4.17 The Airline Group stated when bidding that their bid was on a "not for commercial return" basis. If NATS makes profits the Group would reinvest these in the business; the returns to the airlines would come instead by safe and efficient increases in Air Traffic capacity. At the time of this report the difficult financial situation of NATS effectively precluded the payment of dividends to the shareholders, though even without these difficulties the terms of bank loans would prevent the payment of dividends to shareholders for some years. In April 2002, Easyjet, one of the seven members of the Airline Group, wrote off the full value of their £7 million stake in NATS, stating that they did not expect to see a return for several years. The other members of the consortium have not written down their investment.
25 |
| The new bonus scheme for NATS executive management | |
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| Criteria for award1 | Maximum percentage of basic salary2 |
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| Business Objectives |
|
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| Financial Performance | 6 |
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| Operational Performance | 6 |
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| Employee satisfaction | 3 |
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| Customer satisfaction | 3 |
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| Achievement of Personal objectives | 18 |
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| Bonus at Chief Executive's discretion | 9 |
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| TOTAL | Up to 45 |
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| NOTES 1. All bonuses are subject to the approval of the remuneration committee. 2. NATS' has set bonus thresholds such that bonuses towards the top of the scale will be extremely difficult to achieve. Source: NATS. | |
4.18 Notwithstanding the "not for commercial return" basis of the Airline Group's bid, the Department and their advisers drafted the PPP Agreement in a form that would also be compatible for bids on a profit making basis. The PPP therefore makes provision for dividends to be taken by the Strategic Partner, the Government and NATS Employee Sharetrust Ltd, but only if certain conditions have been satisfied, for example:
■ a dividend policy is set out in the Strategic Partnership Agreement between the Government and the Airline Group which requires an auditor's report on profits that are distributable, and which prohibits distribution of profits using funds required for other purposes in NATS' business plan; and
■ there are prohibitions under NATS' operating licence which prevent the company declaring a dividend until it has certified to the Civil Aviation Authority that it is and will remain in full compliance with the key financial conditions of its licence.