RBS 2009 Annual Report Download - page 232

RBS Group Annual Report and Accounts 2009230
Directors’ remuneration report continued
Date of Notice period – Notice period –
current contract from company from executive
Executive directors
Stephen Hester 4 November 2008 12 months 12 months
Gordon Pell 20 February 2006 12 months 6 months
Bruce Van Saun (1) 8 September 2009 12 months 12 months
Former executive directors
Guy Whittaker (2) 19 December 2005 12 months 12 months
Notes:
(1) Appointed as a director on 1 October 2009.
(2) Ceased to be a director on 30 September 2009.
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 Guy Whittaker in respect of his
ceasing to be a director.
Information regarding directors’ service contracts is shown below:
Except as noted below, in the event of severance where any contractual
notice period is not worked, the employing company may pay a sum to
the executive in lieu of the notice period. 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 the
relevant plan.
Stephen Hester
In the event that Stephen Hester’s employment is terminated by the
company (other than by reason of his personal underperformance), the
following will apply. First, he will be entitled to receive a payment in lieu
of notice to the value of base salary, bonus and benefits (including
pension contributions). Secondly, any share awards granted to him to
replace bonus and share awards he forfeited on leaving The British
Land Company PLC will vest immediately on such termination.
If Stephen Hester’s employment is terminated by reason of his personal
underperformance, the company is entitled to terminate by giving
written notice with immediate effect and without making any payment in
lieu thereof and Stephen Hester will forfeit any unvested stock awards. If
he resigns voluntarily and the company does not require him to work out
his notice period, Stephen Hester may receive a payment in lieu of
notice based on salary only (i.e. no bonus or benefits) and he will also
forfeit any unvested stock awards.
Gordon Pell
Gordon Pell will retire from employment of the Group on 31 March 2010.
In the event that Gordon Pell’s employment has been terminated by
notice, any payment in lieu of notice would have been based on salary
only i.e. not bonus or benefits. Gordon Pell is a member of The Royal
Bank of Scotland Group Pension Fund (the RBS Fund) and is
contractually entitled to receive all pension benefits in accordance with
its terms which apply to all members. The RBS Fund rules allow all
members, including executive directors, who retire early at the request
of their employer to receive a pension based on accrued service with
no discount applied for early retirement. Gordon Pell attained his normal
pension age of 60, according to the rules of the Group Pension Fund,
on 23 February 2010 and from that date, no discount applies on
payment of his pension.
Bruce Van Saun
In the event Bruce Van Saun’s employment is terminated by reason of
his personal underperformance, the company is entitled to terminate by
giving written notice with immediate effect and without making any
payment in lieu of notice. Any payment in lieu of notice that may be
made to Bruce Van Saun would be based on salary only (i.e. not bonus
or benefits).
The company has agreed that, provided certain conditions are met, on
leaving employment, Bruce Van Saun will not forfeit awards under the
rules of the Deferral Plan, the MPP and the ESOP.