The committee expects executive directors to build up a substantial shareholding in the company in line with the policy of encouraging widespread employee ownership. To complement the operation of the company’s long-term incentive arrangements, we will in future operate formal shareholding guidelines for executive directors. The target holding will be 200% of the salary for the chief executive and 125% of salary for the other executive directors consistent with median practice in FTSE 100 companies that operate such arrangements.
Shares that count towards these guidelines will include any shares held unencumbered by the executive, their spouse and/or dependent children (as set out in table 3). They will also include any shares vested but held pending release under a restricted share plan (as marked as * in table 4).
Executive directors will have five years from the date of appointment to reach the guideline.
The value of the executive directors’ holdings based on the middle market value of Pearson shares on 25 February 2011 (which is the latest practicable date before the results announcement) comfortably exceeded these guidelines.