RBS 2011 Annual Report Download - page 287

RBS Group 2011 285
2010
Awards to executive directors under the LTIP in 2010 are subject to improvements in Economic Profit, Relative TSR and Absolute TSR. The award is
due to be assessed in May 2013 to determine the final level of vesting. The table below is an interim assessment and based on performance to date, the
threshold targets have not yet been met.
Performance
measure Weighting Rationale Vesting Current assessment of performance
Economic Profit 50% Ensures that
performance reflects
enduring earnings for
the Bank.
Maximum vesting of the Economic Profit measure will be
triggered by early delivery of Core Business profitability,
well ahead of the range implied by the published Strategic
Plan targets and also in excess of the cost of capital.
Continued difficult economic
conditions in a number of our
key markets mean that based
on performance to date, the
threshold targets have not yet
been met.
Relative TSR 25% Ensure alignment with
shareholders.
Threshold: 20% vesting if the Group’s TSR is at the
median of the companies in the comparator group.
Maximum: 100% vesting if the Group’s TSR is at the upper
quartile of the companies in the comparator group.
Pro-rata vesting in between these points.
Based on share price
performance to date, the
threshold targets have not yet
been met.
Absolute TSR 25% Ensure alignment with
shareholders.
Threshold: 20% vesting if the Group’s share price reaches
57.5p.
Maximum: 100% vesting if the Group’s share price reaches
77.5p.
Pro-rata vesting in between these points.
Based on share price
performance to date, the
threshold targets have not yet
been met.
Note: For the formulaic performance conditions applying to the executive directors, the percent vesting outcomes were calculated by PwC, based on incremental economic profit figures from Group
Finance (Group operating profit less 25% tax less a charge of 10% of tangible equity) and TSR for the period up to and including 3 January 2012.
2009
In 2009, executive directors received long-term incentives under two plans, the Medium Term Performance Plan (MPP) and Executive Share Option
Plan (ESOP). These awards are due to be formally assessed in June 2012. It is currently anticipated that, based on performance to date, the threshold
targets would not be met and there would be nil vesting under any of the elements of these awards.
Performance
measure Weighting Rationale Vesting Current assessment of performance
Relative TSR 50% Ensure alignment with
shareholders.
Threshold: 25% vesting if the Group’s TSR is at the
median of the companies in the comparator group.
Maximum: 100% vesting if the Group’s TSR is at the upper
quartile of the companies in the comparator group.
Pro-rata vesting in between these points.
Based on share price
performance to date, the
threshold targets would not be
met and there would be no
vesting under this element of
the award.
Absolute TSR 50% Ensure alignment with
shareholders.
Threshold: 25% vesting if the Group’s share price reaches
40p.
50% vesting if the Group’s share price reaches 55p.
Maximum: 100% vesting if the Group’s share price reaches
70p.
Based on share price
performance to date, the
threshold targets would not be
met and there would be no
vesting under this element of
the award.
Note: The TSR calculations were provided by PwC based on TSR calculations up to and including 3 January 2012.