RBS 2010 Annual Report Download - page 258

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 twelve months. In relation to newly recruited executive
directors, subject to the prior approval of the Remuneration Committee,
the notice period may be extended beyond twelve 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 twelve 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.
No compensation was paid to Gordon Pell on his retirement from
employment of the Group on 31 March 2010. Details of his pension are
shown on page 262.
Information regarding directors' service contracts is shown below:
Date of current contract
Notice period –
from the company
Notice period –
from executive
Executive directors
Stephen Hester 4November 2008 12 months 12 months
Bruce Van Saun 8 September 2009 12 months 12 months
Former executive director
Gordon Pell Contract expired 12 months 6 months
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 allow,
outstanding awards under long-term incentive arrangements to vest,
subject to the rules of the relevant plan.
Stephen Hester
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.
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 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). In both cases the treatment of any
other unvested stock awards will be determined at the discretion of the
Remuneration Committee.
Bruce Van Saun
In the event that 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. no 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 Medium-term Performance Plan and the
Executive Share Option Plan.
Gordon Pell
Gordon Pell retired from employment of the Group on 31 March 2010 on
attaining his normal retirement age. In line with the rules of the Group
Pension Fund, no discount applied on payment of his pension.
RBS Group 2010256
Directors’ remuneration report continued