4.15 In their bid for the PPP the Airline Group contended that NATS was paying its senior executives below market rates, and highlighted the importance of attracting new managers of the right calibre. New entrants to the company, notably the new Chief Executive Richard Everitt, have joined the company at rates significantly above that of their predecessors. In 2001/02 the remuneration of the highest paid director rose to £216,000, from £180,000 the previous year. As a matter of general principle, the packages for senior managers are set using the Hay Group executive assessment approach, which benchmarks senior executive pay and responsibilities against some 800 organisations worldwide. At the same time, annual leave entitlement for senior staff under new contracts is cut from 33 days to 26 days reflecting norms in the private sector. The Board remuneration committee, on which all shareholders are represented, is responsible for approving the salary and bonus arrangements for members of the Group Executive and the general arrangements applying to all staff on personal contracts.
4.16 At the time of our examination, NATS was finalising the details of new bonus arrangements for its senior executives. Senior executives participate in the Company's share scheme (NATS Employee Sharetrust Ltd), on the same basis as all other permanent members of staff. This is not part of the senior executive incentive scheme, and bonuses are payable as a proportion of basic salaries. This protects to some extent against the risk that remuneration could fluctuate wildly in response to factors outside management's control, such as traffic levels. The bonus scheme is designed to incentivise executives to meet the Company's objectives, (Figure 25 refers). In addition, the scheme protects the company against the risk that key executives could leave by incorporating an additional long term bonus worth up to a third of initial bonuses, which can be held over for five years to encourage staff to stay.