Smiths Group plc Annual Review 2004


PENSIONS The Company operates a number of different pension arrangements for executive directors, generally reflecting the individual's pension arrangements at the time he was appointed to the Board. In some cases, the Company pays monthly salary supplements, of a percentage of salary approved by the Committee at the time of appointment, to enable the director to make his own pension provision. For other directors, final salary schemes provide a pension of up to two-thirds of final pensionable salary. Where Inland Revenue limits apply, the difference between the pension payable on the cap and the target pension is, after taking into account any retained benefits from previous employment, provided by the Company. Directors' annual bonus payments and any gains under share option schemes are not pensionable. REMUNERATION The total remuneration of directors, excluding the value of shares to which certain directors may become entitled under the DSS and also defined benefit pension arrangements, was as follows:

	2004 £000	2003 £000



Fees, salaries and benefits	3,839	3,639
Performance-related bonuses	2,541	1,545
Gain from exercise of share options	–	7
Incremental loss from deferred share scheme exercises	(42)	(63)
Payments in lieu of pension contribution	609	591



	6,947	5,719


The emoluments of the directors are set out below:
	Fees/salary		Benefits	Bonus	Payments in lieu of pension contribution	Total emoluments



	2004 £000	2003 £000	2004 £000	2004 £000	2004 £000	2004 £000	2003 £000



Former Chairman
K Orrell-Jones	240	210	22	–	–	262	237
Chief Executive
K O Butler-Wheelhouse	757	735	61	777	379	1,974	1,682
Executive directors
J Ferrie	366	355	70	354	146	936	784
L H N Kinet	335	325	172	251	84	842	705
J Langston	335	325	34	252	–	621	568
D P Lillycrop	319	310	57	286	–	662	530
E Lindh	335	325	23	321	–	679	493
A M Thomson	407	395	36	300	–	743	611
Non-executive directors
Sir Nigel Broomfield	40	30	–	–	–	40	30
D H Brydon (appointed 19/04/04)	23	–	–	–	–	23	–
Sir Colin Chandler	80	65	–	–	–	80	65
J M Hignett (retired 12/11/02)	–	10	–	–	–	–	10
Sir Julian Horn-Smith	42	30	–	–	–	42	30
P J Jackson (appointed 01/12/03)	27	–	–	–	–	27	–
R W O'Leary	40	30	–	–	–	40	30
Lord Robertson (appointed 15/02/04)	18	–	–	–	–	18	–



	3,364	3,145	475	2,541	609	6,989	5,775



1. Shares which may be awarded under the deferred share scheme are as set out in the directors' share options table. 2. Mr Butler-Wheelhouse waives a small part of his payment in lieu of pension contribution in return for an equivalent contribution to the Smiths Industries Pension Scheme.


PENSIONS

	Age at 31 July 2004	Accrued entitlement at 31 July 2003 £000	Directors' contributions during the year £000	Additional pension earned during the year (excluding any increase for inflation) £000	Transfer value of accrued benefits at 31 July 2004 (A) £000	Transfer value of accrued benefits at 31 July 2003 (B) £000	The amount of (A – B) less contributions made by the director in 2004 £000	Accrued entitlement at 31 July 2004 £000



J Langston	54	125	6	12	2,094	1,802	286	141
D P Lillycrop	48	105	6	8	1,320	1,155	159	116
E Lindh	59	218	21	12	4,308	3,853	434	236
A M Thomson	57	152	26	21	3,057	2,542	489	177



An executive director's normal retirement age is 60. An early retirement pension, based on actual service completed, may be paid after age 50 and may be subject to a reduction on account of early payment. On death a spouse's pension of two-thirds of the director's pension (or for death-in-service his prospective pension at age 60) is payable. All pensions in excess of the Guaranteed Minimum Pension (GMP) are guaranteed to increase at the lesser of (i) in the case of Messrs Lindh and Thomson, 5% per annum compound and, in the case of Messrs Langston and Lillycrop, 7% per annum compound and (ii) the annual increase in the Retail Prices Index. There has, however, been a long-standing practice of granting additional discretionary increases on pensions in excess of the GMP to bring them into line with price inflation. SERVICE CONTRACTS The Company's policy is that executive directors are employed on terms which include a one year rolling period of notice and provision for the payment of predetermined damages in the event of termination of employment in certain circumstances.