Pearson

Main elements of remuneration

Total remuneration is made up of fixed and performance-linked elements, with each element supporting different objectives.

Element	Objective	Performance period	Performance conditions
Base salary (see more here)	Reflects competitive market level, role and individual contribution	Not applicable	Normally reviewed annually taking into account general economic conditions and the wider pay scene, the level of increases applicable to employees across the company as a whole, the remuneration of directors and executives in comparable companies and individual performance
Annual incentives (see more here)	Motivates achievement of annual strategic goals	One year	Subject to achievement of targets for sales, earnings per share or profit, working capital, cash flow and personal objectives
Bonus share matching (see more here)	Encourages executive directors and other senior executives to acquire and hold Pearson shares. Aligns executives’ and shareholders’ interests	Three years	Subject to achievement of target for earnings per share growth
Long-term incentives (see more here)	Drives long-term earnings and share price growth and value creation. Aligns executives’ and shareholders’ interests	Three years	Subject to achievement of targets for relative total shareholder return, return on invested capital and earnings per share growth

Consistent with its policy, the committee places considerable emphasis on the performance-linked elements i.e. annual incentives, bonus share matching and long-term incentives. Our assessment of the relative importance of fixed and performance-related remuneration for each of the directors based on our policy and the data set out in this report is as follows:

Note: The method for valuing the different elements of remuneration is summarised in the table here.

We will continue to review the mix of fixed and performance-linked remuneration on an annual basis, consistent with our overall philosophy.