RBS 2008 Annual Report Download - page 163

RBS Group Annual Report and Accounts 2008162
Directors’ remuneration report continued
Total shareholder return performance
The performance graph illustrates the performance of the company over
the past five years in terms of total shareholder return compared with
that of the companies comprising the FTSE 100 Index. This Index has
been selected because it represents a cross-section of leading UK
companies. The total shareholder return for FTSE banks for the same
period has been added for comparison. The total shareholder return for
the company and the indices have been rebased to 100 for 2003.
Total shareholder return
Service contracts
The company’s policy in relation to the duration of contracts with
directors is that executive directors’ contracts generally continue until
termination by either party, subject to the required notice, or until
retirement. The notice period under the service contracts of executive
directors will not normally exceed 12 months. In relation to newly
recruited executive directors, subject to the prior approval of the
Remuneration Committee, the notice period may be extended beyond
12 months if there is a clear case for this. Where a longer period of
notice is initially approved on appointment, it will normally be structured
such that it will automatically reduce to 12 months in due course.
All new service contracts for executive directors are subject to approval
by the Remuneration Committee. Those contracts normally include
standard clauses covering the performance review process, the
company’s normal disciplinary procedure, and terms for dismissal in the
event of failure to perform or in situations involving actions in breach of
the Group’s policies and standards.
Any compensation payment made in connection with the departure of
an executive director will be subject to approval by the Remuneration
Committee, having regard to the terms of the service contract and the
reasons for termination. Any Board members who leave the company in
the future will receive a severance package which is reasonable and
perceived as fair.
No compensation payment was made to Sir Fred Goodwin, Johnny
Cameron or Mark Fisher in respect of their ceasing to be directors.
Information regarding directors’ service contracts is shown below:
Date of Notice period – Notice period –
current contract from company from executive
Executive directors
Mr Hester 4 November 2008 see note (1) 12 months
Mr Pell 20 February 2006 12 months 6 months
Mr Whittaker 19 December 2005 12 months 12 months
Former executive directors
Sir Fred Goodwin 1 August 1998 see page 161 see page 161
Mr Cameron 29 March 1998 12 months 6 months
Mr Fisher 27 February 2007 12 months 12 months
Note:
(1) On appointment, Mr Hester was entitled to 24 months notice from the company. This will be reduced on a daily basis, so that it will be 12 months by the first anniversary of the commencement of
his employment. As at 25 February 2009, Mr Hester’s notice period was 201
/ 2months.
FTSE 100
FTSE Banks
RBS
20
40
60
80
100
120
140
160
180
200
2003 2004 2005 2006 2007 2008