Directors Remuneration and Share OwnershipDirectors’ compensationThe 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.
* 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.
Highest compensation paid to a member of the executive management boardThe 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-committeesThe 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 bodiesDuring 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 sharesNo 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 18 000 16 000 7 500 15 000 60 500 50 000 1 670 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:
Loans to members of governing bodiesAs 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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