22298.txt

 Annual report and accounts 2009 
Remuneration report 
82 
Introduction 
This report has been prepared in accordance with Section 420 of the Companies 
Act 2006 and schedules 5 and 8 of the Large and Medium-sized Companies and 
Groups (Accounts and Reports) Regulations 2008. The report also meets the 
relevant requirements of the Listing Rules of the Financial Services Authority  
and describes how the Board has applied the principles relating to Directors' 
remuneration in the Combined Code. As required by the Act, a resolution to 
approve the report will be proposed at the AGM of the Company at which the 
financial statements will be approved. 
Remuneration Committee 
The Remuneration Committee of the Board (RemCo ) is primarily responsible  
for determining the remuneration policy and conditions of service for executive 
Directors and the Chairman of the Company. It also reviews and monitors the level 
and structure of remuneration for certain senior managers immediately below the 
level of the Board. The terms of reference of the RemCo, which were reviewed in 
October 2008, can be found on the Company's website www.balfourbeatty.com 
The RemCo has been chaired by Robert Walvis since November 2003. Its other 
members during the year were Hubertus Krossa, Steve Marshall, Gordon Sage  
and Stephen Howard until August 2009. No member of the RemCo has conflicts  
of interest arising from cross-directorships and no member is involved in the  
day-to-day executive management of the Group. Iain Ferguson was appointed  
as a non executive Director on 1 January 2010 and has joined the RemCo. 
During 2009 the Chief Executive, Ian Tyler, and Paul Raby, the human resources 
director, were invited to join meetings of the RemCo, when appropriate. The role  
of secretary of the RemCo is fulfilled by the Company Secretariat. No Director has 
any involvement in any decisions relating to his own remuneration. 
The RemCo is responsible for appointing external independent consultants to 
advise on executive remuneration matters. This advice and assistance has been 
provided throughout the year by Hewitt New Bridge Street LLP (HNBS ) and 
PricewaterhouseCoopers LLP (PwC ). The human resources director has also 
provided advice to the RemCo. During the year, PwC also provided other tax and 
consultancy services to the Company. The RemCo is satisfied that no conflict of 
interest arises from the provision of this advice. 
Executive Directors' remuneration 
General policy 
It is the policy of the RemCo to establish an overall remuneration package that is 
competitive and which facilitates the recruitment and retention of high calibre 
management. The annual and long-term incentive plans make up an important part 
of each executive Director's remuneration and are structured so as to motivate 
senior managers to deliver high standards of performance, without encouraging 
excessive risk taking. It is intended that the share-based elements of the package 
will not only drive performance over the long term but will also assist in aligning 
the interests of senior management with those of shareholders. 
The structure of executive Directors' remuneration was similar in 2009 to that in 
2008 and no significant changes to the existing policy are currently envisaged for 
2010. Under the current arrangements, if target performance is achieved, basic 
salary will represent around one-half of total earnings. If maximum is achieved, 
which would involve a superior level of performance substantially in excess of 
business plan, basic salary will represent around one-third of total earnings. 
When setting the pay of the executive Directors the RemCo takes into account 
general pay trends in other parts of the Group. By way of example, the executive 
Directors did not receive a general pay award in 2009 in common with the majority 
of the operating companies in the Group. 
In 2010 the RemCo will be undertaking a comprehensive review of remuneration 
arrangements for executive Directors and other senior managers across the Group. 
Subject to the outcome of this review, in the event that there are changes to  
the remuneration policy, these will be discussed with the Company's major 
shareholders and their representative bodies. Following those discussions, 
proposals requiring shareholder approval will be submitted for approval at the  
2011 AGM. 
The executive Directors are eligible to be members of the Balfour Beatty Pension 
Fund and the general pensions policy is described below. 
Remuneration and risk 
The RemCo has reviewed the relationship between remuneration and risk and is 
satisfied that the policies operated are appropriate and do not encourage undue 
risk taking as: 
- basic salary levels are targeted at around mid-market levels and are  
reviewed annually; 
- annual bonuses are capped and targeted to ensure that performance incentives 
and rewards are set at an appropriate level; 
- one-third of any annual bonus is deferred in shares for three years; 
- Performance Share Plan (PSP ) awards are granted annually with three-year 
sliding scale performance targets; and 
- alignment with shareholders is provided through the use of bonus deferral,  
Total Shareholder Return (TSR ) for PSP awards and the operation of share 
ownership guidelines. 
Basic salaries 
It is the policy of the RemCo to set basic salaries at levels which it believes are 
competitive given the size and complexity of the Company, as well as the broad 
business sectors in which it operates. To assist in this, HNBS and PwC provide 
data and independent advice on remuneration levels in companies considered to 
be comparable in terms of annual sales, market capitalisation and industry sector. 
The RemCo sets basic salaries around mid-market levels, but also takes into 
account its own judgement of the performance of the Group's businesses and the 
performance of individual Directors. The RemCo intends to continue to use this 
approach in the foreseeable future. 
The basic salaries for the executive Directors are reviewed annually on 1 July.  
At the review in 2009, the salary for Duncan Magrath was increased to  360,000 
(5.9%) and for Andrew McNaughton to  385,000 (4.1%). Following their recent 
appointments to the Board, these increases are designed to progressively align 
their salaries over time with the other executive Directors and the external market. 
The basic salaries of the other three executive Directors were not increased  
in 2009. The current salaries for all the executive Directors are shown in the  
table below. 
Name of Director 
Salary at 
1 July 2009 
D J Magrath  360,000
A J McNaughton  385,000
A L P Rabin  425,000
I P Tyler  630,000
P J L Zinkin  405,000
  Our governance
Annual report and accounts 2009 
 
83
Annual incentive plan 
Each executive Director participates in an annual incentive plan, under which  
pre-determined financial targets must be achieved before any payment is earned.  
The maximum potential bonus which could have been earned by executive 
Directors for 2009 was 80% of basic salary and the performance indicator  
chosen was profit before tax, exceptional items and amortisation of intangible 
assets (profit ). A bonus of 40% of basic salary would have been earned for the 
achievement of performance in line with target. Two-thirds of any bonus achieved 
is payable in cash, whilst the remaining one-third is deferred in the form of ordinary 
shares in the Company under the Deferred Bonus Plan (the DBP ). These shares, 
along with shares awarded in lieu of dividends paid during the deferral period, will 
be released to the Directors after three years, providing they are still employed by 
the Company at that time (unless specified leaver conditions are met, in which 
case early vesting may be permitted under the rules of the DBP). Bonuses are  
non-pensionable. The actual profit for the year ended 31 December 2009 resulted 
in a bonus of 48.3% of basic salary for each executive Director. Details are shown 
in the table on page 85. 
It is currently intended that the annual incentive plan for 2010 will operate in the 
same way and at the same level as for 2009. 
Long-term incentive scheme 
The RemCo believes that performance related long-term incentives which align 
executives with both business strategy and shareholders' interests are an 
important component of overall executive remuneration arrangements.  
The Company operates a Performance Share Plan (the PSP ) under which 
conditional awards of shares in the Company are made to executive Directors  
and other selected operational and functional senior managers. The rules permit  
a maximum market value of any award of 150% of basic salary, other than in 
exceptional circumstances, where the limit is 200% of basic salary. For 2009 an 
award of 135% of salary (reduced from 150% of salary in the previous year) was 
made to the Chief Executive, with the other executive Directors and selected  
senior managers receiving conditional awards over shares with a market  
value of 112.5% of salary (reduced from 125% of salary in the previous year). 
Consistent with institutional shareholder guidance and following consultation  
with major shareholders and their representative bodies, award levels were 
reduced from 2008 levels to reflect the reduction in the earnings per share  
(EPS ) growth targets. 
The awards vest, subject to the achievement of performance conditions, three 
years after the date of grant, together with shares in lieu of dividends payable. 
There is no provision for the re-testing of these performance conditions. For the 
2009 award, there are two performance conditions, each applying to separate 
parts of the award.  
50% of an award is linked to an adjusted EPS growth target, and will vest as 
shown in the table below.  
EPS growth over three years Proportion of award vesting 
Less than RPI + 9% Zero 
RPI + 9% 25% 
RPI + 39% 100% 
Between RPI + 9% and RPI + 39% Between 25% and 100% pro-rata 
This represents a reduction in the EPS targets used in previous awards where 
threshold performance was RPI + 15% and maximum was at RPI + 45%.  
The target reduction reflects expected economic conditions over the next few 
years. Growth in EPS will be determined following independent verification of  
the calculations made internally. 
The performance condition attached to the other 50% of an award is linked to  
TSR performance, measured against a group of UK listed companies operating  
in comparable markets to the Company. The companies used for the 2009 award 
were as follows: Aggreko, Atkins (WS), Babcock International, Bunzl, Capita, 
Carillion, Costain, G4S, Interserve, Keller, Kier, MITIE, Morgan Sindall, Mouchel, 
Serco, SIG, Travis Perkins, VT Group and Wolseley.  
The TSR performance of all companies will be measured over the three year 
performance period, with the TSR of Balfour Beatty compared to the TSR of the 
other companies. This part of an award will vest in part if Balfour Beatty's TSR is 
equivalent to the company whose TSR performance is at the median, with full 
vesting if Balfour Beatty's TSR is equivalent to, or above, that of the company 
whose TSR performance is at the upper quartile. The precise scale of vesting is 
shown in the table below: 
Total shareholder return Proportion of award vesting 
Below median Zero 
Median 25% 
Upper quartile 100% 
Between median and upper quartile Between 25% and 100% pro-rata 
TSR will be independently calculated and approved by the RemCo. 
The RemCo considers that the EPS and TSR performance conditions provide a  
good blend of performance metrics, with EPS growth rewarding strong financial 
performance and TSR rewarding stock market performance, which aligns with 
investors' interests. 
It is the intention of the RemCo to make awards under the PSP in 2010. For the  
TSR element of the award a similar peer group of companies will be used. In view 
of the continuing challenging economic conditions, and following consultation  
with the Company's major shareholders and representative bodies, the RemCo  
agreed for the 2009 award would then continue in  
2010. The RemCo believes that these targets and awards remain stretching  
and appropriate given current market conditions and business outlook. 
The PSP and other share schemes contain provisions relating to a change of 
control. Outstanding awards and options would normally vest and become 
exercisable on a change of control, subject to the satisfaction of any performance 
conditions at that time. 
Share ownership guidelines 
To further align the interests of senior management with those of shareholders, 
executive Directors and certain other senior managers are subject to share 
ownership guidelines. Executive Directors are required to accumulate a holding  
of ordinary shares in the Company to the value of 100% of their basic salary at  
a reference date, with other senior managers at 50% of basic salary. In order to 
achieve this, those subject to the share ownership guidelines, will be expected  
to retain at least half of the shares (after payment of any taxes due) which vest 
from awards made under the PSP and the DBP. 
Share options 
No grants of options have been made under the Executive Share Option Scheme 
2001 since 31 December 2004 and it remains the intention of the RemCo that  
no further grants will be made under this scheme to any level of management, 
other than in exceptional circumstances. 
Executive Directors are eligible to participate in a HMRC approved savings-related 
share option scheme. 
plans reduce the EPS growth targets for the 2010 award to RPI + 6% for  
individual award levels 
threshold performance (25% vesting) and RPI + 36% for maximum (100%)    
vesting, with the same pro-rating arrangements as before. The reduced   
to  Annual report and accounts 2009 
Remuneration report 
84 
Pensions 
The Company provides pension benefits to UK employees principally through the 
Balfour Beatty Pension Fund (the Fund ), which has both defined benefit (DB ) 
and defined contribution (DC ) sections. The DB section provides for the build up 
of pension benefits based on different accrual rates (as determined by job position) 
and has life cover, disability and spouse/dependants pension arrangements.  
A Fund-specific earnings cap has been maintained for those members who were 
previously subject to the HMRC earnings cap. This cap also applies to members  
of the DC section of the Fund. A discretionary cash supplement is paid in lieu of 
pension provision above the earnings cap. The Company is not compensating any 
member of the Fund (or any other pension scheme operated by the Company) for 
any additional tax which is payable.  
The specific pension arrangements for executive Directors are outlined in more 
detail in the Directors' pensions section on page 90. 
In 2008 the Company announced measures to limit the growth in liabilities in the 
main DB section of the Fund. Further measures were announced in 2009 that  
the basic salary used for calculating DB benefits will be frozen with effect from 
January 2011.  
Service contracts 
It remains the Company's policy and practice to include in executive Directors' 
contracts a 12 months' rolling notice period from the Company and six months' 
notice on the part of the Director. This policy will continue. 
Details of the service contracts of the executive Directors are shown in the  
table below. 
Name of Director Date of contract 
Notice 
period from 
Company 
(months) 
D J Magrath  11 April 2008 12
A J McNaughton 15 December 2008 12
A L P Rabin 28 August 2002 12
I P Tyler 22 December 2004 12
P J L Zinkin 16 January 2004 12
Service contracts of executive Directors do not include provision for specific 
payment in the event of early termination, nor do they provide for extended notice 
periods or compensation in the event of a change of control. It is not the RemCo's 
intention to introduce such provisions. If any existing contract of employment is 
breached by the Company in the event of termination, the Company would be  
liable to pay, as damages, an amount approximating to the net loss of salary and 
contractual benefits for the unexpired notice period. The RemCo would seek to 
ensure that the Director fulfils his obligation to mitigate his losses and would  
also give consideration to phased payments where appropriate. All executive 
Directors are elected for a term of three years and must retire and, if eligible,  
seek re-election at the AGM in the third calendar year following the year in  
which they were elected (or last re-elected). 
External appointments 
The RemCo recognises that benefits can arise from allowing executive Directors  
to take a non-executive directorship elsewhere. With approval of the Board in  
each case, executive Directors may therefore accept one external appointment and 
retain any related fees. Ian Tyler was appointed as a non-executive director of VT 
Group plc on 12 May 2008. The fees received for this role are set out in the notes 
to the Directors' remuneration table on page 86. 
Non-executive Directors 
Non-executive Directors are appointed by the full Board following 
recommendations from the Nomination Committee. The Chairman's  
remuneration falls within the remit of the RemCo and is approved by the Board. 
The Board determines the terms on which the services of other non-executive 
Directors are provided. All non-executive Directors are elected for a term of three 
years and must retire and, if eligible, seek re-election at the AGM in the third 
calendar year following the year in which they were elected (or last re-elected). 
They are not eligible to join any pension scheme operated by the Company and 
cannot participate in any of the Company's share option, annual incentive or  
long-term incentive schemes. None of the appointment letters for non-executive 
Directors contain provision for specific payment in the event of termination for 
whatever cause. 
The dates of the letters of appointment or last election (or last re-election) of the 
non-executive Directors serving during the year are shown in the table below. 
Name of Director 
Date of appointment 
or last election 
Unexpired 
period at 
31 December 
2009 
(months) 
M J Donovan 10 May 2007 5
S L Howard
(i)
 10 May 2007 -
G E H Krossa 14 May 2009 29
S Marshall 14 May 2009 29
G C Roberts
(ii)
  14 May 2009 29
G H Sage 10 May 2007 5
R J W Walvis 10 May 2007 5
Notes 
(i) retired on 17 August 2009. 
(ii) appointed on 1 January 2009. 
The fees of the non-executive Directors are reviewed from time to time with the 
last review having taken effect from 1 July 2008. The annual fee level for the  
non-executive Directors (excluding the Chairman) is set at  48,000 and  240,000 
for Steve Marshall as Chairman. The annual fee for chairing Board Committees  
is  8,000. During the year, the RemCo was chaired by Robert Walvis, the Audit 
Committee by Steve Marshall up to 4 March 2009, and Graham Roberts for the 
remainder of the year, and the Business Practices Committee by Stephen Howard 
up to 17 August 2009 and Mike Donovan for the remainder of the year. 
An annual fee of  30,000 is payable to Hubertus Krossa for his chairmanship of the 
supervisory board of Balfour Beatty Rail GmbH.  Our governance
Annual report and accounts 2009 
 
85
Performance graph 
The graph below shows Balfour Beatty's TSR performance compared to the FTSE 250 Index (excluding investment trusts) TSR over the five financial years ended  
31 December 2009. 
 
 
As in previous reports, the RemCo has elected to compare the TSR on the Company's ordinary shares against the FTSE 250 Index (excluding investment trusts) principally 
because this is a broad index of which the Company is a constituent member.  
The values indicated in the graph show the share price growth plus reinvested dividends from a  100 hypothetical holding of ordinary shares in Balfour Beatty plc and in 
the index, at the start of the period and have been calculated using 30 trading day average values. 
The detailed information about the Directors' remuneration, set out below and on pages 86 to 90 has been audited by the Company's independent auditors, Deloitte LLP. 
Directors' remuneration earned in 2009 
Name of Director 
Basic 
salary
 
Fees
  
Pension 
supplement 
  
Benefits  
in kind 
  
Annual  
cash bonus 
  
Total 
remuneration 
2009 
 
Total 
remuneration 
2008 
 
M J Donovan - 51,015 - - - 51,015 45,000
S L Howard - 37,333 - - - 37,333 49,000
G E H Krossa  - 74,786 - - - 74,786 16,540
D J Magrath 350,000 - 45,580 15,504 115,920 527,004 483,180
S Marshall -240,000 - - - 240,000 162,273
A J McNaughton 377,500 - 37,750 15,504 123,970 554,724 -
A L P Rabin 425,000 - 74,162 21,267 136,850 657,279 720,255
G C Roberts - 56,000 - - - 56,000 -
G H Sage - 48,000 - - - 48,000 45,000
I P Tyler 630,000 - 74,907 26,129 202,860 933,896 1,040,121
R J W Walvis - 56,000 - - - 56,000 52,500
P J L Zinkin 405,000 - - 18,156 130,410 553,566 626,390
Former Directors -- - - - - 125,464
Total 2,187,500 563,134 232,399 96,560 710,010 3,789,603 3,365,723
  Annual report and accounts 2009 
Remuneration report 
86 
Notes: 
(i)  Basic salary and fees were those paid in respect of the period of the year during which individuals were Directors. In practice, the salary paid to Mr McNaughton has been reduced with effect from 1 November 2009 due 
to the Director's participation in the Company's SMART Pensions  salary sacrifice arrangement. The amount of reduction corresponds to the Director's contributions to the Balfour Beatty Pension Fund, which are now 
met directly by the Company as part of this arrangement. Salary sacrifice contributions totalled  1,016 in 2009.  
(ii) Ian Tyler, Duncan Magrath, Andrew McNaughton and Anthony Rabin received taxable cash supplements in lieu of pension provision on their salary above the Balfour Beatty Pension Fund specific earnings cap. 
(iii) The performance target for annual bonus was profit before tax, exceptional items and amortisation of intangible assets (profit ). The profit for the year ended 31 December 2009 resulted in a bonus of 48.3%  of basic 
salary for each executive Director. Two-thirds of this bonus is payable in cash and these are the amounts shown in the table above. The remaining one-third is deferred in the form of ordinary shares in the Company 
which will be released to the Director on 31 March 2013, providing he is still employed by the Company at that time. The number of shares comprising the deferred element will be determined based on the share price 
at the award date of 31 March 2010.  
(iv) Hubertus Krossa received a fee of  30,000 (included above) for his chairmanship of the supervisory board of Balfour Beatty Rail GmbH. 
(v)  In addition, Ian Tyler received a fee of  45,000 for his services as a non-executive director of VT Group plc. 
(vi) Benefits in kind are calculated in terms of UK taxable values. All executive Directors receive private medical insurance for the Director and his immediate family. Ian Tyler, Anthony Rabin and Peter Zinkin receive a fully 
expensed car and a fuel card. Duncan Magrath and Andrew McNaughton receive a car allowance of  14,000 p.a.  
(vii) No Director receives any expense allowance.  
(viii) Awards made under the Performance Share Plan in 2006 to Ian Tyler, Duncan Magrath, Andrew McNaughton, Anthony Rabin and Peter Zinkin vested during the year. At the date of vesting on 28 October 2009 the 
closing market price was 265.6p and the total values of the awards which vested were  528,662,  149,964,  110,969,  304,633, and  316,820 respectively. 
(ix) Awards made under the Deferred Bonus Plan in 2006 to Ian Tyler, Andrew McNaughton, Anthony Rabin and Peter Zinkin vested during the year. At the date of vesting on 31 March 2009 the closing market price was 
328p and the total values of the shares which vested were  69,365,  27,362,  47,960 and  49,886 respectively. 
(x) Andrew McNaughton exercised executive share options on 3 April 2009. The closing market price on the date of exercise was 371.75p and the value realisable on exercise was  29,275. 
(xi) Anthony Rabin and Peter Zinkin exercised savings-related share options during the year. The closing market prices on the dates of exercise were 263.5p and 311.25p respectively and the values realisable on exercise 
were  836 and  725 respectively. 
 
The interests of the Directors and their immediate families in the ordinary share capital of Balfour Beatty plc and its subsidiary undertakings during the year are set  
out below. 
Directors' interests 
 Number of ordinary shares
Name of Director 
At
1 January
2009 
At
31 December 
2009 
M J Donovan 5,000 7,142
G E H Krossa 5,000 7,142
D J Magrath 16,000 62,446
S Marshall 5,000 7,142
A J McNaughton - 45,315
A L P Rabin 142,172 257,468
G C Roberts - 7,142
G H Sage 5,000 7,142
I P Tyler 154,051 315,720
R J W Walvis 10,000 14,285
P J L Zinkin 148,686 262,596
Notes: 
(i)  All interests at the dates shown are beneficial and are in respect of 50p ordinary shares in Balfour Beatty plc. There were no changes between 31 December 2009 and 3 March 2010. 
(ii)  Peter Zinkin was also interested at 1 January 2009 and 31 December 2009 in 325 cumulative convertible redeemable preference shares of 1p each in Balfour Beatty plc. 
(iii) Robert Walvis was also interested at 31 December 2009 in 938 ordinary shares in Balfour Beatty held by the Craven Arms Investment Club, of which he is a member.  Our governance
Annual report and accounts 2009 
 
87
Directors' long-term incentives: the Performance Share Plan 
  Maximum number of shares subject to award 
Name of Director Date awarded 
At 
1 January 
2009 
Awarded 
during 
the year 
Lapsed 
during 
the year 
Adjustment for 
rights issue 
Vested  
during  
the year 
At 
31 December 
2009 Exercisable from 
D J Magrath 13 June 2006 64,847 - 19,714 6,693 51,826 - June 2009
 17 April 2007 43,125 - - 6.393 - 49,518 March 2010
 15 April 2008 94,618 - - 14,028 - 108,646 April 2011
 15 April 2009 - 108,050 - 16,019 - 124,069 April 2012
A J McNaughton 13 June 2006 47,986 - 14,588 4,953 38,351 - June2009
 17 April 2007 67,384 - - 9,990 - 77,374 March 2010
 15 April 2008 79,312 - - 11,758 - 91,070 April 2011
 15 April 2009 - 117,584 - 17,433 - 135,017 April 2012
A L P Rabin 13 June 2006 131,721 - 40,043 13,595 105,273 - June 2009
 17 April 2007 90,269 - - 13,383 - 103,652 March 2010
 15 April 2008 105,750 - - 15,678 - 121,428 April 2011
 15 April 2009 - 135,063 - 20,024 - 155,087 April 2012
I P Tyler 13 June 2006 228,586 - 69,491 23,590 182,685 - June 2009
 17 April 2007 157,755 - - 23,388 - 181,143 March 2010
 15 April 2008 193,690 - - 28,716 - 222,406 April 2011
 15 April 2009 - 240,254 - 35,620 - 275,874 April 2012
P J L Zinkin 13 June 2006 136,989 - 41,645 14,137 109,481 - June 2009
 17 April 2007 90,269 - - 13,383 - 103,652 March 2010
 15 April 2008 105,750 - - 15,678 - 121,428 April 2011
 15 April 2009 - 128,707 - 19,082 - 147,789 April 2012
Notes: 
(i)  All awards are granted for nil consideration and are in respect of 50p ordinary shares in Balfour Beatty plc. It is the Company's current intention that awards will be satisfied by shares purchased in the market. 
(ii)  For the awards made in April 2007, April 2008 and April 2009, the performance periods are the three years ending 31 December 2009, 31 December 2010 and 31 December 2011 respectively. 50% of each award is 
subject to an EPS growth target. The maximum number of shares subject to this performance condition will only vest if EPS growth exceeds the retail prices index (RPI ) by 45% over the performance period for the April 
2007 and April 2008 awards and 39% for the April 2009 award. If EPS growth exceeds RPI by 15% for the April 2007 and April 2008 awards and 9% for the April 2009 award, then 25% of this part of the award will 
vest. For growth in EPS between these points, vesting will be on a pro-rata basis. No shares will vest from this part of the award if EPS growth exceeds RPI by less than 15% or 9% as appropriate. The other 50% of each 
award is subject to a total shareholder return (TSR ) target under which the TSR of the Company is compared to that of a comparator group of similar companies listed in the UK at the start of the performance period. 
The maximum number of shares subject to this performance condition will only vest if the Company's TSR is at the upper quartile of the comparator group. If the Company's TSR is equal to that of the median of the 
comparator group then 25% of this part of the award will vest. No shares from this part of the award will vest if the Company's TSR is below that of the median of the comparator group. For TSR performance between 
median and upper quartile, vesting will be on a pro-rata basis. There is no provision for re-testing of either of the performance conditions.  
(iii)  The average middle market price of ordinary shares in the Company for the three dealing dates before the award dates, which was used for calculating the number of awards granted, was 308.417p for the 2006  
award, 491.583p for the 2007 award, 449.17p for the 2008 award, and 354p for the 2009 award. The closing middle market price of ordinary shares on the date of the awards was 301.25p, 490.75p, 450p and  
352.25p respectively. 
(iv) The performance period for the awards made in April 2007 was completed on 31 December 2009. The growth in EPS for this period (with adjustments in relation to the rights issue and the acquisition of Parsons 
Brinckerhoff for EPS in 2006 and 2009) exceeded RPI by more than 45%, the level required for maximum vesting. The Company's TSR for this period ranked just below the median of the comparator group. The combined 
effect of these performance measures is that 50% of each participant's conditional award will vest on 26 March 2010. This date was brought forward from the original vesting date of 17 April 2010. Each participant will 
also receive shares equal in value to the dividends which would have been payable on the shares which vest.  
(v) The performance period for the awards made in June 2006 was completed on 31 December 2008. The growth in EPS for this period exceeded RPI by more than 45%, the level required for maximum vesting.  
The Company's TSR for this period ranked between sixth and seventh of the 14 remaining companies in the comparator group. The combined effect of these performance measures was that 69.6% of each participant's 
conditional award vested on 28 October 2009. Ian Tyler, Duncan Magrath, Andrew McNaughton, Anthony Rabin and Peter Zinkin also received 11,458, 3,246, 2,401, 6,599 and 6,866 shares respectively, regarding 
dividends which would have been payable on the shares which vested, and payments of  13,019,  3,693,  2,733,  7,502 and  7,802 respectively regarding the dividend for July 2009 which was settled in cash.  
The closing middle market price of ordinary shares on the vesting date was 265.6p. The monetary values of the PSP award which vested in 2009 are disclosed in Note (viii) to the Directors remuneration table. 
(vi) PSP awards held at the time of the 2009 rights issue were adjusted by a factor of 1.14826 to recognise the bonus element of the rights issue.  Annual report and accounts 2009 
Remuneration report 
88 
Directors' Deferred Bonus Plan awards 
Number of shares awarded 
Awarded during the year 
in respect of dividends 
Name of Director Date of initial award 
At 
1 January  
2009 
Awarded 
during 
the year 
6 July 
2009 
10 December 
2009 
Lapsed 
during 
the year 
Adjustment for 
rights issue 
Vested  
during  
the year 
At  
31 December 
2009 Vesting date 
D J Magrath 30 March 2007 8,064 - 207 174 - 1,223 - 9,668 30 March 2010
 31 March 2008 12,245 - 314 265 - 1,860 - 14,684 31 March 2011
 31 March 2009 - 24,785 636 536 - 3,768 - 29,725 31 March 2012
A J McNaughton 31 March 2006 8,342 ----- 8,342 - 31 March 2009 
 30 March 2007 8,646 - 222 187 - 1,312 - 10,367 30 March 2010
 31 March 2008 15,685 - 402 339 - 2,383 - 18,809 31 March 2011
 31 March 2009 - 22,234 571 481 - 3,380 - 26,666 31 March 2012
A L P Rabin  31 March 2006 14,622 ----- 14,622 - 31 March 2009
 30 March 2007 17,313 - 444 374 - 2,629 - 20,760 30 March 2010
 31 March 2008 21,950 - 563 475 - 3,336 - 26,324 31 March 2011
 31 March 2009 - 30,982 795 670 - 4,710 - 37,157 31 March 2012
I P Tyler 31 March 2006 21,148 ----- 21,148 - 31 March 2009
 30 March 2007 25,214 - 647 546 - 3,830 - 30,237 30 March 2010
 31 March 2008 33,504 - 860 725 - 5,092 - 40,181 31 March 2011
 31 March 2009 - 45,926 1,179 994 - 6,982 - 55,081 31 March 2012
P J L Zinkin 31 March 2006 15,209 ----- 15,209 - 31 March 2009
 30 March 2007 17,314 - 444 374 - 2,627 - 20,759 30 March 2010
 31 March 2008 21,950 - 563 475 - 3,336 - 26,324 31 March 2011
 31 March 2009 - 29,524 758 639 - 4,489 - 35,410 31 March 2012
Notes: 
(i) All awards are granted for nil consideration and are in respect of 50p ordinary shares in Balfour Beatty plc. It is the Company's current intention that awards will be satisfied by shares purchased in the market. 
(ii) The awards made in 2007, 2008 and 2009 will vest on 30 March 2010, 31 March 2011 and 31 March 2012 respectively, providing the Director is still employed by the Company at the vesting date (unless specified 
leaver conditions are met, in which case early vesting may be permitted). 
(iii)  The awards made in 2006 vested on 31 March 2009. The closing middle market price of ordinary shares on the vesting date was 328p. 
(iv) The shares awarded on 31 March 2006, 30 March 2007, 31 March 2008 and 31 March 2009 were purchased at average prices of 374.641p, 474.989p, 476.454p, and 365.801p respectively. 
(v) The shares awarded on 6 July 2009 and 10 December 2009 in lieu of dividends payable were allocated at average prices of 299.75p and 260.492p respectively. 
(vi) DBP awards held at the time of the 2009 rights issue were adjusted by a factor of 1.14826 to recognise the bonus element of the rights issue.  Our governance
Annual report and accounts 2009 
 
89
Directors' Savings-Related Share Option Scheme grants 
Number of options 
Name of Director Date granted 
At  
1 January 
2009 
Granted 
during 
the year 
Exercised 
during 
the year 
Lapsed 
during 
the year 
Adjustment for 
rights issue 
At
31 December 
2009 
Exercise 
price Exercisable from Exercisable to 
D J Magrath 2 May 2007 1,136 - - - 168 1,304 338.7p July 2010December 2010
 7 May 2008935 ---138 1,073 315.2p July 2013December 2013
 18 May 2009 - 547 - - 81 628 249.0p July 2014December 2014
A L P Rabin 5 May 2004 903 - 1,036 - 133 - 182.8p July 2009December 2009
 4 May 20051,031 ---152 1,183 217.7p July 2010December 2010
 3 May 2006971 ---143 1,114 265.6p July 2011December 2011
 2 May 2007993 ---147 1,140 338.7p July 2012December 2012
 7 May 2008321 ---47 368 315.2p July 2011December 2011
 18 May 2009 - ---- -249.0p - -
I P Tyler 2 May 2007 825 - - - 122 947 338.7p July 2010December 2010
 7 May 2008664 ---98 762 315.2p July 2011December 2011
 18 May 2009 - 383 - - 56 439 249.0p July 2012December 2012
P J L Zinkin 5 May 2004 716 - 716 - - - 182.8p July 2009December 2009
 4 May 2005687 ---101 788 217.7p July 2010December 2010
 3 May 2006717 ---106 823 265.6p July 2011December 2011
 2 May 20071,178 ---174 1,352 338.7p July 2012December 2012
 7 May 2008701 ---103 804 315.2p July 2013December 2013
 18 May 2009 - 319 - - 47 366 249.0p July 2012December 2012
Notes: 
(i)  All options are granted under the savings-related share option scheme, for nil consideration on grant and are in respect of 50p ordinary shares in Balfour Beatty plc. 
(ii)  The closing market price of the Company's ordinary shares on 31 December 2009 was 258.5p. During the year the highest and lowest closing market prices were 342.69p and 244.2p respectively, adjusted for the 
discount element of the rights issue. 
(iii) Both the number of and exercise price of savings-related share options held at the time of the 2009 rights issue were adjusted by a factor of 1.14826 to recognise the bonus element of the rights issue, in accordance 
with the HMRC approved standard formula. 
Directors' Executive Share Option Scheme grants 
Number of options 
Name of Director Date granted 
At  
1 January 
2009 
Granted 
during 
the year 
Exercised 
during 
the year 
Lapsed 
during 
the year 
Adjustment for 
rights issue 
At
31 December 
2009 
Exercise 
price Exercisable from Exercisable to 
A J McNaughton 13 April 2000 10,000 - 10,000 - - - 68.8p April 2003 April 2010
 7 June 2001 10,000 - - - 1,482 11,482 174.1p June 2004 June 2011
 17 April 2002 20,000 - - - 2,964 22,964 207.2p April 2005 April 2012
 16 April 2003 15,000 - - - 2,223 17,223 150.6p April 2006 April 2013
 19 April 2004 15,000 - - - 2,223 17,223 227.3p April 2007 April 2014
Notes: 
(i) All options are granted under the executive share option scheme for nil consideration on grant and are in respect of 50p ordinary shares in Balfour Beatty plc. 
(ii) The closing market price of the Company's ordinary shares on 31 December 2009 was 258.5p. During the year the highest and lowest closing market prices were 342.69p and 244.2p respectively (as adjusted for the 
rights issue).  
(iii) Both the number of and exercise price of executive share options held at the time of the 2009 rights issue were adjusted by a factor of 1.14826 to recognise the bonus element of the rights issue, in accordance with the 
HRMC approved standard formula.  Annual report and accounts 2009 
Remuneration report 
90 
Directors' pensions 
Executive Directors participate in the Balfour Beatty Pension Fund (the Fund ). The Fund provides for a pension at a normal retirement age of 62 for pension purposes 
and each Director pays an annual contribution equal to 5% of contributory salary except where, in the case of Andrew McNaughton, the Director participates in SMART 
Pensions, as outlined in note (ii) to the second table below. The pension for a Director who can complete 20 or more years' pensionable service at normal retirement age 
is targeted at two-thirds of final pensionable salary, subject to HMRC limits. With effect from 6 April 2006, HMRC limits were changed with one of the changes being to 
no longer use the earnings cap when determining the maximum permissible benefits. However, the Balfour Beatty Pension Fund has retained a Fund specific earnings 
cap for pension purposes. The salaries of Duncan Magrath, Andrew McNaughton, Anthony Rabin and Ian Tyler were subject to the Fund specific earnings cap for pension 
purposes and details of the Company's contributions to additional arrangements for them are shown in the Directors' remuneration table on page 85. 
The table below sets out the accrued deferred pension which would be paid annually from the Fund at normal retirement age based on each executive Director's service 
to 31 December 2009 as well as the additional pension benefit secured in respect of service during the year. 
Increase in accrued deferred 
pension during the year 
Name of Director 
Age at
31 December 
2009
Years 
Pensionable
service at
31 December 
2009
Years 
Accrued 
deferred 
pension at 
31 December 
2008
 pa 
Inflation
 pa 
Increase in 
excess 
of inflation 
 pa 
Accrued 
deferred 
pension at
31 December 
2009
 pa 
Transfer value 
corresponding 
to increase 
in excess 
of inflation at
31 December 
2009 
less Director's 
contributions 
(Note i)
  
D J Magrath  45 3 11,073 553 3,979 15,605 39,703
A J McNaughton 46 12 29,019 1,451 3,099 33,569 30,997
A L P Rabin (see note ii) 54 16 59,599 2,980 3,793 66,372 55,836
I P Tyler 49 13 37,671 1,884 3,060 42,615 34,853
P J L Zinkin 56 28 203,611 10,181 4,199 217,991 56,157
Notes: 
(i) The transfer value of the increase in accrued deferred pension is the present value of the increase in excess of inflation in the deferred pension and associated benefits during the period, in accordance with the transfer 
value regulations, less the Director's contributions. 
(ii) Anthony Rabin's pensionable service includes nine years of transferred-in service from previous pension arrangements. 
 
The table below sets out the transfer value at 31 December 2009 of each executive Director's accrued deferred pension at that date as well as the movement in that 
transfer value over the period. The transfer values represent the cash equivalent values that would have been payable from the Fund had the Directors left service on the 
dates shown and reflect the age of the Director, his period of membership of the Fund and his pensionable salary. 
Name of Director 
Age at
31 December 
2009
Years 
Pensionable 
service at 
31 December 
2009
Years 
Transfer 
value at
31 December 
2008 
(Note i)
 
Contributions 
made by  
Director  
during the year 
(Note ii) 
  
Increase in 
transfer value 
during the year 
less Director's 
contributions 
(Note iii)
 
Transfer 
value at
31 December 
2009
(Note i)
  
D J Magrath  45 3 90,263 6,333 81,831 178,427
A J McNaughton 46 12 244,306 6,333 133,163 383,802
A L P Rabin (note iv) 54 16 792,460 6,333 261,628 1,060,421
I P Tyler 49 13 388,860 6,333 169,108 564,301
P J L Zinkin 56 28 3,025,680 21,005 743,912 3,790,597
Notes: 
(i) The transfer value is the present value of the accrued deferred pension and associated benefits at the relevant date, calculated using the transfer value basis then in force. 
(ii) Andrew McNaughton has participated in the Company's SMART Pensions  salary sacrifice arrangement since 1 November 2009. Andrew McNaughton's contributions figure includes  1,016 paid by the Company  
via this arrangement. 
(iii) The figure is the difference between the transfer value of the accrued benefits at the start and end of the period, less the Director's contributions during the period. 
(iv) Anthony Rabin's pensionable service includes nine years of transferred-in service from previous pension arrangements. 
Remuneration report 
By order of the Board 
 
R J W Walvis  
Senior Independent Director and chairman of the Remuneration Committee 
3 March 2010