the Company's Executive Directors."

John sussens, remuneration committee chairman

Introductory statement from the remuneration committee chair

Dear shareholder

As outlined earlier in this Annual Report, 2012 was a year of fundamental change for Cookson Group plc ("Cookson"). In December, Cookson demerged into two new businesses, Vesuvius plc and Alent plc. Vesuvius plc became the new holding company of the Engineered Ceramics and Precious Metals Processing divisions, and Alent plc became the new holding company of the Performance Materials division. This report focuses on the philosophy and remuneration arrangements that the Remuneration Committee has put in place for Vesuvius following the demerger. We are required by statute to provide details of Directors' remuneration from the date of incorporation of the Company to 31 December 2012, despite the fact that Vesuvius plc was only separately listed for 13 days of 2012, from 19 December to 31 December. Although not required by statute, we have also provided information on Directors' remuneration for the full year ended 31 December 2012 as we believe this is more helpful to shareholders. This report therefore contains the following sections:

  • Remuneration Committee Structure and Remit;
  • Impact of the demerger on Executive Directors' 2012 Executive Remuneration Arrangements and Outstanding Share Incentives;
  • Remuneration Policy for Executive Directors for 2013;
  • Directors' Contracts;
  • Directors' Remuneration for the Statutory Period from Incorporation to 31 December 2012; and
  • Directors' Remuneration for 2012.

The report includes a number of the disclosures that have been recommended by the Department for Business, Innovation and Skills in its draft new reporting regulations.

In terms of the Company's overall remuneration policy, the remuneration structure for Executive Directors and other senior managers, like that of Cookson, aims to:

  • attract and retain high calibre executives;
  • strongly support the Company's strategy;
  • align management's interests with those of shareholders; and
  • foster a high performance culture, with a substantial portion of remuneration being performance linked.

The Company aims to provide median total remuneration levels for target performance and up to upper quartile total remuneration levels for superior performance. This is assessed against FTSE 250 companies and relevant international sector-specific companies to reach a rounded judgement.

As disclosed in the demerger prospectus and approved by shareholders at the time of the demerger, the remuneration of the Executive Directors comprises base salary, annual incentive, the long-term incentive plan ("LTIP") and retirement benefits. This is similar to the pre-demerger remuneration structure at Cookson except that it is simpler as it excludes both bonus deferral of the annual incentive and the matching shares which formed part of the Cookson Group plc long-term incentive plan.

When formulating this remuneration policy and structure at the time of the demerger, the overall intention was that it would result, in broad terms and as far as possible, in a "no gain-no loss" position for Executive Directors as compared with the pre-demerger Cookson remuneration arrangements, aside from some individuals who were either new hires or promotions. This remuneration policy, structure and positioning may change at some point post-demerger, but it is not anticipated that any material changes will be made within the Company's first year.

The Company is committed to open and transparent dialogue with its shareholders on remuneration as well as other governance matters. As a matter of course the Remuneration Committee will consult with key institutional shareholders and various representative bodies about the incentive arrangements of the Company's Executive Directors. Indeed, during the demerger process, the views of Cookson's largest shareholders were sought on a number of matters, including in relation to the proposed remuneration policy, structure and positioning of Vesuvius. These views were very supportive and were reflected in 97.73% of votes at the demerger General Meeting being cast in favour of the approval of the new Alent and Vesuvius Share Plans. We look forward to continuing this dialogue.

On behalf of the Remuneration Committee

John sussens
Chairman, Remuneration Committee
28 March 2013

Remuneration committee structure and remit

Members

John Sussens (Committee Chairman)
Nelda Connors
Jeff Hewitt
Jane Hinkley
Jan Oosterveld

Roles and responsibilities of the Remuneration Committee

The Remuneration Committee (the "Committee") is responsible for:

  • setting the appropriate remuneration for the Chairman, the Executive Directors and the Company Secretary;
  • recommending and monitoring the level and structure of remuneration for senior management, being the first layer of management below Board level; and
  • overseeing the operation of any Executive share incentive plans.

A copy of the Remuneration Committee's Terms of Reference is available on the Company's website, www.vesuvius.com.

Composition of the Remuneration Committee

The current members of the Remuneration Committee are all the independent Non-executive Directors. Mr Sussens, who chairs the Remuneration Committee, will be retiring as a Director at the forthcoming AGM, and Ms Hinkley will take over this role. Messrs Hewitt, Oosterveld and Sussens were appointed as Directors of the Company on 31 October 2012. Ms Hinkley was appointed on 3 December 2012 and Ms Connors on 1 March 2013. The Company Secretary acts as Committee Secretary. The Chairman, Chief Executive, Chief Financial Officer and the non-independent Non-executive Director, Mr Gardell, are invited to attend Committee meetings as appropriate, but do not participate in discussions of their own remuneration.

Advice provided to the Remuneration Committee

The Remuneration Committee appointed the external advisers Towers Watson ("Towers") to assist it in formulating policies and deciding individual remuneration levels. The Committee is also advised by the Chief Executive, the Vice President Human Resources, the Company Secretary, and by the law firm Clifford Chance LLP ("CC"). Towers was appointed directly by the Remuneration Committee to provide advice on executive remuneration matters, including remuneration structure and policy, updates on market practices and trends, and guidance on the implementation and operation of long-term incentive plans. Towers has also provided the Remuneration Committee with remuneration benchmarking data for certain executives. CC provides advice on the operation of executive share plans. Towers is a signatory to the Remuneration Consultants Group Code of Conduct in relation to Executive Remuneration Consulting in the UK.

Towers provides other remuneration and benchmarking advice to the Company, and CC provides legal advice to the Company. The Remuneration Committee does not believe that the provision of any of these services to the Company compromises the independence or integrity of the advice that it receives from Towers and CC.

Activities of the Remuneration Committee

The Company's Remuneration Committee only met formally once during the year under review, but as members of the Cookson Remuneration Committee, Messrs Hewitt, Oosterveld and Sussens were involved in discussions regarding the implementation of Vesuvius' new remuneration programme for senior executives in advance of the demerger.

The Remuneration Committee expects to meet at least four times in 2013 to consider key matters, including:

  • the salary review proposals for the Executive Directors and senior management;
  • reviewing achievement against the performance targets, and approving payouts, in respect of the 2012 annual incentive arrangements;
  • setting performance targets and approving the structure of the 2013 annual incentive arrangements;
  • considering the Company's performance against the performance conditions applicable to the 2010 Cookson Long-Term Incentive Plan, and authorising the vesting of these awards where relevant;
  • setting the performance conditions and authorising the grant of awards under the Vesuvius Share Plan;
  • receiving feedback on the Remuneration Committee Chairman's meetings with key institutional shareholders regarding the Company's remuneration policy and practice, and in the light of this, and advice received from the external advisers regarding trends in remuneration practice and governance, discussing the Company's approach to executive remuneration and reviewing whether any changes should be made;
  • reviewing the Remuneration Committee's Terms of Reference, and recommending any amendments to the Board for approval; and
  • reviewing and approving the 2012 Directors' Remuneration Report.

Impact of the demerger on executive directors' 2012 cookson remuneration arrangements and outstanding share incentives:

Cookson 2012 Annual Incentive

For the financial year 2012, Mr Wanecq's Annual Incentive was based on financial targets for Cookson as a whole and separately, for the Engineered Ceramics Division. The Cookson element was based on Cookson Group Headline Earnings performance, with an adjustment based on Cookson's working capital performance to focus greater attention on cash flow performance. The effect of this was to reduce the level of payout that could be achieved by up to 10% if specified working capital targets were not attained. The adjuster could increase the level of payout by up to 10%, but not above the usual plan maximum. Half of Mr Wanecq's Annual Incentive was assessed against this criterion and the remainder based upon the Cookson Engineered Ceramics division's trading profit adjusted for performance against working capital targets. His maximum incentive potential was 100% of salary. For 2012 the Cookson Group Headline Earnings performance and the Engineered Ceramics Division's trading profit were both below threshold; there is therefore no payout due to Mr Wanceq in relation to the 2012 Annual Incentive.

As part of the arrangements agreed upon his recruitment to the Company, Mr O'Shea is entitled to receive the maximum Annual Incentive payout of 100% for 2012 based on his pro rated salary for his period in employment. No performance conditions were applicable to this award.

For 2012, the following Annual Incentive payments are payable:

NameMeasureWeightingTarget
Performance
Achieved
(% of salary)
Incentive Paid
(% of salary)
François WanecqGroup Headline Earnings50%£207mnilnil
Engineered Ceramics Trading profit50%£208mnilnil
Chris O'SheaNonen/an/a100%100%

Mr O'Shea's Annual Incentive payment is reported in the Directors' remuneration table.

Cookson Long Term Incentive Plan ("Cookson LTIP")

The Demerger did not result in the early vesting of awards held under the Cookson LTIP.

2010 Cookson LTIP Award

In the case of the grants made in 2010 under the Cookson LTIP where the performance period was due to end on 31 December 2012, the period was shortened very slightly, to end at the Demerger Effective Time (18 December 2012), so that performance was measured purely in relation to Cookson's performance — being relative TSR performance and its growth in Headline Earnings Per Share ("EPS") (50% each). These awards are due to vest on, or shortly after, 7 April 2013 and were rolled over to become awards over a combination of Vesuvius and Alent shares in the same combination that applied to Cookson shareholders under the terms of the demerger. This reflects the fact that these awards relate to Cookson performance and not the future performance of Vesuvius or Alent.

The proportion of shares vesting under the 2010 Cookson LTIP is based on the performance of Cookson Group plc against specified performance conditions. Vesting of 50% of shares awarded is based upon the three-year TSR performance of the Cookson Group relative to that of the constituent companies of the FTSE 250 excluding Investment Trusts, and 50% on Headline EPS growth over a three-year period. The two measures operate independently.

Vesting of 50% of Performance Shares and Matching Share Awards under the 2010 Cookson LTIP awards is based on TSR performance in accordance with the following schedule:

TSR ranking relative to FTSE 250
excluding Investment Trusts
Performance Shares
Vesting Percentage
Matching Shares Vesting Ratio
(Matching Shares: Investment Shares)
Below Median0%0
Median12.5%0.25 : 1
Upper Quintile (top 20%)50%1.125 : 1
Between Median and Upper QuintilePro rata between 12.5% and 50%Pro rata between 0.25 : 1 and 1.125 : 1

Vesting of 50% of Performance Shares and Matching Share Awards under the 2010 Cookson LTIP awards is based on Headline EPS growth, as compared with the compound annual growth in the Retail Prices Index ("RPI"), in accordance with the following schedule:

Annual Compound Headline
EPS Growth above RPI
Performance Shares
Vesting Percentage
Matching Shares Vesting Ratio
(Matching Shares: Investment Shares)
Below 3%0%0
3%12.5%0.25 : 1
At or above 10%50%1.125 : 1
Between 3% and 10%Pro rata between 12.5% and 50%Pro rata between 0.25 : 1 and 1.125 : 1

Matching Share Awards only vest if the Investment Shares originally purchased have been retained.

The performance period applicable to the awards made in 2010 ended on 18 December 2012. Cookson's TSR performance during this almost three-year performance period was assessed against the comparator group (FTSE 250 excluding investment trusts) and it was determined that Cookson's performance was between the median and the upper quintile, a level which results in the vesting of 17.7% out of a maximum of 50% of Performance Share awards and Matching Share awards vesting at a ratio of 0.372 : 1, compared to a maximum vesting ratio of 1.125 : 1. In addition, Cookson's annual compound Headline EPS growth was assessed for the performance period as being over 10% above RPI, a level which results in the maximum 50% of Performance share awards vesting and Matching shares awards vesting at a ratio of 1.125 : 1. Prior to the vesting of any award, as an additional hurdle, vesting must be justified by the underlying financial performance of Cookson over the performance period. It has been concluded that the vesting of the 2010 LTIP awards is justified by the underlying financial performance of Cookson. Accordingly, 67.7% of Mr Wanecq's 2010 LTIP Performance Share award will vest and his Matching Share award will vest at a ratio of 1.497 : 1 on, or shortly after, 7 April 2013.

2011 and 2012 LTIP Awards

In the case of the grants made in 2011 and 2012 under the Cookson LTIP, it was agreed prior to the demerger that awards for participants who went on to be employed by Alent plc, would be rolled over to become awards over Alent shares of equivalent value. For those participants who went on to be employed by Vesuvius plc, their awards would be rolled over to become awards over Vesuvius shares of equivalent value. For those participants who had already left the Cookson Group under circumstances in which they retained their LTIP entitlement, or who, at the request of Cookson, left or are leaving the Cookson Group as a result of the demerger and who have not joined either Alent or Vesuvius on a permanent basis, their awards have been rolled over to become awards over a combination of Alent and Vesuvius shares in the same combination as applied to Cookson shareholders. Mr Wanecq's oustanding 2011 and 2012 awards have therefore been rolled over to become awards over Vesuvius shares. Details of these awards are given in this Directors' remuneration report.

Performance will still be measured over a three-year period, but by reference to Cookson performance up to the Demerger Effective Time (18 December 2012) and by reference to Vesuvius performance (for Vesuvius shares) or Alent performance (for Alent shares) thereafter to the end of the period. The awards continue to be subject to the terms and conditions of the Cookson LTIP, save that the relevant company (and relevant Remuneration Committee) is Vesuvius for Vesuvius employees and leavers, and Alent for Alent employees, instead of Cookson.

The method of measuring performance for the 2011 and 2012 LTIP awards is as follows:

  • As regards the EPS targets, the mechanics of the proposed adjustments were disclosed in the Demerger Circular. The previously disclosed Cookson Headline EPS threshold and maximum vesting targets for the final year of the relevant three-year performance period have been split between Vesuvius and Alent by reference to their respective trading profit contributions to Cookson's total 2012 trading profit such that the new Vesuvius and Alent targets aggregate to the previously disclosed Cookson targets. The new 2013 EPS targets for Vesuvius plc, are therefore 48.6 pence at Threshold and 58.4 pence at Maximum, and for 2014, 50.4 pence at Threshold and 62.3 pence at Maximum. When added to the revised Alent plc targets, these targets aggregate to the former Cookson Group plc targets. The respective Vesuvius Headline EPS values as reported for the final year of the three-year performance period will be compared with these new threshold and maximum targets to determine the vesting outcome. Prior to the vesting of any award, as an additional hurdle, vesting must be justified by the underlying financial performance of Vesuvius over the performance period.

Vesting of 50% of Performance Shares and Matching Share Awards under the 2011 Cookson LTIP awards will be based on Headline EPS growth in accordance with the following schedule:

Headline EPS for 2013 financial yearPerformance Shares
Vesting Percentage
Matching Shares Vesting Ratio
(Matching Shares: Investment Shares)
Less than 48.6 pence0%0
48.6 pence12.5%0.25 : 1
58.4 pence or more50%1.125 : 1
Between 48.6 pence and 58.4 pencePro rata between 12.5% and 50%Pro rata between 0.25 : 1 and 1.125 : 1

Vesting of 50% of Performance Shares and Matching Share Awards for the 2012 Cookson LTIP awards will be based on Headline EPS growth in accordance with the following schedule:

Headline EPS for 2014 financial yearPerformance Shares
Vesting Percentage
Matching Shares Vesting Ratio
(Matching Shares: Investment Shares)
Less than 50.4 pence0%0
50.4 pence12.5%0.25 : 1
62.3 pence or more50%1.125 : 1
Between 50.4 pence and 62.3 pencePro rata between 12.5% and 50%Pro rata between 0.25 : 1 and 1.125 : 1
  • As regards the TSR targets, Cookson's TSR growth from the start of the relevant three-year performance period up to the time of the demerger has been determined. For the purpose of the 2011 LTIP awards, Cookson's TSR grew by 9% in the period from 1 January 2011 to 18 December 2012, and for the purpose of the 2012 LTIP awards, Cookson's TSR grew by 28.1% in the period from 1 January 2012 to 18 December 2012. These growth figures will be added to the TSR growth of Vesuvius from the demerger date to the end of the three-year performance period. This aggregate TSR growth will then be ranked against the TSR of the relevant comparator group and the resulting vesting outcome will be calculated against the TSR performance schedule in the LTIP.

Vesting of 50% of Performance Shares and Matching Share Awards under the 2011 and 2012 LTIP awards will be based on TSR performance in accordance with the following schedule:

TSR ranking relative to FTSE 250
excluding Investment Trusts
Performance Shares
Vesting Percentage
Matching Shares Vesting Ratio
(Matching Shares: Investment Shares)
Below Median0%0
Median12.5%0.25 : 1
Upper Quintile (top 20%)50%1.125 : 1
Between Median and Upper QuintilePro rata between 12.5% and 50%Pro rata between 0.25 : 1 and 1.125 : 1

Cookson Deferred Share Bonus Plan ("Cookson DSBP")

The Cookson DSBP was implemented in 2007 to provide an alternative long-term incentive arrangement for certain executives. The senior managers who participated in this plan received an allocation of deferred shares to the value of a percentage of their annual bonus. In the case of the grants made in 2010 under the Cookson DSBP, these awards over Cookson shares were rolled over to become awards over a combination of Vesuvius and Alent Shares in the same combination that applied to Cookson shareholders under the terms of the demerger.

In the case of the grants made in 2011 and 2012 under the Cookson DSBP it was agreed prior to the demerger, that awards for participants who went on to be employed by Alent plc would be rolled over to become awards over Alent shares of equivalent value. For those participants who went on to be employed by Vesuvius plc, their awards would be rolled over to become awards over Vesuvius shares of equivalent value. For those participants who had already left the Cookson Group, or who, at the request of Cookson, left or are leaving the Cookson Group as a result of the demerger and who have not joined either Alent or Vesuvius on a permanent basis, their awards have been rolled over to become awards over a combination of Alent and Vesuvius shares in the same combination as applied to Cookson shareholders.

The awards continue to be subject to the terms and conditions of the existing Cookson DSBP, save that the relevant company (and relevant remuneration committee) is Vesuvius in respect of outstanding awards for Vesuvius employees and leavers, and Alent in respect of Alent employees, instead of Cookson.

Cookson Restricted Share Award

As part of his one-off appointment arrangements, and to partly offset the loss of value of long-term share incentive awards forgone as a result of him joining Cookson, Mr O'Shea was granted (on 5 November 2012) a restricted share award with a face value of 100% of his annual base salary (£340,000). Half of the award is due to vest on the first anniversary of his date of joining (11 October 2013) and the remainder on the second anniversary (11 October 2014), subject to him remaining employed with the Company and not under notice of termination. Mr O'Shea is also entitled to receive shares or cash to the value of any dividends that would have accrued on the shares he has been awarded during the period between his date of joining and the date of vesting of his awards. This restricted share award was granted over Cookson shares (which rolled over into Vesuvius Shares on demerger) and was granted by individual award agreement (not under the terms of the Cookson LTIP or the Vesuvius Share Plan).

Dividend accrual

The Committee has the discretion to award participants in the Cookson LTIP and Cookson DSBP the dividends that would have been paid on the number of shares that vest in respect of dividend record dates occurring during the period between the award date and the date of vesting. These dividends can be paid in either cash or shares. The Committee believes that this can be an important step in aligning the interests of senior executives with those of shareholders.

Details of all awards outstanding under the Cookson share plans as at 31 December 2012 are given in note 32 to the consolidated financial statements and note 10 to the Company financial statements.

Remuneration policy for executive directors for 2013

The remuneration policy of the Company aims to establish a remuneration structure for Executive Directors and other senior managers which:

  • attracts and retains high calibre executives;
  • strongly supports the Company's strategy;
  • aligns management's interests with those of shareholders; and
  • fosters a high performance culture, with a substantial portion of remuneration being performance linked.

When formulating this remuneration policy and structure at the time of the demerger, the overall intention was that it will result, in broad terms and as far as possible, in a "no gain-no loss" position for Executive Directors as compared with the pre-Demerger Cookson remuneration arrangements, aside from some individuals who were either new hires or promotions. The Remuneration Committee will undertake a regular review of the Company's remuneration policy, structure and positioning. These may change at some point post-Demerger but it is not anticipated that any material changes will be implemented within the first 12 months.

In formulating remuneration policy going forward, the Remuneration Committee will have regard to the international scale and nature of the Company's operations and take into consideration the requirements of the UK Corporate Governance Code and guidelines issued by its leading shareholders and bodies such as the Association of British Insurers and the National Association of Pension Funds. The Remuneration Committee takes into account the pay and employment conditions of other Group employees when determining Executive Directors' remuneration, particularly when determining base salary increases. The Remuneration Committee will also obtain information on the remuneration paid for comparable roles at other companies to provide a point of reference for determining remuneration policy.

The Remuneration Committee is cognisant of the need to ensure that the remuneration policy is firmly linked to the Company's strategy, including its risk management philosophy. As all Remuneration Committee members also serve on the Audit Committee, each Committee benefits from the Directors' experience on the other. This will be particularly relevant going forward, when the Remuneration Committee is considering matters such as the Company's achievement of performance conditions and the implications for the Company's risk profile of the award of incentives under the Company's remuneration programmes. The Remuneration Committee considers the Company's current executive remuneration policy and incentive structure to be compatible with the Company's risk management and internal control systems.

The Board has set a strategy (as described in the Message from our Chief Executive) designed to deliver superior returns to Vesuvius' shareholders by focusing on five key objectives:

  • maintaining Vesuvius' existing technology leadership position;
  • enlarging Vesuvius' addressable market through the penetration of product and service solutions;
  • leveraging Vesuvius' strong positions in developing markets to capture growth;
  • improving cost leadership and margins; and
  • building a comprehensive offering in metal casting engineering;

whilst maintaining a rigorous focus on cash flow generation.

The remuneration policy incentivises and rewards executives to deliver their contribution to the achievement of the Company's strategy, with a significant proportion of the executive Directors' total remuneration based on the variable, performance-related elements of the Annual Incentive and Performance Share awards under the Vesuvius Share Plan. The performance conditions under these arrangements support the Company's focus on growth in profit, cash flow generation and shareholder returns by targeting key business imperatives such as relative total shareholder return ("TSR"), defined as the increase in the value of a share, including reinvested dividends, Headline EPS and working capital. These targets are objective, auditable and transparent and as such are considered to be appropriate performance measures for management. To ensure that their interests are aligned with those of shareholders, Executive Directors are required to build a significant stake in the Company in accordance with the Company's share retention guidelines.

The Remuneration Committee will evaluate the efficacy of the Company's Executive remuneration policy each year and commission formal reviews as it considers appropriate.

Fixed & variable remuneration for 2013

The following illustrates the balance between fixed and variable remuneration for the Executive Directors based on the remuneration policy for 2013:

The following illustrates the value of the Executive Directors' fixed and variable remuneration below threshold, on-target and at maximum performance:

Remuneration-f-wanecq.jpg

Remuneration-c-oshea.jpg

Note: All these charts assume Target payouts consist of base salary, pension allowance and incentive awards payable at 50% of Maximum.

Summary of key features of the executive directors' remuneration for 2013

Element of RemunerationPurpose and link to remuneration policyLevels of AwardKey features
Base salary
  • Helps to recruit and retain key employees.
  • Reflects the individual's experience, role and contribution within the Company.
  • n/a
  • Paid in cash.
  • Normally reviewed by the Remuneration Committee annually.
Annual Incentive
  • Incentivises executives to achieve specific, pre-defined annual targets.
  • For 2013, Annual Incentives are based on Group Headline Earnings performance with a working capital adjustment target.
  • Below Threshold: 0%
  • On-Target: 62.5% of base salary for the Chief Executive, 50% of base salary for the Chief Financial Officer
  • Maximum: 125% of base salary for the Chief Executive, 100% of base salary for the Chief Financial Officer
  • Entire bonus amount payable in cash.
  • No deferral.
  • Subject to clawback.
Vesuvius Share Plan
  • Flexible "umbrella" plan.
  • Aligns executives' interests with those of shareholders through the delivery of shares.
  • Rewards growth in shareholder value and earnings.
  • Aids retention of key executives over a three-year performance period.
  • Executive Directors eligible to receive, on an annual basis, a performance share award with a face value of up to 200% of base salary.
  • Participants are eligible to receive annual allocations of Performance Share Awards.
  • These awards are eligible to vest three years after their award date subject to the achievement of specified performance conditions.
  • Vesting of half of awards is subject to the Company's TSR performance versus the FTSE 250 (excluding Investment Trusts).
  • Vesting of the remaining half of awards is subject to the growth in the Company's EPS.
  • Prior to any vesting the Remuneration Committee has also stipulated that, as an additional hurdle, it needs to be satisfied that vesting has been justified by the underlying financial performance of the Company over the performance period.
  • The Remuneration Committee has the discretion to award participants the dividends accrued on any shares that vest.
  • Subject to clawback.
Retirement Benefits
  • Helps to recruit and retain key employees.
  • Ensures income in retirement.
  • Executive Directors are eligible to receive a pension allowance of 30% of their base salaries.
  • Benefits are provided by way of an allowance which can be delivered in cash and/or as a payment to a defined contribution arrangement.
Other Benefits
  • Provides core benefits to Executive Directors.
  • Relocation assistance provided to the Chief Executive to support his move from Brussels to London.
  • Core benefits on same terms as those provided to other Group Executives.
  • Relocation benefits in accordance with the Vesuvius Relocation policy.
  • Core benefits include car allowance, life assurance, disability and health insurance.
  • Relocation benefits include short-term rent allowance, and assistance locating a property for purchase and paying associated expenses.

Further details of the executive directors' remuneration arrangements for 2013

Base salary

Base salary levels reflect the individual's contribution and experience, the Company's financial performance, the pay environment for employees within the Company and the salaries paid in comparator companies.

At the time of the demerger, Mr Wanecq's promotion was reflected in a base salary increase of 10% due to changing role and increased responsibilities. Mr Wanecq's salary is currently £550,000 p.a. and Mr O'Shea's salary £340,000 p.a. It is envisaged that base salaries will be reviewed annually, with the next review scheduled for 1 January 2014.

Annual incentive

The Executive Directors are eligible to receive an Annual Incentive calculated as a percentage of base salary and based on achievement against specified targets. There is no deferral of annual bonuses for Executive Directors. The Remuneration Committee has the discretion to determine that actual incentive payments should be lower than levels calculated by reference to achievement against the specified targets if it considers this to be appropriate. Each year the Remuneration Committee will establish the financial performance criteria for the forthcoming year. These criteria will be set by reference to the Company's financial budget and prior year actual financial results. The target range will be set to ensure that maximum bonuses are only paid for significantly exceeding market expectations. The Remuneration Committee considers that the setting and attainment of these targets is important in the context of achievement of the Company's longer-term strategic goals.

The Annual Incentive has a threshold level of performance below which no award is paid, a target level and a maximum performance level at which a maximum award is earned. Mr Wanecq's maximum Annual Incentive potential is 125% of base salary and his target annual incentive potential is 62.5% of base salary. Mr O'Shea's maximum Annual Incentive potential is 100% of base salary and his target annual incentive proposal is 50% of base salary.

The Remuneration Committee has determined that for 2013 Messrs Wanecq's and O'Shea's Annual Incentives will be based on Group Headline Earnings, with an adjustment based on the Group's working capital performance, to focus greater attention on cash flow performance. The effect of this will be to reduce the level of payout that the Directors can achieve by up to 10% if specified working capital targets are not attained. The adjuster can increase the level of payout by up to 10%, but not above the usual plan maximum.

Vesuvius share plan

Summary

The Vesuvius Share Plan was approved by shareholders at the time of the demerger. The Vesuvius Share Plan does not replicate the Cookson LTIP. It has been simplified to remove matching shares and is structured as an "umbrella" plan, which gives greater flexibility in terms of the awards which can be made, in line with current market practice. This means that the Company only needs to have one set of share plan rules to cover all its current and prospective share plan needs. The Vesuvius Share Plan permits awards to be granted as:

  • performance share awards;
  • deferred share bonus awards;
  • restricted share awards; and
  • market-price options.

Performance Share Awards

It is the Remuneration Committee's intention to grant awards to Executive Directors under the first element, performance share awards, in 2013. Awards under this element reward executives for delivering superior TSR, defined as the increase in the value of a share, including reinvested dividends, and EPS growth over a set period of time, and as such is intended to align executive remuneration with shareholders' interests.

Eligibility and individual grant levels

Executive Directors are eligible to receive, on an annual basis, a performance share award with a face value of up to 200% of base salary.

Performance conditions for performance share awards

The vesting of performance share awards granted by the Company will be based on the Company's performance against specified performance conditions measured over a three-year period. For 2013, the performance metrics are similar to the Cookson Long-Term Incentive Plan (Headline EPS and TSR based). The performance scale for the 2013 Vesuvius Share Plan awards has been set to be stretching. The nominal figures for Headline EPS part of the award have been selected in the light of a relatively low base period result. The performance scale for future awards is intended to be of similar difficulty, but the nominal growth rates selected for 2014 and after are expected to be set at a lower rate than those for 2013. The Remuneration Committee will take into account the Group's prospects and the broader global economic environment when setting future targets.

For awards made in 2013, the proportion of shares vesting will be based on the Company's performance against specified performance conditions. Vesting of 50% of shares awarded will be based upon the Company's three-year TSR performance relative to that of the constituent companies of the FTSE 250 excluding Investment Trusts, and 50% on Headline EPS growth, as compared with the compound annual growth in global GDP over a three-year period. The two measures will operate independently.

Vesting of 50% of performance share awards will be based on TSR performance in accordance with the following schedule:

TSR ranking relative to FTSE 250
excluding Investment Trusts
Performance Shares
Vesting Percentage
Below Median0%
Median12.5%
Upper Quintile (top 20%)50%
Between Median and Upper QuintilePro rata between 12.5% and 50%

Vesting of 50% of performance shares awards will be based on EPS growth in accordance with the following schedule:

Annual Compound Headline EPS Growth above global GDPPerformance Shares
Vesting Percentage
Below 7%0%
7%12.5%
At or above 15%50%
Between 7% and 15%Pro rata between 12.5% and 50%

The Remuneration Committee will obtain independent external advice to assess whether the Company has met the performance conditions at the end of the relevant performance period. Measurement of the Company's TSR takes place over a performance period commencing on the first day of the Company's financial year in which the award is granted. TSR is measured as the percentage increase in a return index for the Company and each comparator company between the beginning and end of the performance period. The return index at the beginning of the performance period is the average of the return index on each weekday in the three-month period prior to the start of the performance period. The same three-month averaging method is used to ascertain the return index at the end of the performance period. The companies are then ranked, in descending order, according to their TSR. If the Company is ranked at or above the median of the comparator group then a proportion of the awards is eligible to vest.

Headline EPS will be calculated on a consistent basis and the Remuneration Committee has the discretion to adjust for exceptional items as it deems appropriate. Growth in Headline EPS is the annualised percentage growth over the performance period. Headline EPS for the base year (i.e. the calendar year prior to the award date) is compared with the final year (i.e. the calendar year three years after the base year).

Performance shares awards vest after three years. Performance share awards can be granted as allocations with a fixed vesting date, or in the form of nil-cost options. Nil-cost options awarded in 2013 would become exercisable, subject to the achievement of the applicable performance conditions, three years after their award, and then remain exercisable until the fifth anniversary of their award. This allows each participant the flexibility to decide when to exercise their awards rather than the shares being subject to a one-off vesting date on the third anniversary of their award.

Deferred Share Bonus Awards

The Remuneration Committee also intends to grant deferred share bonus awards to certain executives in 2013. The senior managers who participate in this plan will receive an allocation of deferred shares to the value of a percentage of their annual bonus. Neither of the Executive Directors will participate. The deferred shares awarded will vest after three years, although an executive's allocation may lapse if he or she ceases employment in certain circumstances before the end of the three-year period.

Dividend Accrual

The Committee has the discretion to award participants in the Vesuvius Share Plan the dividends that would have been paid on the number of shares that vest in respect of dividend record dates occurring during the period between the award date and the date of vesting. These dividends can be paid in either cash or shares. The Committee believes that this can be an important step in aligning the interests of senior executives with those of shareholders.

Clawback Arrangements

The Executive Directors are subject to clawback arrangements. In the event that a misstatement is identified in the Company's consolidated financial statements which requires the restatement of a prior year's accounts in order to ensure compliance with the requirements of International Financial Reporting Standards or any applicable law, then such portion as the Remuneration Committee deems appropriate of any variable executive remuneration (including from both the Annual Incentive and the Vesuvius Share Plan) resulting from a measure of financial performance affected by the misstatement will be subject to clawback provisions.

Share usage

Under the rules of the Vesuvius Share Plan the Company has the discretion to satisfy awards either by the transfer of existing shares or by the allotment of newly issued shares. The decision on how to satisfy awards is taken by the Board, which considers the most prudent and appropriate sourcing arrangement for the Company. As at 31 December 2012, 903,983 Vesuvius shares and 903,983 Alent shares were held in the Company's employee share ownership trust ("ESOP"). The trustee of the ESOP purchases shares in the open market or can subscribe for newly issued shares as required, to meet obligations for the provision of shares to satisfy options and awards that vest. The Vesuvius Share Plan rules comply with the current ABI guidelines on headroom which provide that overall dilution under all plans should not exceed 10% over a ten-year period in relation to the Company's issued share capital, with a further limitation of 5% in any ten-year period on discretionary schemes. If all the awards over Vesuvius shares oustanding under the Cookson share plans were satisfied by the allotment of new Vesuvius shares, then this would require Vesuvius to allot less than 1% of its current issued share capital.

Total shareholder return (tsr) graph

Given that the demerger did not become effective until 19 December 2012, it is not possible to produce a graph which compares the Company's TSR over the last five years with the return on an appropriate index (in compliance with the Large & Medium-sized Companies and Groups (Accounts & Reports) Regulations 2008). The graphs below therefore:

  1. compare the Company's TSR over the short period from the Demerger to 31 December 2012 with the return on the FTSE 250 Index (excluding Investment Trusts). This index has been chosen as the comparator index to reflect the size, international scope and diversity of the Company; and
  2. compare Cookson's TSR over the almost five year period to 18 December 2012 with the return on the FTSE 250 Index (excluding Investment Trusts)

Historical tsr performance — growth in the value of a hypothetical £100 holding over 12 days

Historical-tsr-12-days.jpg

Source: DataStream

Historical tsr performance — growth in the value of a hypothetical £100 holding over five years

Historical-tsr-5-years.jpg

Source: DataStream

Directors' contracts

The following paragraphs summarise the main terms and conditions of the contracts of the Directors:

François Wanecq

François Wanecq is employed as Chief Executive of Vesuvius pursuant to the terms of a service agreement made with Cookson Group plc dated 17 October 2012, which was assigned to the Company upon completion of the demerger. Mr Wanecq's appointment is terminable by the Company on not less than 12 months' written notice, and by Mr Wanecq on not less than six months' written notice. The Company has the option to make a payment in lieu of part or all of the required notice period. Any such payment in lieu will consist of the base salary, pension contributions and value of benefits to which Mr Wanecq would have been entitled for the duration of the remaining notice period, net of statutory deductions in each case.

Chris O'Shea

Chris O'Shea is employed as Chief Financial Officer pursuant to the terms of a service agreement with Cookson Group plc dated 10 September 2012, which was assigned to the Company upon completion of the demerger. Mr O'Shea's appointment is terminable by the Company on not less than 12 months' written notice, and by Mr O'Shea on not less than six months' written notice. The service agreement provides that, in the event of termination notice by either party, Vesuvius may make a payment in lieu of any remaining notice to Mr O'Shea. Any such payment in lieu will consist of the base salary, pension contributions and value of benefits to which Mr O'Shea would have been entitled for the duration of the remaining notice period net of statutory deductions in each case.

Half of any payments in lieu of notice to be made to Messrs O'Shea and Wanecq would be made in a lump sum, the remainder in equal monthly instalments commencing in the month in which the midpoint of their foregone notice period falls; if they found a role paying equivalent or better base salary or fees, no further instalments would be payable, and the value of any lesser new base salary or fees would be deducted from any further instalments.

Messrs O'Shea and Wanecq are also subject to certain non-compete covenants for a period of nine months, and non-solicitation covenants for a period of 12 months, following the termination of their employment. The agreements are governed by English law. Neither of the Executive Directors' contracts contains any change of control provisions and they both contain a duty to mitigate should the Director find an alternative paid occupation in any period during which the Company must otherwise pay compensation on early termination. No Directors had any material interest in a contract of significance (other than service agreements) with the Company or any subsidiary company during the year.

Non-executive directors

The terms of service of the Chairman and other Non-executive Directors are contained in letters of appointment. Each Non-executive Director is appointed subject to their election at the Company's first Annual General Meeting following their appointment and re-election at subsequent Annual General Meetings. With the exception of the Chairman, none of the Non-executive Directors are entitled to receive compensation for loss of office at any time. During the first year of his appointment the Chairman he is entitled to 12 months' notice from the Company; thereafter he is entitled to 6 months' notice from the Company. All Directors are subject to retirement, and election or re-election, in accordance with the Company's Articles of Association. The current policy is for Non-executive Directors to serve on the Board for nine years, with review at the end of three and six years, subject to mutual agreement and annual performance evaluation.

The Board sets the remuneration of the Non-executive Directors after considering the role and responsibilities of each Director and the practice of other companies. The Non-executive Directors do not participate in Board discussions on their own remuneration.

External appointments

Neither of the Executive Directors serves as a Non-executive Director of any other quoted companies outside the Group.

Pension arrangements

In accordance with their contracts, Messrs Wanecq and O'Shea are entitled to a pension allowance of 30% of base salary, which they can use to participate in Vesuvius' pension arrangements, invest in their own pension arrangements or take as a cash supplement (or any combination of the aforementioned options).

Mr Wanecq's pension allowance in 2012 amounted to £159,015. Mr O'Shea's pension allowance in 2012 amounted to £22,885.

Directors' remuneration for the statutory period from the date of incorporation (17 september 2012) to 31 december 2012

The following table details the remuneration payable to each Director for their services to Vesuvius plc for the statutory period from the Company's date of incorporation to 31 December 2012. With the exception of Mr McDonough and Ms Hinkley, who received remuneration as Directors of the Company on appointment to the Board, no Director was paid for their services to Vesuvius plc prior to the listing of Vesuvius plc on 17 December 2012. Messrs O'Shea and Wanecq, received remuneration as Directors of the Company following the assignment of their contracts to the Company on the demerger becoming effective.

Base
salary and
Non-executive
Directors' fees
£
Benefits
in kind1
£
Annual
Incentive
bonuses2
£
Total
17 September
2012 to
31 December
2012
£
Chairman (Non-executive)
John McDonough CBE431,54531,545
Executive Directors
Chris O'Shea512,14353612,14324,822
François Wanecq619,6434,33623,979
Non-executive Directors3
Christer Gardell71,9641,964
Jeff Hewitt72,6192,619
Jane Hinkley83,7503,750
Jan Oosterveld71,9641,964
John Sussens72,8372,837
Total Directors' remuneration76,4654,87212,14393,480

Notes

  1. Benefits in kind comprise mainly the assessed benefits arising from the contractual payments of relocation benefits, medical insurance and company car allowances.
  2. The Annual Incentive bonus awarded to Mr O'Shea resulted from a contractual entitlement to receive a full prorated bonus for 2012. The award had no performance conditions.
  3. Details of the annual fees payable to Non-executive Directors can be found in the section titled Remuneration of the Chairman and Non-executive directors in the Directors' report.
  4. Appointed and remunerated as a Director of Vesuvius plc from 31 October 2012.
  5. Recruited as an employee of Cookson Group plc on 11 October 2012, and appointed as a Director of Vesuvius plc on 31 October 2012. Remunerated as a Director of Vesuvius plc from the date the demerger became effective (19 December 2012) when his contract of employment was assigned to Vesuvius plc.
  6. Appointed as a Director of Vesuvius plc on 31 October 2012. Remunerated as a Director of Vesuvius plc from the date the demerger became effective (19 December 2012) when his contract of employment was assigned to Vesuvius plc.
  7. Appointed as a Director of Vesuvius plc on 31 October 2012, and remunerated as a Director of Vesuvius plc from the date of listing, 17 December 2012.
  8. Appointed and remunerated as a Director of Vesuvius plc from 3 December 2012.
  9. Messrs Elliston and Malthouse served as the original Directors of Vesuvius plc from the date of incorporation to 31 October 2012. They received no remuneration in respect of their appointments.
  10. The information in the above table is audited by the Company's Auditor.

Directors' remuneration for the non-statutory period 1 january 2012 to 31 december 2012

The following table details the remuneration payable to each Director for their services to Cookson Group plc (as appropriate) and Vesuvius plc in respect of the year ended 31 December 2012, together with comparative totals (where applicable) in respect of the year ended 31 December 2011.

Base
salary and
Non-executive
Directors' fees
£
Benefits
in kind1
£
Annual
Incentive
bonuses2
£
2012
Total
remuneration
£
2011
Total
remuneration
£
Chairman (Non-executive)
John McDonough CBE531,54531,545
Executive Directors
Chris O'Shea676,2823,36576,282155,929
François Wanecq7530,05073,115603,165673,287
Non-executive Directors4
Christer Gardell823,55223,552
Jeff Hewitt955,21855,21855,000
Jane Hinkley103,7503,750
Jan Oosterveld940,21840,21840,000
John Sussens955,43655,43655,000
Total Directors' remuneration816,05176,48076,282968,813823,287

Notes

  1. Benefits in kind comprise mainly the assessed benefits arising from the contractual payments of relocation benefits, medical insurance, life assurance and company car allowances.
  2. The Annual Incentive bonus awarded to Mr O'Shea resulted from a contractual entitlement to receive a full prorated bonus for 2012. The award had no performance conditions.
  3. Mr Wanecq's remuneration details are translated into sterling at the average euro:sterling exchange rate for the year.
  4. Details of the annual fees payable to Non-executive Directors can be found in the section titled Remuneration of the Chairman and Non-executive directors in the Directors Report.
  5. Appointed and remunerated as a Director of Vesuvius plc from 31 October 2012.
  6. Recruited as an employee of Cookson Group plc on 11 October 2012, and appointed as a Director of Vesuvius plc on 31 October 2012. Remunerated as a Director of Vesuvius plc from the date the demerger became effective (19 December 2012) when his contract of employment was assigned to Vesuvius plc.
  7. Served as a Director of Cookson Group plc. Appointed as a Director of Vesuvius plc on 31 October 2012. Remunerated as a Director of Vesuvius plc from the date the demerger became effective (19 December 2012) when his contract of employment was assigned to Vesuvius plc.
  8. Appointed as a Director of Cookson Group plc on 1 June 2012. Appointed as a Director of Vesuvius plc on 31 October 2012, and remunerated as a Director of Vesuvius plc from the date of listing, 17 December 2012.
  9. Served as a Director of Cookson Group plc. Appointed as a Director of Vesuvius plc on 31 October 2012, and remunerated as a Director of Vesuvius plc from the date of listing, 17 December 2012.
  10. Appointed and remunerated as a Director of Vesuvius plc from 3 December 2012.
  11. Messrs Elliston and Malthouse served as the original Directors of Vesuvius plc from the date of incorporation to 31 October 2012. They received no remuneration in respect of their appointments.

Cookson ltip allocations

Details of Mr Wanecq's allocation of shares under the Cookson LTIP are shown in the tables below:

2009 Cookson LTIP Award (Awards vested on 26 March 2012 over Cookson shares)

Grant date and type of awardCookson
Share
allocations
outstanding
as at
31 Dec
20111
No.
Additional
shares
allocated
for
Dividend
Accrual3
No.
Shares
vested
during
the year3
No.
Share
allocations
outstanding
as at
31 Dec
2012
No.
Market
price of
shares
on day
before
award1
(p)
Performance
Period3
Vesting
date of
shares
LTIP
25/03/093Performance Shares303,4868,187(311,673)180.0001/01/09–
31/12/11
26/03/12
Matching Shares980,17026,444(1,006,614)180.0001/01/09–
31/12/11
26/03/12
Totals1,283,65634,631(1,318,287)

2010 Cookson LTIP Award (as adjusted for the demerger from awards over Cookson shares into awards over shares in Alent plc and Vesuvius plc)

Demerger Adjustments
Grant date and type of awardCookson Share allocations outstanding as at 31 Dec 2011
No.
Revised allocations
over Alent
shares4
No.
Revised
allocations
over Vesuvius
shares4
No.
Total share allocations outstanding as at
31 Dec 2012
No.
Market price
of shares on
day before
award
(as adjusted
for the
demerger)4
(p)
Performance
Period2,5
Earliest
vesting
date
Alent
shares
Vesuvius
shares
07/04/105Performance Shares93,32793,32793,32793,32793,327311.1501/01/10–
18/12/12
07/04/13
Matching Shares61,76161,76161,76161,76161,761311.1501/01/10–
18/12/12
07/04/13
Totals155,088155,088155,088155,088155,088

2011 and 2012 LTIP Awards (as adjusted for the Demerger from awards over Cookson shares into awards over shares in Vesuvius plc)

Grant date and type of awardCookson Share allocations outstanding as at
31 Dec
2011
No.
Cookson shares allocated during the year
No.
Revised
allocation
over Vesuvius
shares4
No.
Total share allocations outstanding as at
31 Dec
2012
No.
Market price
of shares on
day before
award (as
adjusted
for the
demerger)4
(p)
Performance
Period2
Earliest vesting
date
Vesuvius shares
01/04/11Performance Shares78,656148,260148,260365.8001/01/11–31/12/1301/04/14
Matching Shares176,367332,437332,437365.8001/01/11–31/12/1301/04/14
05/04/126Performance Shares79,619150,075150,075365.8001/01/12–31/12/1405/04/15
Matching Shares32,47561,21261,212365.8001/01/12–31/12/1405/04/15
Totals255,023112,094691,984691,984

Notes

  1. The 2009 interests and market prices shown have been adjusted for the consolidation of Cookson's ordinary shares which took effect on 15 May 2009, when every ten ordinary 10p shares held by shareholders at the close of business on 14 May 2009 were exchanged for one new £1 ordinary share.
  2. The performance criteria which apply to the vesting of share allocations under the LTIP are summarised in the section titled 2011 and 2012 LTIP Awards.
  3. The performance period for the LTIP awards made in 2009 ended on 31 December 2011. The Company's TSR performance during the three-year performance period was assessed against the comparator group and it was determined that the Company's performance was above the upper quintile. The Company's annual compound Headline EPS growth over RPI was assessed as being greater than 10% during this period. The Remuneration Committee confirmed that it was satisfied that the vesting of awards under the 2009 LTIP was justified by the underlying financial performance of the Group over the performance period. Accordingly, 100% of the 2009 LTIP awards vested on the first dealing day after the third anniversary of their award. The Remuneration Committee also exercised its discretion to award participants in the LTIP the dividends that would have accrued during the vesting period on the shares that vested. Mr Wanecq's award vested on 26 March 2012. The mid-market closing price of Cookson's shares was 704.5p; the value of shares transferred to Mr Wanecq was £9,287,332. Mr Wanecq sold 642,989 Cookson shares.
  4. The 2010, 2011 and 2012 interests and market prices shown have been adjusted for the demerger which took effect in December 2012.
  5. The performance period for the LTIP awards made in 2010 ended on 18 December 2012. The Company's TSR performance during the three-year performance period was assessed against the comparator group and it was determined that the Company's performance was between the median and upper quintile. The Company's annual compound Headline EPS growth over RPI was assessed as being above 10% during this period. The Remuneration Committee has confirmed that it is satisfied that the vesting of awards under the 2010 LTIP is justified by the underlying financial performance of Cookson over the performance period. Accordingly, 67.7% of the 2010 Performance Share awards will vest on the third anniversary of their award, and the Matching Share awards will vest at a ratio of 1.497 : 1.
  6. In 2012 Mr Wanecq received a potential maximum allocation of Performance Shares worth one times his base salary. Under the Matching Share award element of the LTIP he used his 2011 Annual Incentive payment to purchase 7,856 Cookson shares, and received a maximum allocation of Matching Share Award based on this amount which had a maximum potential value on the date of award equivalent to circa 40% of his base salary. The allocations were made to Mr Wanecq on 5 April 2012 and were calculated based upon the closing mid-market price of Cookson's shares on the day before the awards were made. Cookson's mid-market closing price on 4 April 2012 was 689.5p.
  7. The mid-market closing price of Cookson's shares ranged between 509p and 747.5p from 1 January 2012 to 14 December 2012 when Cookson ceased to be listed. The mid-market closing price of shares in Vesuvius plc was 641p and 645p on 17 and 18 December respectively, when the Cookson Group traded under the name Vesuvius plc and from 19 December to 31 December 2012, when the demerger was effective ranged between 324p and 352p.
  8. The information in the above table is audited by the Company's Auditor.

Restricted Share award

Details of the restricted share award that Mr O'Shea received on joining Cookson Group plc are given in the table below:

Date of awardCookson
shares
allocated
during the
year
No.1
Revised
allocation
over Vesuvius
shares2
No.
Total share allocation outstanding as at
31 Dec
2012
No.
Market price
of shares on
day before
award (as
adjusted for
the demerger)2
(p)
Vesting
date1
Vesuvius shares
05/11/1257,724108,805108,805312.4850% on
50% on
11/10/13
11/10/14

Notes

  1. On his appointment, Mr O'Shea was granted a restricted share award with a face value of 100% of base salary. Half of the award is due to vest on the first anniversary of his date of joining and the remainder on the second anniversary, subject to him remaining employed by the Company and not under notice of termination. No other performance conditions apply to this award.
  2. Mr O'Shea's interest and the market price shown have been adjusted for the demerger which took effect in December 2012.
  3. The mid-market closing price of Cookson's shares ranged between 509p and 747.5p from 1 January 2012 to 14 December 2012 when Cookson ceased to be listed. The mid-market closing price of shares in Vesuvius plc was 641p and 645p on 17 and 18 December respectively, when the Cookson Group traded under the name Vesuvius plc and from 19 December to 31 December 2012, when the demerger was effective, ranged between 324p and 352p.

Directors' interests

On 17 December, as part of the Scheme of Arrangement, Vesuvius plc was inserted as the new parent of Cookson Group plc. The beneficial interests of the current Directors of Vesuvius plc and their connected persons in the ordinary shares of the Cookson Group plc and the Company during 2012 were as shown below.

Cookson shares held as at
31 Dec 2011 or date of appointment
Cookson shares held as at
14 Dec 2012
Vesuvius shares held as at
17 Dec 2012
Vesuvius shares held as at
31 Dec 2012
Chairman (Non-executive)
John McDonough CBE
Executive Directors
Chris O'Shea
François Wanecq462,1621,145,3161,145,3161,145,316
Non-executive Directors
Christer Gardell3
Jeff Hewitt14,73715,28415,28415,284
Jane Hinkley
Jan Oosterveld15,68416,25416,25416,254
John Sussens26,00026,00026,00026,000

Notes

  1. With the exception that Mr McDonough acquired 50,000 ordinary shares in the Company, there were no changes to the interests of the Directors in the ordinary shares of the Company in the period from 1 January 2013 to 28 March 2013. Ms Connors has not had an interest in Vesuvius's shares since the date of her appointment.
  2. Full details of Directors' shareholdings and share allocations are given in the Company's Register of Directors' Interests, which is open to inspection at the Company's registered office during business hours.
  3. Mr Gardell is Managing Partner of, and has a financial interest in, Cevian Capital which held just over 20% of Cookson's issued share capital on the date of his appointment to the Cookson Board and continued to hold an interest of just over 20% in Vesuvius's issued share capital following the demerger, and as at the date of this report. None of the other Directors, nor their spouses nor minor children, held non-beneficial interests in the ordinary shares of the Company during the year.
  4. Mr Malthouse, one of the initial Directors of the Company, holds one deferred share in the Company (which was formally the initial subscriber share of the Company) along with 50,000 redeemable preference shares which were issued in order to obtain a trading certificate for the Company. Neither the deferred share nor the redeemable preference shares carry any voting rights or have any right to participate in the profits of the Company (other than on a winding up of the Company). Both the deferred share and the redeemable preference shares will be cancelled in due course.
  5. The information in the above table is audited by the Company's Auditor.

Shareholding guidelines

The Remuneration Committee encourages Executive Directors to build and hold a shareholding in the Company equivalent in value to at least one times salary. To this end, Executive Directors will normally be expected to retain at least 50% (measured as the value after tax) of any Performance Share Awards vesting under the LTIP, until this criterion has been met. New Executive Directors will be allowed four years in which to acquire this shareholding.

As at 31 December 2012, using the Company's share price at 31 December 2012 of 346 pence, the Executive Directors' shareholdings against this guideline were as follows:

DirectorActual share ownership
as a
percentage of salary at
31 December 2012
Guideline share ownership
as a
percentage of salary
Guideline
met?
François Wanecq721%100%Yes
Chris O'Sheanil100%Not yet
reached

On behalf of the Board

John sussens
Chairman, Remuneration Committee
28 March 2013