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Remuneration Report

In preparing the Remuneration Report and establishing its policy the Board has given consideration to, and adopts the provisions of, the Combined Code, where appropriate and applicable.

Ofcom is not required to comply with the Directors’ Remuneration Report Regulations 2002 but has prepared this report to be compliant so far as is practicable and appropriate.

Constitution of the Remuneration Committee

The constitution of the Remuneration Committee is set out on page 57.

Advisers

The Remuneration Committee takes advice and/or obtains services from the following external entities:

Towers Perrin, on executive remuneration; and
Allen & Overy LLP, on employment contracts and associated legal issues.

Towers Perrin also provides advice and services to Ofcom in respect of pensions, pension trustee and administration support and other organisational issues.

The Committee also takes advice from Ofcom’s HR Director. The Chief Executive is normally invited by the Remuneration Committee to attend meetings of the Committee. No individual is present for any discussion about his or her own remuneration.

General policy

In setting Ofcom’s remuneration policy the Remuneration Committee believes that Ofcom should, within the constraints of a public corporation, provide rewards which will attract and retain the high-calibre management necessary to enable Ofcom to fulfil its statutory remit and responsibilities. The overall policy approach is not expected to change in the coming year.

Components of remuneration

The main components of the Executive Members’ remuneration are:

Salary and flexible benefits

The basic salary for each Executive Member and senior manager is determined by taking into account each colleague’s responsibilities, performance and experience together with market trends. In addition, a flexible benefits allowance is made available to each Executive Member and senior manager.

Benefits in kind

Each Executive Member and senior manager receives certain standard benefits which are detailed later in this section.

Annual bonus

Each Executive Member and senior manager participates in a bonus scheme which is calculated as a percentage of salary based on the individual’s performance up to a maximum of 25 per cent of salary depending upon the individual concerned. No element of bonus is pensionable.

Bonuses included in the schedules reflect the amount payable for the performance review period 1 April 2007 to 31 March 2008.

Pension arrangements

Executive management

Each Executive Member and senior manager (with the exception of Dominic Morris and Chris Banatvala as set out below) is provided with an allowance, determined as a percentage of base salary, which the individual can take as extra salary or invest in a pension scheme of their choice.

Dominic Morris is eligible to participate in the Ofcom Defined Benefit Pension Plan on comparable terms as applied when previously employed by the ITC. This provides salary-related pension benefits on a defined benefit basis, with an accrual rate of 1/60th of final salary per year of service, subject to the Ofcom Plan Earnings Cap where appropriate. Dominic Morris receives additional benefits through the Plan in recognition of his earnings in excess of the cap.

Chris Banatvala is eligible to participate in the Ofcom Defined Benefit Pension Plan on comparable terms as applied when previously employed by the ITC. This provides salary-related pension benefits on a defined benefit basis, with an accrual rate of 1/60th of final salary per year of service, subject to the Ofcom Plan Earnings Cap where appropriate.

Non-Executive Members

As set out below in the Notes to the Remuneration table David Currie was paid fees by Ofcom from 9 April 2007; between 1 April and 9 April as part of his then applicable arrangements a small amount of direct pension costs for David Currie were met by Ofcom. No other Non-Executive Member received a pension benefit from Ofcom during the year under review.

Details of remuneration for the Board, the Content Board and the Executive Committee, which have been audited by the National Audit Office, are set out on page 67.

Guidance to the remuneration schedules

These schedules refer to remuneration during the financial year. The schedule reflects remuneration for that part of the year during which individuals were either providing services to, or Executive Members of the Board, Content Board or the Executive Committee. Where individuals are members of more than one Board/Committee (as set out on pages 54 and 57) they appear only once in the remuneration schedules. The numbered points against the names of individuals refer to the numbered points set on pages 68 and 69.

Ofcom Board Remuneration 2007/8

Name	Role		Total remuneration	Pension entitlement/allowance	Flexible benefits allowance	Benefits in kind	Bonus	Salary
			£	£	£	£	£	£
Millie Banerjee	Non-Executive Member	(2,3,13)	58,446			672	-	57,774
Colette Bowe	Non-Executive Member	(2,5,13)	10,320				-	10,320
David Currie	Chairman	(1,2,13)	206,134	616		728	-	204,790
Tim Gardam	Non-Executive Member	(2,4,13)	10,320				-	10,320
Philip Graf	Deputy Chairman	(2, 13)	103,874			672	-	103,202
Ian Hargreaves	Executive Member	(7,16-19)	247,896	27,000	12,000	1,896	27,000	180,000
Stephanie Liston	Non-Executive Member	(2, 8,13)	41,953			672	-	41,281
Mike McTighe	Non-Executive Member	(2,4,13)	24,417			336	-	24,081
Sara Nathan	Non-Executive Member	(2,6,13)	31,465			504	-	30,961
Ed Richards	Chief Executive	(16-19)	417,581	56,400	19,953	2,828	56,400	282,000
Philip Rutnam	Executive Member	(16-19)	260,753	27,150	15,000	1,403	36,200	181,000
Total			1,413,159	111,166	46,953	9,711	119,600	1,125,729

Ofcom Content Board Remuneration 2007/8

Name	Role		Total remuneration	Pension entitlement/allowance	Flexible benefits allowance	Benefits In Kind	Bonus	Salary
			£	£	£	£	£	£
Richard Ayre	Content Board Member	(8,11,12)	26,248			300	-	25,948
Chris Banatvala	Director of Standards	(15-18,20)	174,968	24,052	16,250	1,352	23,000	110,314
Sue Balsom	Content Board Member	(8,12)	21,690			672	-	21,018
Pam Giddy	Content Board Member	(8,12)	21,690			672	-	21,018
Anthony Lilley	Content Board Member	(8,12)	21,690			672	-	21,018
Dr Paul Moore	Content Board Member	(8,12)	21,690			672	-	21,018
Stewart Purvis	Partner, Content & Standards	(10,15-18)	60,271	7,280	4,000	458	-	48,533
Adam Singer	Deputy Chairman	(8,12)	28,696			672	-	28,024
Tim Suter	Partner, Content & Standards	(9,15-18)	149,671	17,600	14,290	448	-	117,333
Joyce Taylor	Content Board Member	(8,12)	21,634			616	-	21,018
Kath Worrall	Content Board Member	(8,12)	28,396			372	-	28,024
Total			576,644	51,797	34,540	6,906	23,000	463,266

Ofcom Executive Committee Remuneration 2007/8

Name	Role		Total remuneration	Pension entitlement/allowance	Flexible benefits allowance	Benefits In Kind	Bonus	Salary
			£	£	£	£	£	£
Jill Ainscough	Chief Operating Officer	(12, 15-18)	161,230	16,738	9,846	919	22,137	111,590
Janet Campbell	HR Director	(13,15-18)	124,199	10,170	10,714	1,517	17,048	84,750
Rona Chester	Finance Director	(13,15-18)	126,695	14,957	10,714	1,310	-	99,714
Graham Howell	Secretary to the Corporation	(13,15-18)	145,241	15,954	10,714	1,517	10,699	106,357
Peter Ingram	Chief Technology Officer	(13,15-18)	166,546	23,175	17,857	1,479	8,160	115,875
Stuart McIntosh	Partner, Competition	(12,15-18)	50,127	6,144	2,731	290	-	40,962
Dominic Morris	Director of the CEO’s Office	(13,15-19)	153,089	19,520	13,092	1,310	10,892	108,275
Peter Phillips	Partner, Strategy and Market Developments	(13,15-18)	266,006	27,090	20,000	2,196	36,120	180,600
Total			1,193,133	133,748	95,668	10,538	105,056	848,123

Notes to the remuneration tables

In April 2007 the Chairman retired from City University. As of 9 April 2007 the Chairman began to receive fees from Ofcom on the same basis as the other Non-Executive Members (see Note 2 below). In addition, Ofcom met David Currie’s pension costs for the period 1 April to 9 April 2007.
The fees for all the Non-Executive Members of the Ofcom Board are fixed in agreement with DBERR and DCMS for the duration of their appointment. The fees shown represent a full year or, where appropriate, part of the year if the relevant Non-Executive Member joined or retired from the Ofcom Board during the period under review. The fees for the Non-Executive Members are linked to the recommendations of the Senior Salaries Review Body for senior civil service pay and as a consequence of such linkage fees were increased by 0.66 per cent from 1 April 2007. The basic fee of the Non-Executives of the Ofcom Board (with the exception of the Chairman, the Deputy Chairman and Millie Banerjee) was £41,281 per annum from 1 April 2007. An additional fee of £5,000 per annum is paid to Non-Executive Board Members who chair a Board Committee.
Millie Banerjee ’s basic fee was increased with effect from 1 April 2007 to £52,774 per annum to reflect her additional membership of the Content Board.
Mike McTighe was appointed as a Non-Executive Member of the Ofcom Board on 1 September 2007. Tim Gardam was appointed as a Non-Executive Member of the Ofcom Board on 1 January 2008.
Colette Bowe was appointed as a Non Executive Member of the Ofcom Board on 1 January 2008. Prior to this appointment, Colette Bowe was Chairman of the Consumer Panel. The remuneration shown within the table represents the part of the year during which Colette Bowe was a Member of the Ofcom Board only.
Sara Nathan retired from the Ofcom Board on 31 December 2007. The remuneration shown represents the part of the year during which Sara Nathan was a Member of the Ofcom Board. Sara Nathan has restrictive covenants in her agreement with Ofcom which prevent her from accepting certain paid employment or providing certain services to third parties for a six month period following her retirement from Ofcom. Ofcom therefore continued to pay Sara Nathan her fees until 31 March 2008 as consideration for the enforcement of such restrictive covenants. Sara Nathan received remuneration (covering fees and benefits in kind) of £10,488 for this three-month period.
Ian Hargreaves is employed by Ofcom on a part-time basis. His remuneration shown for the period under review represents what was actually paid to him, and not a full-time equivalent salary. Ian Hargreaves resigned from the Board on 31 May 2008
Stephanie Liston resigned from the Ofcom Board on 31 March 2008.
The fees for the Non-Executive Members of the Content Board are fixed by the Ofcom Board. The fees shown represent a full year or, where appropriate, part of the year if the Content Board Member joined or retired from the Content Board during the year. As with the fees for the Ofcom Board, fees for the Content Board Members are linked to the recommendations of the Senior Salaries Review Body for senior civil service pay and as a consequence of such linkage fees were increased by 0.66 per cent from 1 April 2007. The basic fee of the Content Board Members (with the exception of Adam Singer and Kath Worrall, who receive enhanced fees for their additional roles as Deputy Chairman and Chair of the Fairness Committee) was £21,018 per annum from 1 April 2007.
Tim Suter resigned as an Executive Member of the Content Board on 30 November 2007. The remuneration shown represents the part of the year during which Tim Suter was a Member of the Content Board. In addition to the remuneration shown Tim Suter received remuneration (covering salary, pension allowance and flexible benefits) of £35,983 for the a month period, representing remuneration due to him during his period of notice.
Stewart Purvis was appointed as Partner, Content and Standards and an Executive Member of the Content Board on 3 December 2007. Stewart Purvis is employed by Ofcom on a part-time basis. His remuneration shown for the period under review represents what was actually paid to him, and not a full-time equivalent salary.
During the period under review, Richard Ayre undertook an enquiry for Ofcom into aspects of audience participation television; this work was in addition to his duties as a Content Board Member and he received an additional payment in excess of his Content Board fees of £4,930 for the provision of his services to the enquiry.
The Non-Executive Members of the Ofcom Board and the Content Board Members (with the exception of Richard Ayre as noted in Note 12) receive no additional remuneration from Ofcom beyond their fees other than the entitlement to the provision of certain standard benefits, which are a digital package for domestic and business use and, for the Non-Executive Members of the Ofcom Board only, the provision of IT equipment for home working. Not all Non-Executive Members of the Ofcom Board or Content Board Members took up the entitlement during the period under review.
The membership of the Executive Committee of Ofcom was changed on 18 December 2007. As a result, Janet Campbell, Rona Chester, Graham Howell, Peter Ingram and Dominic Morris all resigned from the Committee on 18 December 2007. The remuneration table shows all those colleagues who were members during the year. For those who were appointed to, or who resigned from, the Executive Committee during the period under review their remuneration is shown for the duration of their membership of the Executive Committee only.
Jill Ainscough was appointed as Chief Operating Officer on 7 August 2007; Stuart McIntosh was appointed as Competition Partner on 28 January 2008.
Annual remuneration for the Ofcom executives (Executive Members of the Ofcom Board, Executive Members of the Content Board and senior managers on the Executive Committee) includes base salary together with a cash allowance for flexible benefits and a percentage of basic salary paid as a pension allowance (with the exception of Dominic Morris and Chris Banatvala).
Base salary for all senior executives is reviewed annually on 1 July.
Each Ofcom Executive Member of the Ofcom Board or senior manager is able to benefit from life assurance, group income protection, a digital package for domestic and business use and the ability to undertake an annual health check. The value of group income protection and annual health checks have not been disclosed in the remuneration schedules because they are not treated by HM Revenue & Customs as a taxable emolument.
All Ofcom colleagues participate in a bonus scheme, payment of which is based on individual performance. All payments are approved by the Ofcom Remuneration Committee and are calculated as a percentage of base salary ranging from 0-25 per cent. For the financial year 2007/8 bonuses were paid in July 2008 and have been accrued in the table above. Those with a nil amount were not eligible for a bonus.
Dominic Morris is a member of the Ofcom Defined Benefit Pension Plan. A separate disclosure in relation to this plan has been made in the table below.
Chris Banatvala is a member of the Ofcom Defined Benefit Pension Plan. A separate disclosure in relation to this plan has been made in the table below.

Executive disclosure for Defined Benefit pensions

The disclosures for defined benefit pensions for Dominic Morris and Chris Banatvala are shown in the table below.

The accrued pensions and transfer values for Dominic Morris and Chris Banatvala reflect the additional pension arising from a transfer-in of their benefits from their previous employer.

The transfer value of accrued pension represents the estimated cost to the pension scheme of providing the pension benefit accrued to date (calculated in accordance with Actuarial Guidance Note GN11). The value is affected by a number of factors, which include age of individual, pensionable salary and investment market conditions at the date of calculation.

Service agreements

No Executive Member of the Ofcom Board or other Ofcom colleague has a service agreement containing a notice period exceeding one year. The Remuneration Committee has considered the notice period and termination arrangements in the light of the Combined Code and believes them to be appropriate.

The Non-Executive Members are all on fixed-term appointments for a set time commitment to Ofcom of up to two days per week (with the exception of David Currie, Philip Graf and Millie Banerjee who currently commit up to four, three and two and a half days per week respectively).

Disclosures for Defined Benefit pensions

Compensation from early termination

The arrangements for early termination of a service contract for an Executive Member of the Ofcom Board or senior manager are decided by the Remuneration Committee and will be made in accordance with the service contract of the relevant Executive Director or senior manager. Each service contract provides for a payment in lieu of notice on early termination at Ofcom’s discretion.

Non-Executive Members have no entitlement to compensation in the event of early termination.

All Non-Executive Members have restrictions against working for a business regulated by Ofcom for up to six months prior to the termination or expiry of the appointment (a period of exclusion or ‘gardening leave’) and six months after termination (a protective covenant). These restrictions reflect those which also apply to the Executive Members of the Ofcom Board and are designed to protect the independence of Ofcom and the professional integrity of each Non-Executive Member.

Outside directorships

No Executive Member of the Ofcom Board may accept a non-executive appointment without the prior approval of the Board to ensure that these do not give rise to conflicts of interest.

All appointments accepted by the Non-Executive Members of the Ofcom Board must be notified to the Board to ensure that no conflict of interest arises; if such conflict is deemed to arise then the Non-Executive Member will be required to resign from the position in question.

On behalf of Ofcom,

Millie Banerjee
Chairman of the Remuneration Committee

17 June 2008

Name	Accrued pension at 31 March 2008	Increase in accrued pension over year	Transfer value of accrued pension at 31 March 2008	Transfer value of accrued pension at 31 March 2007	Increase in transfer value less member’s contributions
	£	£	£	£	£
Dominic Morris CBE (20)	23,800	2,900	352,000	298,000	43,000
Chris Banatvala (21)	10,900	1,500	85,000	70,000	10,000

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