RBS 2005 Annual Report Download - page 127

section
02
Governance
125
Directors’ remuneration report
Annual Report and Accounts 2005
Chairman and non-executive directors
The original date of appointment as a director of the company and the latest date for the next re-election are as follows:
Latest date for
Date first appointed next re-election
Sir George Mathewson 1 September 1987 retires 28 April 2006
Sir Tom McKillop 1 September 2005 2006
Mr Buchan 1 June 2002 2006
Dr Currie 28 November 2001 2008
Mr Hunter 1 September 2004 2008
Mr Koch 29 September 2004 2008
Mrs Kong 1 January 2006 2006
Mr MacHale 1 September 2004 2008
Sir Steve Robson 25 July 2001 2008
Mr Scott 31 January 2001 2006
Mr Sutherland 31 January 2001 2006
The non-executive directors do not have service contracts or notice periods although they have letters of engagement reflecting
their responsibilities and commitments. Under the company’s articles of association, all directors must retire by rotation and seek
re-election by shareholders at least every three years. The dates in the table above reflect the latest date for re-election. However, in
2007, at least one-third of the Board will retire by rotation as required by the company’s articles of association. No compensation
would be paid to the Chairman or to any non-executive director in the event of early termination.
The tables and explanatory notes on pages 126 to 129 report the remuneration of each director for the year ended 31 December 2005
and have been audited by the company’s auditors, Deloitte & Touche LLP.
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
situations involving breach of the employing company’s
policies resulting in dismissal, reduced or no payments may be
made 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 subject to the rules of relevant
plan. The exception to these severance arrangements relates
only to Mr Fish.
If Mr Fish’s contract is terminated without cause, or if he
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 12 months salary plus annual bonus.
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. The
Remuneration Committee has been advised that these
termination provisions are less generous than the current
market practice in the US.
Group Finance Director – Guy Whittaker
Guy Whittaker was appointed Group Finance Director on 1
February 2006 and has a service contract with The Royal Bank
of Scotland plc dated 19 December 2005. This service contract
provides for a normal retirement age of 60 and may be
terminated by either party giving 12 months notice to the other.
In accordance with normal market practice, Mr Whittaker will
be recompensed for the value of restricted stock and unvested
options he forfeited on his departure from his previous
employer. In this respect he will be provided with ordinary
shares in The Royal Bank of Scotland Group plc worth
£1,000,000 and restricted stock worth £1,450,000, the latter
vesting in 3 tranches between 2007 and 2009. As Mr Whittaker
forfeited his performance bonus from his previous employer, he
received a cash payment of £1,195,181 and will receive
restricted stock worth £962,785, the latter vesting in 4 tranches
between 2007 and 2010. The provision of ordinary shares and
the vesting of restricted stock is subject to certain conditions
set out in Mr Whittaker’s service contract.
As Group Finance Director, Mr Whittaker will be eligible to
receive short-term annual incentives and long-term incentives
on the same basis as other UK-based executive directors.