RBS 2003 Annual Report Download - page 128

126
Directors’ remuneration report continued
Directors’ remuneration report
Except as noted below, in the event of severance of contract
where any contractual notice period is not worked, the
employing company may pay a sum to the executive in lieu of
this period of notice. Any such payment would, at maximum,
comprise base salary and a cash value in respect of fixed
benefits (including pension plan contributions). In the event of
failure to perform, or in situations involving breach of the
employing company’s policies resulting in dismissal, reduced
or no compensation will be paid to the executive. Depending
on the circumstances of the termination of employment, the
executive may be entitled, or the Remuneration Committee may
exercise its discretion to allow, the executive to exercise
outstanding awards under long-term incentive arrangements.
Exceptions to these severance arrangements are as follows:
•lf Mr McLuskie’s contract is terminated by the Royal Bank
before he reaches age 60, he is entitled to a payment of
three months’ base salary, annual bonus and benefits in lieu
of notice plus up to 57 weeks’ pay (subject in some
circumstances to mitigation) and an immediate pension without
actuarial reduction. If his contract is terminated by the Royal
Bank within 12 months of a change of control, he is entitled
to a payment equal to twice his annual salary at the time of
such notice, and an immediate pension. Mr McLuskie is due to
retire in August 2004 when he reaches age 60.
•If Mr Pell’s contract is terminated early by NatWest without
notice, he is entitled to a compensation payment of base
salary relating to the notice period, his annual bonus to the
date of termination, a payment equal to the average annual
bonus over the previous three years, payment in lieu of
contractual benefits and allowances including pension and
extra payments by way of funded or unfunded pension and
death in service contributions relating to the notice period.
•If Mr Watt’s contract is terminated through redundancy, he is
entitled to payment in lieu of notice and a cash payment
calculated by reference to his age and length of service.
Currently this entitlement is equal to nine months’ salary, and
an additional payment of 2.13 weeks’ pay.
•Under Mr Fish’s previous contract dated 1 July 1996, the
notice period on termination by the company was 24
months. Following review, during which Mr Fish’s normal
retirement date was confirmed to be at the age of 65, Mr
Fish has entered into a revised contract under which this
notice period has been reduced to 12 months. No
compensation has been paid or will be payable as a result
of this change. The provisions of Mr Fish’s previous contract
dealing with termination following a change of control of
Citizens, the company or the Royal Bank have been
eliminated from the contract. If his contract is terminated
without cause, or if Mr Fish terminates the contract for good
reason (as defined in the contract), he is entitled to a lump
sum payment to compensate him for the loss of salary and
annual bonus (and, in the case of a termination during 2004,
long-term bonus) in relation to the period he would have
worked had notice been given by Citizens. Mr Fish would
also be entitled to receive for this period health, life
insurance and long term disability coverage and any other
benefits determined in accordance with the plans, policies
and practices of Citizens at the time of termination.
•Mr Robertson ceased his full-time employment with the
Royal Bank on 25 June 2003 but continued as a director of
the company in a non-executive capacity. Details of his
contract as a non-executive director are set out on page 128.
Information regarding executive directors’ service contracts is summarised in the table and notes below.
Date of current contract/ Notice period – Notice period –
Name Employing company Normal retirement age from company from executive
Fred Goodwin 1 August 1998 60 12 months 6 months
The Royal Bank of Scotland plc
Norman McLuskie 9 October 1997 60 3 months 3 months
The Royal Bank of Scotland plc
Gordon Pell 22 May 2002 60 12 months 6 months
National Westminster Bank Plc
Fred Watt 28 September 2000 60 12 months 6 months
The Royal Bank of Scotland plc
Lawrence Fish 18 February 2004 65 12 months 12 months
Citizens Financial Group Inc
Iain Robertson See note below — — —