The remuneration committee has been established in accordance with the recommendations of the Combined Code. During the 2008/09 financial year, the committee was chaired by Paul Myners up to his resignation in October 2008, and subsequently by the interim chair, John Bartle. Amelia Fawcett succeeded Paul as chair of the remuneration committee on her appointment as chair of the Board on 22 April 2009. Subsequently, on 25 June 2009, John Bartle became chair of the committee and Nick Backhouse and Judy Gibbons became members of the committee. The committee consists of all independent directors, and the chair of the Scott Trust, Dame Liz Forgan.

Remuneration policy for executive directors

The remuneration committee ensures that executive directors are remunerated fairly, taking into account both external market factors and the values of the Group, which commit us to fair and equitable treatment of all who work for us. Thus, we undertake to provide a package of benefits which are sufficiently competitive to attract and retain the most talented senior executives in our industry. At the same time, decisions on senior executive packages are made with reference to internal equities and to ensure that there is a transparency and "felt fairness" about our executive remuneration policy. We aim to fairly recognise both individual contributions and collective achievements. Accurate data on the internal market is provided by the group HR director, and regular updates on the external market environment by PricewaterhouseCoopers LLP, who are also the Group auditors.

Salary and benefits

Salary is reviewed annually and is determined by the remuneration committee, having regard to market conditions and internal relativities.

All executive directors receive a company car, or cash alternative, and private health care benefits. Life insurance is provided as part of their pension arrangements.

A pay-freeze was announced in February 2009 and applies to all directors. Alan Rusbridger has decided to take a 10% cut in salary with effect from 1 April 2009.

Performance related bonus

The bonus arrangements for the executive directors are based on annual, pre–determined, divisional and Group financial performance targets and personal objectives.

The senior executive bonus scheme was updated in 2007/08 to bring greater accountability and more sharply defined performance targets to the reward process.

Executive directors are able to earn a performance related bonus of a maximum of 100% of basic salary, dependent upon performance conditions being met. The percentage of salary which can be earned as a bonus based on financial performance related targets, and the percentage based on personal objectives, is set out below for each executive director.

Similar bonus arrangements, albeit with a lower quantum, apply to other senior executives in the operating divisions.

Alan Rusbridger has no contractual entitlement to a bonus payment.

In 2008/09 no executive director received a bonus based on financial performance targets. In addition, Carolyn McCall and Tim Brooks have waived any entitlement to a bonus based on achievement of personal objectives.

In 2009/10, the performance related bonus scheme has been suspended, and will be kept under review for both financial performance related and personal objectives.

Pensions

Retirement benefits are accruing to the executive directors under money purchase schemes. Contributions made by the Group to the schemes are shown in the table of directors’ emoluments.

Service contracts

All executive directors have service contracts terminable on 12 months’ notice by the Company or by the director.

The chair has a letter of appointment which allows for three months’ notice by the chair; no notice period needs to be given by the Company.

Independent directors have letters of appointment that allow for three months’ notice by the director; no notice period is required by the Company. Terms and conditions of appointment of independent directors are available for inspection by any person at the Company’s registered office during normal business hours.

Details of the service contracts of directors are as follows:

Directors’ emoluments

* Date of appointment, resignation or other changes to directorships.

1. 1Mark Dodson has been provided with a one-off long-term incentive plan which is based on pre-determined financial targets for the period April 2008 to March 2011. Mark Dodson will be able to earn an additional one-off bonus of a maximum of 100% of basic salary as at 1 April 2008, should performance targets be achieved. 

2. 2John Myers was provided with an annual loyalty bonus arrangement running to 1 April 2010. The loyalty bonus was to be paid in equal instalments on 1 April 2008, 1 April 2009 and 1 April 2010 provided John Myers was in employment with the Group on the date of payment. A loyalty bonus was paid in April 2008. John subsequently notified the Group that he intended to retire at the end of the 2009/10 financial year and was offered and accepted a consulting role with GMG Radio for the final year of his loyalty scheme until 1 April 2010 at a rate of £50,000 per annum. A reduced final loyalty bonus was paid in June 2009. 

3. 3Following the sale of a minority shareholding in Trader Media Group, announced in March 2007, Jerry Fowden stepped down as chief executive of Trader Media Group and resigned as a director of Guardian Media Group on 13 April 2007. In accordance with the terms of the Employer Financed Retirement Benefit Scheme (EFRBS) £33,091 was credited to Jerry Fowden’s EFRBS account with the Company in the year ended 29 March 2009. 

4. 4Sir Robert Phillis retired as chief executive on 31 July 2006 and as a non–executive director on 31 December 2006. The Company has undertaken to make an annual payment, totalling £169,083, in respect of his pension contributions, life insurance and private healthcare benefits in line with his service agreement and until his 65th birthday in December 2010. 

5. 5Alan Rusbridger was appointed editor-in-chief of both the Guardian and Observer in September 2007. 

 Carolyn McCall was a non–executive director of Tesco PLC and earned and retained fees in their year ended 28 February 2009 of £10,000 (2008 £67,000). She resigned as a director on 10 April 2008. Carolyn was appointed as a non-executive director of Lloyds Banking Group plc on 1 October 2008 and earned and retained fees in their year ended 31 December 2008 of £16,250.

Remuneration policy for chair and independent directors

Remuneration for the chair and independent directors comprises fees for their services in connection with the Board and Board committees. The chair and the independent directors are not eligible for pension fund membership and will not participate in any of the Group’s bonus schemes.

The level of fees for independent directors is reviewed biennially and approved by the Board. In 2007/08 the independent directors were paid a basic fee of £34,000 with further fees payable for additional responsibilities such as being chair of a committee. The fees are next due for review in 2009/10.

Giles Coode–Adams received an additional fee as senior independent director, being chair of the audit committee and a non–executive director of Trader Media Group Limited up to 8 June 2007. Nick Backhouse succeeded Giles as chair of the audit committee and received an additional fee for this role. John Bartle declined any additional fees for acting as chair of the Board, nominations and remuneration committees.

Amelia Fawcett

Chair of the remuneration committee

25 June 2009