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 service agreements in 2008 and again in 2010. Our policy is that future executive director agreements should provide that the company may terminate these agreements by giving no more than 12 months’ notice. As an alternative, the company may at its discretion pay in lieu of that notice. Payment in lieu of notice may be made in instalments and may be subject to mitigation.
We will keep the application of the policy on executive service agreements, including provisions for payment in lieu of notice, under review, particularly with regard to the arrangements for any new executive directors.
In the case of the longer serving directors with legacy 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 2010 and that continue to apply for 2011 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 |
| 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 |