In accordance with long established policy, all continuing executive directors have rolling service agreements under which, other than by termination in accordance with the terms of these agreements, employment continues until retirement.
The committee reviewed the policy on executive employment agreements in 2008. For future executive directors, service agreements should provide that the company may terminate these agreements by giving no more than 12 months’ notice. As an alternative to giving notice, the company may pay salary, target annual incentive and the cost of pension and other benefits in lieu, subject to mitigation. In the case of the longer serving directors with legacy employment agreements, the compensation payable in circumstances where the company terminates the agreements without notice or cause takes the form of liquidated damages.
There are no special provisions for notice, pay in lieu of notice or liquidated damages in the event of termination of employment in the event of a change of control of Pearson.
On termination of employment, executive directors’ entitlements to any vested or unvested awards under Pearson’s discretionary share plans are treated in accordance with the terms of the relevant plan.
We summarise the service agreements that applied during 2008 and that continue to apply for 2009 as follows:
Name | Date of agreement | Notice periods | Compensation on termination by the company without notice or cause |
---|---|---|---|
Glen Moreno | 29 July 2005 | 12 months from the director; 12 months from the company | 100% of annual fees at the date of termination |
Marjorie Scardino | 27 February 2004 | Six months from the director; 12 months from the company | 100% of annual salary at the date of termination, the annual cost of pension and all other benefits and 50% of potential annual incentive |
David Bell | 15 March 1996 | Six months from the director; 12 months from the company | 100% of annual salary at the date of termination, the annual cost of pension and all other benefits and 50% of potential annual incentive |
Will Ethridge | 26 February 2009 | Six months from the director; 12 months from the company | 100% of annual salary at the date of termination, the annual cost of pension and all other benefits and target annual incentive |
Rona Fairhead | 24 January 2003 | Six months from the director; 12 months from the company | 100% of annual salary at the date of termination, the annual cost of pension and all other benefits and 50% of potential annual incentive |
Robin Freestone | 5 June 2006 | Six months from the director; 12 months from the company | No contractual provisions |
John Makinson | 24 January 2003 | Six months from the director; 12 months from the company | 100% of annual salary at the date of termination, the annual cost of pension and all other benefits and 50% of potential annual incentive |