Policy
The remuneration package of the executive directors is designed to attract, retain and motivate directors of the quality required
having regard to the needs of the business, market rates and comparable posts within industry.
Compliance
As well as complying with the provisions of the Combined Code as disclosed in the Company’s Corporate Governance Report,
the Company has applied the Principles of Good Governance relating to directors’ remuneration as described below.
Composition of the Remuneration Committee
The Remuneration Committee consists of all the non-executive directors. The Chief Executive attends meetings by invitation,
but is not present when his own remuneration is considered.
Total remuneration
The total remuneration of the executive directors consists of basic salary, performance related annual bonus, profit related pay,
benefits in kind, pension scheme benefits and participation in an approved executive share option scheme, an approved share
participation scheme and a long term share incentive scheme.
Basic salary
The basic salaries of the executive directors are reviewed annually by the Remuneration Committee by reference to individual
performance and external market data.
Performance related annual bonus
The performance related annual bonus element of executive directors’ remuneration is governed by an incentive scheme
approved by the Remuneration Committee. The scheme provides for a discretionary bonus based on the attainment of
pre-determined corporate financial targets and personal business objectives.
Profit related pay
The executive directors participate in an approved profit related pay scheme on the same terms as all other eligible employees.
The scheme terminated on 31 March 2000 and will not be renewed.
Benefits in kind
The principal benefits in kind are the provision of company cars and medical insurance.
Pension benefits
The executive directors participate in the Group’s approved contributory final salary pension scheme. The main benefits, subject
to the Inland Revenue limit on the amount of remuneration that may be treated as pensionable, of the executive directors are:
(i) Normal pension age
(i)  G L Baldwin, 62; R C Atwood and M J Clark, 60
(ii) Accrual rate for each year of pensionable service
(ii) 1/30th (1999: 1/30th).
(iii) Life assurance cover
(iii) Four times pensionable remuneration.
(iv) G L Baldwin, as he was entitled to, has changed his retirement date by giving the Company more than one year’s notice
(iv) of his intention to retire on 31 July 2000. As a result he will receive a pension calculated as if his pensionable service had
(iv) been increased by 20 months, the period from the date of his retirement to his normal pension age.
(v) Funded unapproved retirement benefit scheme arrangements have been established in relation to remuneration in excess of
(v) the Inland Revenue pensionable limit.
As is normal in the water industry, bonuses and benefits in kind are pensionable.
Approved executive share option scheme
The executive directors and certain senior executives are participants in this scheme. The last grant was made in July 1995
and no further options are to be granted.
Approved share participation scheme
The executive directors participate in an approved general share participation scheme on the same terms as all other eligible
employees. The allocation, included within bonuses in the remuneration table, made in 1999/2000 was 100 ordinary shares
at 593p to each participant.
Long term share incentive scheme
Under the Mid Kent Holdings Performance Share Plan, options to acquire shares in the Company for a nominal amount may be
granted, with exercise subject to the achievement of total shareholder return and earnings per share targets over a three year
period. Awards of options under the Plan are granted at the discretion of the Trustee on the recommendation of the Remuneration
Committee. Awards will normally vest, subject to the achievement of the prescribed performance targets, on
the third anniversary of the date on which the options were granted.
Service agreements
The executive directors have service agreements with notice periods not exceeding one year.
Non-executive directors
The non-executive directors are appointed for an initial period of three years, normally renewable for a further period of three years. They are engaged under letters of appointment and do not have service agreements. The non-executive directors’ fees are recommended by the Chairman and the Chief Executive and are approved by the whole Board and are subject to annual review by reference to external market comparators.
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