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Directors Remuneration and Share Ownership

Directors’ compensation

The total level of compensation paid to members of the Board of Compagnie Financière Richemont SA and the Management Committee, including pension contributions, benefits in kind and all other aspects of compensation, amounted to € 37 319 954. In determining the value of each component of compensation, the Group has followed the valuation and measurement principles of International Financial Reporting Standards (‘IFRS’). The amounts are in agreement with other IFRS information provided elsewhere in the annual report.

For the year ended 31 March 2009

Salary, bonus payments, directors' fees and other short-term benefits Long-term benefits Post employment benefits Stock option cost * Total 2009



Board of Directors of Compagnie Financière Richemont SA






Johann Rupert Executive Chairman
2 098 794
- 1 528 739
2 295 383
5 922 916
Jean-Paul Aeschimann Non-Executive Deputy Chairman
123 613
- - - 123 613
Norbert Platt Group Chief Executive Officer
5 070 284
- 67 643
2 221 997
7 359 924
Richard Lepeu Group Finance Director
2 704 187
- 69 225
1 287 895
4 061 307
Franco Cologni Executive Director
517 161
- 9 416
- 526 577
Lord Douro Non-Executive Director
192 080
- - - 192 080
Yves-André Istel Non-Executive Director
118 613
- - - 118 613
Simon Murray Non-Executive Director
76 938
- - - 76 938
Alain Dominique Perrin Executive Director
1 545 442
- - - 1 545 442
Alan Quasha Non-Executive Director
76 938
- - - 76 938
Lord Renwick Non-Executive Director
118 613
- - - 118 613
Jan Rupert Manufacturing Director
1 005 354
- 53 016
1 014 734
2 073 104
Jürgen Schrempp Non-Executive Director
76 938
- - - 76 938
Martha Wikstrom Non-Executive Director
76 938
- - - 76 938
Total

13 801 893
- 1 728 039
6 820 009
22 349 941
Group Management Committee


10 032 558
(414 000)
629 485
5 245 293 19 494 429
Total Directors' compensation

23 595 979 1 995 000 2 357 524
11 541 979
37 319 954

* The cost for stock options is determined in accordance with IFRS 2 Share-based Payment. Details of the valuation model and significant inputs to this model are to be found in note 34 to the consolidated financial statements.

Salary and other short-term benefit payments received by Mr Johann Rupert from Richemont and from its related parties, Remgro Limited, Venfin Limited and Reinet Investments SCA, are donated to charity. Me Jean-Paul Aeschimann, the Deputy Chairman, is counsel to the Swiss legal firm, Lenz & Staehelin. During the year under review, Lenz & Staehelin received fees totalling € 743 000 from Group companies for advice on legal and taxation matters.

During the year the Group gave donations of € 371 000 to the Fondazione Cologni dei Mestieri d’Arte. The Foundation promotes, supports and organises cultural, scientific and training initiatives in favour of the Arts and Crafts and the Trades of Art. Dr Franco Cologni, a senior executive director of Compagnie Financière Richemont SA, is the President of the Foundation. In addition to his non-executive director’s fee, Lord Douro received fees, pension contributions and other benefits totalling € 115 142 in connection with his role as director and non-executive chairman of Richemont Holdings (UK) Limited, the holding company for the Group’s UK interests, and in respect of consultancy services provided to the Group. Since his appointment to the Board in 2006, Mr Ruggero Magnoni has formally waived his entitlement to receive any fees or compensation in respect of his duties as a nonexecutive director.

During the period to 20 October 2008, the Group had an interest in three closed-ended investment funds managed by General Enterprise Management Services Limited. Mr Simon Murray has an effective interest of 25 per cent in this investment management company. The net cash paid to the fund during the period, net of
amounts returned, was € 1 735 252. On 28 February 2006, the Group committed to invest US$ 65 million in a subsidiary company, Atelier Fund, LLC, a limited liability investment company specialising in high potential brand/retail opportunities in the luxury goods sector. Ms Martha Wikstrom holds a one-third interest in Atelier Management, LLC, the managing company of this investment fund. During the year under review, fees of € 853 000 were paid to the managing company for fund management and other services not specific to
Atelier Fund, LLC.

Messrs Istel, Magnoni, Quasha and Schrempp are members of the Board of Overseers of the Reinet Group. No amount of their compensation as disclosed above is in respect of this role. The Management Committee includes the Executive Chairman, the Group Chief Executive Officer, the Group Finance Director and the Manufacturing Director. The compensation of these four directors is disclosed above as members of the Board and is therefore excluded from the total compensation of the Management Committee. Details of other members of the Management Committee are included in section 4 of the corporate governance report on pages 48 and 49. Since the date of the de-twinning, certain members of the Management Committee have provided services to Reinet entities. € 584 000 of the total compensation costs disclosed above was in respect of these services and has been recovered from Reinet.



Management transactions


Management transactions in Richemont shares and related securities are systematically reported to the SIX Swiss Exchange. This public information can be accessed via the following link: Click here

Highest compensation paid to a member of the executive management board

The total level of compensation of the highest paid director of the Management Committee was € 7 359 924, which was paid to Mr Norbert Platt, Group Chief Executive Officer

Compensation of Board sub-committees

The Board has established a number of sub-committees. These committees comprise both executive and non-executive directors of the Board. The compensation of the individual members of these committees is disclosed above.

Compensation for former members of governing bodies

During the year under review, a former executive director received a fee of € 129 863 from the Group for services provided to an entity in which the Group is a joint venture partner. Two former executive directors received a total cash settlement of € 17 962 in accordance with the terms of the modification to the Group’s stock option plan.

Allotment of shares

No shares or units were allotted to directors or members of the Management Board during the year under review.

Share ownership

As at 31 March 2009, members of the Board and parties closely linked to them owned a total of 60 500 Richemont ‘A’ shares. Members of the Management Committee and parties closely linked to them held a total of 51 670 Richemont ‘A’ shares at that date. As noted above Mr Johann Rupert is the General Managing Partner of Compagnie Financière Rupert, which holds the 522 000 000 ‘B’ registered shares in the Company. Parties associated with Mr Johann Rupert and Compagnie Financière Rupert held a further 162 664 ‘A’ shares or ‘A’ share equivalents at 31 March 2009. The interest of individual directors in Richemont ‘A’ shares is as follows:





At 31 March 2009

Members of the Group Management Committee

Lord Douro


18 000

Yves André Istel


16 000

Simon Murray

7 500

Alain Dominique Perrin

15 000

Lord Renwick 4 000

60 500

Group Management Committee

Alan Grieve

50 000

Albert Kaufmann

1 670

51 670

Mr Jan Rupert, Group Manufacturing Director, is a director of a company which holds 2 375 005 Richemont ‘A’ shares. He is also one of a group of family members who are beneficiaries of certain trusts which are, directly or indirectly, shareholders in that company and which hold Richemont 'A' shares and 'A' share equivalents in their own right. Mr Jan Rupert is a trustee of certain of these trusts but is not in a position to control their investment decisions or to control the exercise of voting rights by those trusts. In addition, members of Mr Jan Rupert’s family are also beneficiaries of certain companies that have acquired and currently hold 20 000 Richemont ‘A’ shares.

Mr Jan Rupert has no beneficial interest in Compagnie Financière Rupert and shares referred to in the paragraph above do not form part of the interest held by Compagnie Financière Rupert and its associated parties. For the avoidance of doubt, Mr Johann Rupert, Group Executive Chairman and a cousin of Mr Jan Rupert, is not a director of the company referred to in the paragraph above and has no interest in its holding of 'A' shares. He is neither a trustee of the trusts referred to in the preceding paragraph nor a beneficiary of those trusts. Details of the holding of Compagnie Financière Rupert and parties associated with Mr Johann Rupert are given at the beginning of this section of the corporate governance report.

Mr Alain Dominique Perrin, an executive director, also has an indirect holding of 720 779 ‘A’ shares. This indirect holding followed the redemption during the year of indirect holdings of derivative instruments linked to 720 779 underlying shares.

Mr Alan Grieve, a member of the Management Committee, also serves as a director of certain private companies established when the Group was founded and linked to former investors in Compagnie Financière Rupert. These companies hold in total 9 791 954 Richemont ‘A’ shares. Mr Grieve has no beneficial interest in those companies or in the ‘A’ shares that they hold. These companies have no current connection with Compagnie Financière Rupert and are not associated in any way with Mr Johann Rupert.

The Group operates a long-term share-based compensation plan whereby executives are awarded options to acquire shares at the market price on the date of grant. No awards under the stock option plan have been made to non-executive directors. Richemont agrees with the principle that stock options form a significant part of compensation and that the issue of new shares to meet the obligations under stock option plans results in dilution. For this reason, Richemont has implemented a series of buy-back programmes since 1999 to acquire ‘A’ shares to meet the obligations arising under its share-based compensation plans. By using its own capital to acquire these shares, Richemont has effectively always reflected the financing cost of the share-based compensation plans in the income statement. In addition, since 2004, Richemont has entered into over-the-counter call options with a third party to purchase treasury shares at the same strike price as the share options granted to executives. These call options, together with the shares held, provide a comprehensive hedge of the Group’s anticipated obligations arising under its stock option plan.

Awards under the Group’s stock option plan will not result in the issue of new capital and, in consequence, there will be no dilution of current shareholders’ interests.

In accordance with IFRS 2, Share-based Payment, the Group recognises in its financial statements an operating expense in respect of the fair value of options granted to executives. The aggregate charge in respect of each option grant is amortised over the vesting period of the award. Further details are given in note 34 to the consolidated financial statements. For the year under review the IFRS 2 charge amounted to € 31 million (2008: € 31 million).

With effect from the 2005 award, the terms of the Group’s long-term share-based compensation plan have been amended to permit executives not only to exercise but also to trade options once they have vested. The options granted as from 2008 onwards include a performance condition correlated to a comparative group of luxury goods businesses upon which vesting is conditional.

Details of options held by executive directors and members of the management board under the plan at 31 March 2008 are as follows:

    1st
April
2008

Granted
in year

Exercised
in year

Impact of
option plan
modifications
31 March
Weighted
average
grant price
CHF

Exercise
period

Latest
expiry

Board of Directors of
Compagnie Financière Richemont SA
















Johann Rupert
6 104 000
-
-
2 171 841
6 104 000
26.23
Apr 2008-Jul 2011
June 2013
Norbert Platt
924 666
429 375
-
967 835
924 666
49.97
Apr 2008-Jul 2014
June 2017
Richard Lepeu
995 000
257 625
-
541 987
995 000
39.75
Apr 2008-Jul 2014
June 2017
Jan Rupert
570 000
214 689
-
451 654
570 000
41.59
Apr 2008-Jul 2014
June 2017

Group management Committee
















Giampiero Bodino
240 000
68 700
-

277 445
240 000
50.13
Jul 2008-Jul 2014
June 2017
Pilar Boxford
80 233
17 175
(18 567)

79 575
80 233
43.80
Jul 2008-Jul 2014
June 2017
Bernard Fornas
503 000
8 589
-

516 177
503 000
44.55
Apr 2008-Jul 2014
June 2017
Alan Grieve
206 000
51 525
-
169 046
206 000
42.17
Apr 2008-Jul 2014
June 2017
Albert Kaufmann
560 000
171 750
(1 670)

494 670
560 000
43.86
Apr 2008-Jul 2014
June 2017
Thomas Lindemann
137 000
85 875
(5 500)

169 046
137 000
53.79
Jul 2008-Jul 2014
June 2017
Eloy Michotte
225 555
85 875
-

150 551
225 555
40.59
Apr 2008-Jul 2014
June 2017
Frederick Mostert
296 666
171 750
-

318 307
296 666
52.04
Apr 2008-Jul 2014
June 2017

Loans to members of governing bodies

As at 31 March 2009, there were no loans or other credits outstanding to any current or former executive or non-executive director. The Group’s policy is not to extend loans to directors. There were also no non-business related loans or credits granted to relatives of any executive or non-executive director.

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