RBS 2008 Annual Report Download - page 168

167RBS Group Annual Report and Accounts 2008
Restricted Share Award
Interests at 1 January 2008 and the related prices on award and vesting in the table below have been restated to reflect the rights issue in June 2008
and the capitalisation issue in September 2008.
End of the
Awards Market Market Value of Awards period for
held at Awards price on Awards price on awards held at qualifying
1 January granted in award vested in vesting vested 31 December conditions to
2008 2008 £ 2008 ££2008 be fulfilled
Mr Hester — 8,575,019 0.48 577,964 0.48 277,423 7,997,055 21.11.08 – 29.05.11(1)
— 1,832,062 0.48 1,832,062 21.11.09 – 21.11.11(2)
— 10,407,081 9,829,117
Mr Whittaker (3) 109,208 5.41 109,208 3.37 368,503 —
90,718 5.41 90,718 01.02.09(4, 5)
44,500 5.41 44,500 01.02.10
244,426 135,218
Notes:
(1) Awards to replace bonus and share awards Mr Hester forfeited on leaving The British Land Company PLC, which reflect the vesting dates of the original awards.
(2) These awards vest as to 1/3 on each of the first, second and third anniversary of award, subject to their terms.
(3) Awards were granted to Mr Whittaker in lieu of unvested share awards from his previous employer.
(4) The end period for qualifying conditions is subject to any restrictions on dealing in the Group’s shares which may be in place and to which Mr Whittaker may be subject. As a result of the close
period prior to the announcement of the Group’s results, the end of the period for qualifying conditions to be fulfilled in 2009 is 26 February 2009.
(5) Award has now vested and shares will be released to Mr Whittaker on 26 February 2009.
Citizens Long Term Incentive Plan (1)
Benefits received from awards
Interests at 1 January 2008 vesting during the year Interests at 31 December 2008
Mr Fish LTIP awards for the
3 year periods:
01.01.05 – 31.12.07 nil —
01.01.06 – 31.12.08 nil(2) —
01.01.07 – 31.12.09 nil(2) —
Notes:
(1) This cash LTIP was approved by shareholders at the company’s Annual General Meeting in April 2005. Performance is measured on a combination of growth in Profit before tax and Relative
Return on Equity based on a comparison of Citizens with comparator US banks.
(2) When Mr Fish stepped down from the Board on 31 December 2008, under the terms of the Citizens LTIP, his outstanding awards vested, subject to pro-rating for the elapsed proportion of the
performance period and for performance to date. As a result, there was nil vesting for all awards.
No variation was made to any of the terms of the plan during the year.
Awards made in 2007 and 2008 are subject to two performance
measures; 50% of the award vests on a relative Total Shareholder
Return (TSR) measure and 50% vests on growth in adjusted earnings
per share (EPS) over the three year performance period.
For the TSR element, vesting is based on the level of outperformance by
the Group of the median of the comparator group TSR over the
performance period. Awards made under the plan will not vest if the
company’s TSR is below the median of the comparator group.
Achievement of median TSR performance against comparator
companies will result in vesting of 25% of the award. Outperformance
of median TSR performance by up to 9% will result in vesting on a
straight-line basis from 25% to 125%, outperformance by 9% to 18% will
result in vesting on a straight-line basis from 125% to 200%. Vesting at
200% will occur if the company outperforms the median TSR
performance of the comparator group by at least 18%. For awards
made in 2007, the companies in the comparator group were ABN
AMRO Holdings N.V.; Banco Santander Central Hispano, S.A.; Barclays
PLC; Citigroup Inc; HBOS plc; HSBC Holdings plc; Lloyds TSB Group
plc and Standard Chartered PLC. Following the acquisition of ABN
AMRO by the consortium members in October 2007, the Remuneration
Committee agreed that Fortis N.V. would replace ABN AMRO in the
comparator group. Subsequently, for awards made in 2008, Fortis N.V.
was replaced by Deutsche Bank Group.
The level of EPS growth over the three year period is calculated by
comparing the adjusted EPS in the year prior to the year of grant with
that in the final year of the performance period. Each year the vesting
schedule for the EPS growth measure is agreed by the Remuneration
Committee at the time of grant, having regard to the business plan,
performance relative to comparators and analysts’ forecasts.
For the awards made in 2007, the EPS element of the awards will not
vest if EPS growth is below 5% per annum compound over the three
year period. Where EPS growth is between 5% per annum and 10% per
annum vesting will occur on a straight-line basis from 25% to 100%.
Vesting at 100% will occur if EPS growth is at least 10% per annum
compound. For the awards made in 2008, an EPS growth threshold level
of 5% per annum to a maximum level of 9% per annum was agreed.