RBS 2011 Annual Report Download - page 277

RBS Group 2011 275
Third quarter
xhalf year performance reviews for executive directors, members of
the Executive Committee and Management Committee; and
xoutcome of Group Internal Audit review on how the FSA
Remuneration Code has been implemented which showed
management is aware of the key risks and are pro-active in
identifying issues relating to remuneration.
Fourth quarter
xreview of risk-adjusted performance across the Group and divisions;
xpreliminary bonus pools discussions for Group and divisions;
xenhanced process for review of risk trigger events for clawback and
bonus reduction;
xcontent for shareholder consultations undertaken in December 2011
and January 2012; and
xreport from the project to enhance risk input into remuneration with
recommendations for actions.
In addition, the Committee received regular knowledge updates on global
remuneration regulatory developments; pay consultations issued by the
FSA, Department for Business, Innovation & Skills, HM Treasury and the
High Pay Commission; guidelines from shareholders and investor bodies;
and market trends reports.
Advisers to the Group Remuneration Committee
The advisers to the Group Remuneration Committee are appointed
independently by the Committee, which reviews its selection of advisers
annually. The advisers are instructed by and report directly to the
Committee. The Committee Chair oversees the fees for the advisers.
PricewaterhouseCoopers LLP (PwC) were appointed as the Committee’s
remuneration advisers on 14 September 2010, and their appointment
was reconfirmed by the Committee in June 2011 after an annual review
of the quality of the advice received and fees charged. PwC are
signatories to the voluntary code of conduct in relation to remuneration
consulting in the UK.
PwC also provide professional services in the ordinary course of
business including assurance, advisory, tax and legal advice to
subsidiaries of the Group. The Committee Chair is notified of other work
that is being undertaken by PwC and is satisfied that there are processes
in place to ensure that the advice the Committee receives is independent.
As well as receiving advice from PwC during 2011, the Committee took
account at meetings of the views of the Group Chairman, Group Chief
Executive, Group Finance Director, Group Human Resources Director,
Group Head of Reward, Group Secretary and the Chief Risk Officer.
Performance evaluation process
An internal review of the effectiveness of the Group Remuneration
Committee was conducted by the Group Secretary during 2011. The
evaluation was based on detailed questionnaires and individual meetings
with each member and attendee. Amongst the areas reviewed were the
role of the Committee, composition, meetings and processes, continuing
professional development and communication. Generally, the Committee
was considered to be effective and meeting its objectives, with members
willing to spend the time necessary to discharge their responsibilities.
The evaluation respondents agreed that the Committee was the right
size, with an appropriate composition and was headed by a committed
Chair. The respondents were also impressed by the level of work
undertaken outside of the meetings, particularly by the Chair.
Anumber of actions arose from the evaluation relating to the further
improvement of the meeting arrangements, including:
ximproved performance from the Committee’s internal and external
resources;
xfurther improvement on length and clarity of materials provided to
the Committee; and
xmonitoring of the new processes for risk input into remuneration and
processes for reporting and escalation of trigger events which may
lead to clawback or bonus reduction.
The Committee has considered and discussed the report on the
outcomes of the evaluation and is satisfied with the way in which the
evaluation was conducted, the conclusions and the recommendations for
actions. The outcomes of the evaluation have been reported to the Group
Board and the actions are being progressed.