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Conygar Investments Shareholder Poll

Shareholders: Enter your holding and opinion on the remuneration at Conygar Investments (see below)
This poll is not sanctioned or approved by Conygar Investments.

Discussion1 on Motley Fool BB   Discussion2 on Motley Fool  Conygar Investor relations   Conygar Annual Report 2011

Conygar Profit sharing plan

"The profit sharing plan is an annual plan in which executive directors and senior executives will be entitled to an allocation of a profit sharing pool based upon the increase in the net asset value of the company adjusted for property  revaluation, attributable taxation, fair value of debt and adjusted to neutralise the effect of any capital raising (“adjusted net asset value”). The profit sharing pool is 20% of any increase in the adjusted net asset value at 30 September 2011 over the previous highest adjusted net asset value (“high watermark”). This ensures that executive directors cannot accrue any profit share twice in respect of the same net asset value growth. The previous high watermark was at 30 September 2009.
In addition, the increase in adjusted net asset value per share must exceed a hurdle of 6% compounded annually since the last high watermark (134.8p at 30 September 2009). Executive directors are required to invest a minimum of 50% of any profit share payment in shares of the company which must be held for a minimum of two years except subject to certain good leaver provisions.
The remuneration committee has absolute discretion over participation, pool allocation and determination of performance conditions save in a limited number of circumstances covering change in control and certain good leaver provisions."

Annual Report 2011, page 17

Comment: The average rental yield on Conygar's property is about 9%, so even if inflation plus the actions of directors did not add any nominal value to the properties, over time the NAV hurdle will be regularly hit. The directors then get a bonus of 20% of the adjusted NAV increase from the previous high watermark. This increase is calculated without any 6% PA rise or inflation adjustment.
For example: Year1 adjusted NAV £100m. Year2
adjusted NAV £105m. Year3 adjusted NAV £115m.
Supposing that NAV/share tracks adjusted NAV, there would be no bonus in Year2. In Year3 the hurdle is hit. The
adjusted NAV has risen £10m (less than a years' rental and inflation) yet the bonus pool would be £2m.

Five year table of NAV, directors' remuneration, share-based charges, profits and tax paid

FY    NAV    NAV/share  Profit share  Basic salary  Share-based  Total board   Pretax     Tax       Profit before  TBC as % of profit  TBC as
costs (TBC)* profit paid** TBC before TBC % of NAV
2007 £65m 162p £1.2m £0.5m nil £1.7m £8.2m £2.55m £9.9m 17% 2.6%
2008 £68m 164p £1m £0.2m £1.1m £2.3m -£0.1m £0.26m £2.2m 104% 3.4%
2009 £162m 140p £4.7m £0.8m £1m £6.5m £13.7m -£0.35m £20.2m 32% 4.0%
2010 £177m 150p nil £0.9m £0.4m £1.3m £14.9m £0.64m £16.2m 8% 0.7%
2011 £158m 155p £2.7m £0.8m nil £3.6m £1.8m £0.68m £5.4m 67% 2.3%

* excluding pension costs ** note that Tax paid is very far from the normal rate of corporation tax in years 2008 to 2010

Comparison with Land Securities

Executive directors total remuneration in 2011 was £3.75m (£1.86m basic, £1.9m in benefits & bonuses). The eight non-execs were paid £0.74m.
Share-based charges were £3.8m giving total board costs (ex-pension) of £8.3m. This was 0.13% of NAV (£6367m).

NAV/sh rose 18%, and 19.5% on an adjusted & diluted basis.
If Land Securities had the same profit share scheme as Conygar, the directors would share a £225m pot.