Executive Remuneration at Reckitt Benckiser plc.PDF

9-104-062 REV: JULY 10, 2006 JAY W. LORSCH V. G. NARAYANAN KRISHNA PALEPU Executive Remuneration at Reckitt Benckiser plc “The U.S. is about the size of the pie. The U.K. is about the slice of the pie.” - Bart Becht, CEO of Reckitt Benckiser Reckitt Benckiser management believed that the company f...

9-104-062 REV: JULY 10, 2006 JAY W. LORSCH V. G. NARAYANAN KRISHNA PALEPU Executive Remuneration at Reckitt Benckiser plc “The U.S. is about the size of the pie. The U.K. is about the slice of the pie.” - Bart Becht, CEO of Reckitt Benckiser Reckitt Benckiser management believed that the company fostered an innovative and entrepreneurial culture through a remuneration system that relied strongly on performance-oriented pay. In fact, as stated in the 2001 Annual Report, “this [remuneration] system drives both in year performance, through the annual bonus system, and long-term alignment to shareholder value through the long-term incentive system. . . . Our compensation system is absolutely integral to our future success.”1 Nevertheless, with a recent trend in the United Kingdom toward more shareholder involvement in decision-making, especially executive compensation, and incidents of shareholder protest at other multi-national companies, senior managers and directors at Reckitt Benckiser were faced with the challenge of balancing executive and shareholder concerns. The History of Reckitt Benckiser Reckitt Benckiser plc. was formed in December 1999 by the merger of Benckiser N.V., a Netherlands-based household products company, and Reckitt & Colman plc., a United Kingdombased consumer products company. Founded in Germany by Johann A. Benckiser in 1823 as an industrial chemical firm, Benckiser eventually branched into consumer products, launching Calgon water softener and Calgonit Automatic Dishwashing Detergent in the middle of the 20th century. Reckitt & Colman, which began in 1804 as a flour mill, prospered by manufacturing spices, most notably mustard. The company eventually divested most of its food lines in favor of household cleaning, health and personal care products. During the 1980s and 1990s it acquired several popular brands in these categories, including Airwick air fresheners, Black Flag insecticide, Woolite fabric care, Easy-Off oven cleaner, Lysol, Glass Plus, and Spray'n Wash.2 1 Reckitt Benckiser 2001 Annual Report. 2 "Reckitt Benckiser plc, Company Profile," Available from Hoovers Online <http://www.hoovers.com> (accessed June 25, 2003). ________________________________________________________________________________________________________________ Professors Jay W. Lorsch, V. G. Narayanan, and Krishna Palepu and Research Associates Ashley C. Robertson and Lisa Brem prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2004 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School. This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. 104-062 Executive Remuneration at Reckitt Benckiser plc When the two companies merged, Alan Dalby, the chairman of Reckitt & Colman was named chairman of the new company, and Bart Becht, who had been CEO of Benckiser, was named CEO. The new company divested several non-performing and unrelated brands, while it continued to grow and expand geographically through acquisitions, such as the purchase of Korean Oxy Company (makers of Oxy Clean fabric treatment) in 2001. In 2003 Reckitt Benckiser was number one in the world in household cleaning products and ranked third in the broader household goods category (see Exhibit 1 for Global household goods market share).3 It owned leading brands in disinfectants, garment care, automatic dishwashing and depilatories. In 2001, Reckitt Benckiser ranked 11th overall in consumer package goods behind leaders Unilever and Procter & Gamble (P&G) (see Exhibit 2 for Consumer non-durable companies). Overall, the merger was a commercial and financial success. In an interview in Reckitt Benckiser’s newly built Slough, England headquarters in 2003, Bart Becht explained that the new company reflected the culture of each of the two combined companies, with 75% of the culture adapted from Benckiser and 25% from Reckitt & Colman. One important cultural aspect taken from Benckiser was the emphasis on performance-based pay. The synergy of the products of the two companies, coupled with the fact that they had complementary geographic strengths, contributed to their effective integration. In 2002, sales at Reckitt Benckiser totaled 3.5 billion pounds (£). Fabric care and surface care products generated nearly 50% of sales, with home care, dishwashing, health and personal care accounting for another 42%.4 The company had a 2002 profit before taxes of £545 million with annual growth of 26.7%, supported by 23,000 employees (1,300 in the U.K.) with operations in 60 countries. It sold products in 180 countries and had 50 manufacturing facilities across every continent. The company's main competitors included: Procter & Gamble (U.S.), Unilever (Netherlands and U.K.), Colgate-Palmolive (U.S.), The Clorox Company (U.S.), Henkel (Germany) and Dial Corporation (U.S.) (see Exhibits 1 and 2).5 Going forward, the company raised its target for net income growth in the 2003 Interim Report to 14% at actual exchange.6 Company Strategy and Performance The company's strategy was to grow by acquisitions and organic growth through line extensions and new products. Indeed, one important factor in the company’s strategic success was its emphasis on new products, as new products launched in the past three years comprised 32% of net revenues and the company was on track to meet a targeted 40% by 2004. These new products expanded what the company considered to be its “top 15 Power Brands.” Reckitt Benckiser was aggressive in marketing and advertising. Its media budget, which supported these new products, was 11% of net revenues, one of the highest among its competitors.7 3 John Parker, Phil Spencer, Sara Supino and Mark Purdy, Deutsche Bank Company Focus Global Equity Research, "Reckitt Benckiser A Breath of Fresh Air," (May 13, 2003). Published by OneSource Information Services, Inc., <http://www.onesource.com> (accessed June 29, 2003). 4 "Reckitt Benckiser plc, Company Profile," available from Hoovers Online <http://www.hoovers.com> (accessed June 25, 2003) and "Company Report for Reckitt Benckiser PLC," available from Amadeus <http://www.Amadeus.bvdep.com> (accessed June 23, 2003). 5 Reckitt Benckiser 2002 Annual Report. 6 Reckitt Benckiser 2003 Interim Report, p.4. 7 Reckitt Benckiser 2002 Annual Report. 2 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. Executive Remuneration at Reckitt Benckiser plc 104-062 As Becht outlined in the 2002 Annual Report, the strategy also consisted of the following core components: • Deliver above industry average net revenue growth. We target to achieve this growth by focusing on high growth categories in which our top 15 Power Brands hold the market-leading positions. • Leverage out net revenue growth into even stronger net income growth and strong cash generation through improving operating margins and cash flow management.8 Analysts considered Reckitt Benckiser to be a financial success (see Exhibit 3 for company performance, 1999-2002). As the Financial Times noted: Investors' eyes may glaze over at talk of textured floor wipes and three-in-one dishwasher tablets. Yesterday's results from Reckitt Benckiser show why they should take notice. The Anglo-Dutch household products group has outstripped industry sales growth since its birth in 1999.9 Industry watchers pointed to its product innovations, cash flow and revenue growth as proof that the company would continue to grow into 2004 (see Exhibit 4).10 Organic growth rates (constant currency) were between 6% and 7% from 2000 to 2002, with most of that growth in Europe and North America. Indeed, the company generated 47% of its revenue in Western Europe and 29% in North America.11 As the 2002 Annual Report pointed out: We exceeded our financial targets for 2002. Net revenues for the year grew by 7% at constant exchange to £3,531m. Reported growth was 3%, affected by adverse exchange rates. Normalised net income grew by 20% to £408m. Net cash flow generation grew by 38% as we further improved profits, cut net working capital and improved our cash management.12 Remuneration Philosophy The Global Nature of the Remuneration Plan Reckitt Benckiser wanted to attract the best executives regardless of country of origin and believed that it must remain competitive for talent with U.S.-based competitors, such as P&G. There was also a related concern among those who formulated the company’s remuneration policies that they pay executives in such a way that they would have complete global mobility. According to John Beadle, Compensation & Benefits Director, Reckitt Benckiser valued highly the “fresh thinking and new ideas [that] stem from people moving around from one market to another” and, in practice, moved everyone in the top commercial team at least once in his or her career. Reckitt Benckiser had 8 Reckitt Benckiser 2002 Annual Report. 9 Financial Times, London. February 21, 2002. 10 See Parker, supra note 3. 11 "Business Brief -- Reckitt Benckiser PLC: First-Quarter Net Rose 17% on Strength in North America," The Wall Street Journal, New York, NY, May 8, 2003, available from ProQuest, ABI/Inform, <http://proquest.com> (accessed June 22, 2003). 12 Reckitt Benckiser 2002 Annual Report. 3 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. 104-062 Executive Remuneration at Reckitt Benckiser plc developed a plan to motivate and retain top managers while adhering to a global remuneration policy. The plan was a reflection of the company’s culture, and supported both international mobility and the development of global executives. Fundamentals of the Remuneration Plan As Beadle explained, “base pay is sufficient to live on. If one hits his or her targets he or she will be slightly better off than the competition. However, it is possible for one to exceed his or her targets and earn a maximum bonus of 3 ½ times the target bonus.” The theory behind the compensation plan was twofold: it should be performance driven at all levels of management and it should be easily understood with targets within each manager’s “line of sight.” Beadle emphasized that simplicity was a key factor in the remuneration plan. Essential to this concept of simplicity was the consistency of the plan throughout various levels of management, including the CEO. Additionally, the company did not use measures such as Economic Value Added, as those involved with formulating the plan felt it was too complicated when pushed down in the company. The 2002 Annual Report pointed out: “We also put a heavy emphasis on winning. This explains not just our very performance oriented compensation system, but also our need for high quality people with passionate commitment.” To assure that they had such people, management, as explained by Becht, rated potential recruits on both competency and cultural fit. Cultural fit was considered critical and was determined based on a propensity for achievement, commitment, entrepreneurship, and teamwork. Executives involved in setting the compensation policies were convinced that attracting employees with these characteristics was essential to the success of the plan. The outcome of the hiring process, according to Beadle, was “a self-selected group of people who are motivated and excited by the remuneration system and who believe in themselves and in the system.” The plan consisted of three major parts: salary, short-term incentives, and long-term incentives (see Exhibit 5). Salaries were typically set around the median of competitors according to compensation surveys. Both base salaries and short-term incentives were paid in cash. Most of a manager’s compensation was dependent on performance. If an executive met all targets, which were generally set at the average of the peer group performance, he or she would receive 40% of base salary as a bonus. However, if the individual substantially exceeded all targets, he or she could earn up to 140% of base salary. Generally, to achieve this, a performance of double the targets would be required. If none of the goals were met, the variable compensation would be zero (see Exhibit 6). Short-term incentives were based on factors within the manager’s control. The three criteria used to determine the compensation of a manager in a business unit were revenue growth, profit growth, and net working capital reduction. Long-term pay was based on targets related to corporate growth over three years as agreed to by the board of directors, upon the recommendation of the Remuneration Committee. The indicator used was earnings per share (EPS). The long-term incentives, paid in options and restricted stock, vested only if the company met the EPS targets. According to Beadle, Reckitt Benckiser was reducing the grants of options and moving towards granting more restricted stock. The EPS target for partial vesting was 6% growth per annum, or 19% over a three-year period that was based on historical industry growth averages. If the company grew EPS at 9% per annum or 30% over threeyears, 100% of the long-term incentives would be granted (see Exhibit 7). A new three-year plan was put in place each year. 4 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. Executive Remuneration at Reckitt Benckiser plc 104-062 Due to a strong belief that holding stock in the company would cause employees to behave like owners, the Remuneration Committee also set a minimum share ownership policy. For example, the CEO was required to own 400,000 shares within six years of appointment and the top thirty managers were each required to own 50,000-200,000 shares depending on one’s level (see Exhibit 6). Consultants from Bain & Company (a U.S.-based global consulting firm) endorsed Reckitt Benckiser’s plan. In their view stock-based incentives, linked carefully to performance, could effectively bridge the gap between pressure to raise executive pay scales and the austere economic climate. They opined that Reckitt Benckiser was a best practice company in this regard: Even with the right measures in place, unless the incentives to perform are palpable, compensation becomes a blunt tool or, worse, a scheme that rewards mediocrity. At Reckitt Benckiser. To earn their bonuses, executives must show measured progress toward the company's strategic targets. 13 Compensation Decision Makers at Reckitt Benckiser The Role of Human Resources Human Resources worked with the board’s Remuneration Committee and with senior managers to formulate and maintain the remuneration policy. Beadle’s role was to be the inside expert on all compensation matters, including any design changes, and to ensure the effective administration of the compensation plan. The Human Resources department at Reckitt Benckiser also engaged an external compensation consulting firm to provide market data and commentary on market trends. The Role of the Board of Directors Members of the Remuneration Committee of the board (see Exhibit 8) were referred to by Beadle as the “custodians of the compensation strategy.” It was this committee’s responsibility to ensure that the policy was aligned with company culture and that it served the business strategy and executives themselves. Additionally, any changes in the compensation policy had to be approved by the entire board. Shareholder Involvement In late 2003 each London Stock Exchange listed company’s remuneration policy had to be “blessed” not only by the board of directors, but also by the company shareholders. This shareholder approval was “advisory,” but companies ignoring the shareholder vote would be subjected to negative media attention and shareholder protests. There was generally a move toward giving shareholders more influence in remuneration, both in the London Stock Exchange listing requirements and in The Combined Code. In July 2003 the Financial Reporting Council published a revised version of The Combined Code on Corporate Governance outlining governance guidance for companies as well as good practice suggestions. In accordance with The Code, shareholders at Reckitt Benckiser voted on long-term incentive schemes. For example, at the May 2003 Annual Meeting shareholders approved the 2002 plan for the CEO and directors’ pay. 13 Orit Gadiesh and Marcia Blenko, "Executive Pay: The Same Old Saw?" The Wall Street Journal, New York, N.Y., April 29, 2003, page B4. Available from ProQuest, ABI/Inform, <http://proquest.com> (accessed June 22, 2003). 5 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. 104-062 Executive Remuneration at Reckitt Benckiser plc Reckitt Benckiser directors believed that their performance-based compensation also adhered to provisions of The Code, which stated that “performance-related elements should form a significant proportion of the total package of executive directors and should be designed to align their interests with those of the shareholders and to give these directors keen incentives to perform at the highest levels.”14 Shareholders also had the right to vote on the amount of dilution allowed under the plan. Limits were set in the U.K. on how much dilution could be allowed to compensate employees in “discretionary” (executive) plans. In order to implement its incentives program and to stay even with its U.S. competition, Reckitt Benckiser needed to obtain its shareholders’ approval to raise this level to above the U.K. norm. Prior to the merger, Reckitt & Colman was listed on the London Stock Exchange; Benckiser was listed on the Amsterdam and New York Stock Exchanges. As a result, Reckitt Benckiser shares in 2003 were only 35% held in the U.K. (20% were held in the U.S. and 15% were held in Europe and Asia, with 16% retained by the Benckiser family). Even though such a small proportion of shares were owned in the U.K., the Remuneration Committee felt it was important that U.K. shareholders be comfortable with larger dilution. To accomplish this the chairman of the board and the chairman of the Remuneration Committee spent many days talking with U.K. shareholders about the need to exceed normal U.K. levels of dilution. In 2003 the shareholders approved the use of 2% dilution per year over 5 years for all employee share programs. This 2% dilution program was still below the 75th percentile of the U.S. peer group, where the range was 1.7-2.5% dilution per year. Broader Issues on the Table An area of general confusion for U.K. stockholders was the valuation of stock options. Criticism of several multi-national, globally competitive companies, similar to Reckitt Benckiser, had been voiced about how they had valued stock options, for example, whether the stock options should be valued at the price of the stock at the time of the grant. Another issue that concerned shareholders was the length of contracts for senior executives since they did not want to see companies paying executives large amounts if the company’s performance did not warrant such compensation. Initiatives taking place in the U.K. indicated that institutional shareholders were increasingly concerned about executive remuneration plans. As Christine Farnish of the National Association of Pension Funds said, “we want to see a greater alignment between executive pay and shareholders' interests.15 To this end, there were a number of examples of remuneration plans about which shareholders expressed concern: • 2003: GlaxoSmithKline CEO Jean-Pierre Garnier's remuneration package was voted down by the company’s shareholders as being exorbitant.16 • 2003: WPP CEO Sir Martin Sorrell’s 3 year compensation contract only narrowly passed in a shareholder vote (54%) due to fears of a “golden parachute.”17 14 The Combined Code on Corporate Governance, July 2003, as found on the Web site of the Financial Reporting Council < http://www.frc.org.uk> (accessed October 21, 2003). The Combined Code summarized the recommendations of a number of corporate governance committees in the United Kingdom, dating back to the early 1990s. 15 Christine Farnish, Chief Executive, National Association of Pension Funds, quoted in Financial Times, London, April 15, 2003. 16 Julia Finch, “Hewitt threatens to snatch fat cats’ cream,” The Guardian, June 4, 2003. 6 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. Executive Remuneration at Reckitt Benckiser plc • 104-062 2003: Shareholders protested Reuter's CEO Tom Glocer's severance package equaling £2.8 million after he presided over the worst loss in the company's history.18 Given the importance of incentive compensation in motivating key managers and developing a culture of risk taking and innovation, Reckitt Benckiser executives and members of the board of directors were concerned about how to sustain their incentive compensation programs while still meeting the changing expectations of shareholders. Management at the company considered it critical to maintain levels of compensation attractive to recruit and retain top managers globally, while also adhering to shareholder requests that remuneration not get out of hand. 17 Adam Pasick, “WPP sees firming ad sector amid Sorrell pay row,” Reuters, August 18, 2003. 18 Chris Tryhorn, “Glocer under fire over pay deal,” The Guardian, April 17, 2003. <www.mediaguardian.co.uk.> 7 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. 104-062 Exhibit 1 Executive Remuneration at Reckitt Benckiser plc Global Household Goods Market —Top 10 Companies (Share %) The Procter & Gamble Company Unilever Group Reckitt Benckiser plc S. C. Johnson & Son, Inc. The Henkel Group Colgate-Palmolive Company The Clorox Company Kao Corporation Sara Lee Corporation Lion Corporation 1999 17.6 14.4 7.9 5.8 5.1 4.5 2.7 2.0 1.7 1.6 2000 18.1 14.3 8.0 5.9 5.0 4.3 3.0 2.2 1.8 1.6 Source: Adapted from Euromonitor, as reproduced by Deutsche Bank Global Equity Research, May 13, 2003. Exhibit 2 Leading Household Products/Personal Care Companies Ranked By Sales (U.S.$ Millions) Unilever Group The Procter & Gamble Company Kimberley-Clark Corporation L'Oreal Group Colgate-Palmolive Company The Gillette Company Newell Rubbermaid Kao Corporation Fortune Brands Avon Products, Inc. Reckitt Benckiser plc Shiseido Co., Ltd. Estee Lauder S.C. Johnson & Son, Inc. The Clorox Company Alberto-Culver ACCPW The Dial Corporation Revlon Consumer Products Corporation Tupperware Corporation Fiscal Year End Dec. 01 Jun. 02 Dec. 01 Dec. 01 Dec. 01 Dec. 01 Dec. 01 Mar. 02 Dec. 01 Dec. 01 Dec. 01 Mar. 01 Jun. 02 Jun. 00 Jun. 02 Sep. 01 Dec. 01 Dec. 01 Sales 43,121.00 40,238.00 14,524.00 12,171.00 9,430.00 8,960.00 6,910.00 6,325.00 5,680.00 5,990.00 5,002.00 4,711.20 4,144.00 4,200.00 4,061.00 2,494.00 1,660.00 1,322.00 Net Income 1,646.00 4,352.00 1,609.90 1,089.00 1,150.00 910.00 265.00 454.00 139.00 430.00 501.00 356.90 168.50 NA 322.00 110.00 70.00 (150.00) Dec. 01 1,114.00 62.00 Source: Adapted from Hoover's Online as reproduced in Standard & Poor's Industry Surveys. Howard Choe, Standard & Poor’s Industry Surveys, “Household Nondurables, “ (October 24, 2002) from Web site <www.onesource.com> (accessed June 29, 2003). 8 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. 3,439 525 603 3,531 577 752 Net Revenues Operating Profit Cash flow Source: Reckitt Benckiser Web site <http://reckittbenckiser.com> (accessed October 21, 2003). 2001 (£m) Company performance since the merger, 1999-2002 2002 (£m) Exhibit 3 502 440 3,160 2000 (£m) 407.8 137.3 3,054.4 1999 (£m) 104-062 -9- This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. 1,834 (848) 986 (706) 280 280 (11) 269 (70) 199 199 (99) 100 Discontinued and de-consolidated operations Total net revenues Cost of sales Gross Profit Net operating expenses Operating profit from continuing operations Discontinued and de-consolidated operations Total operating profit Net interest expense Profit on ordinary activities before taxation Tax on profit on ordinary activities Profit on ordinary activities after taxation Attributable to equity minority interests Profit for the period Ordinary dividends Retained profit for the period 27.1p On profit for the period, diluted Source: Reckitt Benckiser 2003 Interim Report 2003, p. 5. 28.1p On profit for the period Earnings per ordinary share: 1,834 st 1 half 2003 (£m) Group Profit and Loss Account for the half-year ended 30 June 2003 (unaudited) Net revenues from continuing operations Exhibit 4 23.7p 24.6p 83 (90) 173 - 173 (64) 237 (20) 257 2 255 (653) 910 (846) 1,756 13 1,743 1st half 2002 (£m) 55.7p 58.0p 227 (181) 408 - 408 (137) 545 (32) 577 3 574 (1,276) 1,853 (1,678) 3,531 13 3,158 Full-year 2002 (£m) 104-062 -10- Executive Remuneration at Reckitt Benckiser plc Exhibit 5 104-062 2001 Average Executive Pay Levels (industrial companies with over $500 million in sales) Salary & Perks Cash Bonus Long-term Incentives (mostly equity-based) 1400 1200 Pay (US $000s) 1000 800 600 400 200 0 Europe Asia Latin America Australia, New Zealand, Canada US Source: Brian J. Hall, "Six Challenges of Equity-Based Pay Design," from data supplied by Towers Perrin. 11 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. 104-062 Exhibit 6 Executive Remuneration at Reckitt Benckiser plc Report on Director's Remuneration from Reckitt Benckiser's 2002 Annual Report 12 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. Executive Remuneration at Reckitt Benckiser plc 104-062 13 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. 104-062 Executive Remuneration at Reckitt Benckiser plc 14 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. Executive Remuneration at Reckitt Benckiser plc 104-062 15 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. 104-062 Executive Remuneration at Reckitt Benckiser plc 16 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. Executive Remuneration at Reckitt Benckiser plc 104-062 Source: Reckitt Benckiser 2002 Annual Report, p. 33-38. 17 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. 104-062 Exhibit 7 Executive Remuneration at Reckitt Benckiser plc Earnings Per Share targets for Reckitt Benckiser EPS Growth per annum (%) Compound EPS growth over 3 years (%) % of options and shares vesting 6 19.1 40 7 22.5 60 8 26.0 80 9 29.5 100 Source: Reckitt Benckiser 2002 Annual Report. 18 This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. This document is authorized for use only by Aishath Shama ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. The Board of Directors, October 2003 -19- Source: Reckitt Benckiser Web site <http://www.reckittbenckiser.com> (accessed October 21, 2003). Peter White, 62, previously Group Chief Executive of Alliance & Leicester plc. (Chairman of the Audit Committee and Member of the Nomination Committee) Hans van der Wielen, 59, previously President and Chief Executive Officer of Koninklijke Numico N.V. Chairman of Pink Roccade and Director of Gouda Vuurvast. (Member of the Audit Committee) Judith Spreiser, 50, Chief Executive Officer of Transor Inc. and Director of Allstate Insurance Company, USG Corporation, Kohl’s Corporation and Member of the American Institute of CPAs and Northwestern University’s Board of Trustees. (Member of the Remuneration Committee) Ana Maria Llopis, 52, Executive Vice-President of the Financial and Insurance Markets at Indra, the leading Spanish IT consulting firm which acquired Razona in February 2002, where she was Chairman and CEO until its full integration. Non-Executive Director of British American Tobacco PLC. (Member of the Audit Committee) Peter Harf, 56, Deputy Chairman. Chairman of Coty Inc. and Director of Interbrew and the Brunswick Corporation. Chief Executive Officer of Joh. A. Benckiser GmbH. (Chairman of the Remuneration Committee and Member of the Nomination Committee) George Greener, 57, Appointed Senior Non-Executive Director in 2003. Chairman of British Waterways and The Big Food Group Plc and Non-Executive Director of Fleming Investment Trust plc. (Member of the Remuneration Committee) Colin Day, 48, previously Group Finance Director at Aegis Group Plc. Non-Executive Director of easyJet plc and Bell Group plc. Adrian Bellamy, 61, Appointed Non-Executive Chairman in 2003. Executive Chairman of The Body Shop International Plc, Chairman of Gucci Group NV and a Director of The Gap, Inc, The Robert Mondavi Corporation and Williams-Sonoma, Inc. (Member of the Nomination Committee and the Remuneration Committees) Bart Becht, 47, Chief Executive Officer of the Company (Member of the Nomination Committee) Exhibit 8 104-062