RBS 2011 Annual Report Download - page 290

288 RBS Group 2011
Relative Total Shareholder Return (TSR) (25%)
The relative TSR measure provides a direct connection between
executive directors’ awards and relative performance delivered to
shareholders. The measure compares the Group's performance against a
group of comparator banks from the UK and overseas, weighted towards
those companies most similar to the Group. Performance is measured
over a three year performance period. The Remuneration Committee
reviewed the weightings within the TSR peer group, and made a small
number of adjustments to reflect emerging regulatory influences, the
future geographic and business focus of RBS, and consequent future
relevance of peer companies. This has resulted in reducing the
weightings of a small number of banks in the peer group for 2012 LTIP
awards.
Relative TSR Comparator Group
Weighting
1Barclays 200%
2Lloyds Banking Group
3HSBC 150%
4Standard Chartered
5Bank of America 50%
6BBVA
7BNP Paribas
8 Citigroup
9Credit Agricole
10 Credit Suisse Group
11 Deutsche Bank
12 JP Morgan Chase
13 National Australia Bank Limited
14 Royal Bank of Canada
15 Santander
16 Societe Generale
17 The Toronto-Dominion Bank Group
18 UBS
19 Unicredito
20 Wells Fargo & Company
To receive any of the LTIP awards subject to this performance measure
the Group’s performance must be at least as good as the median of the
comparator companies, with vesting as follows (with a pro-rata proportion
of the award vesting in between these points):
x20% of the award will vest if the Group’s TSR is at the median of the
companies in the comparator group.
x100% of the award will vest if the Group’s TSR is at the upper
quartile of the companies in the comparator group.
Balance Sheet & Risk (25%)
The Balance Sheet & Risk measures have a particular focus on risk
reduction, the resolution of the Non-Core business and the building of a
sustainable and responsible franchise for the Group.
Strategic Scorecard (25%)
The balanced Strategic Scorecard rewards management for delivering a
robust basis for future growth in terms of the strength of our franchise,
efficiency, reputation, and the strength and engagement of employees.
Performance measures
Non-Core assets
Cumulative Non-Core loss
Core Tier 1 Capital
Wholesale funding
Liquidity reserves
Leverage ratio
Loan:deposit ratio
Balance
Sheet and Risk
measures
and targets
Earnings volatility
Customer franchise
Cost:income ratio in core bank
Lending targets
Sustainability performance
Strategic
Scorecard
measures
and targets Progress in people issues
Both quantitative and qualitative strategic measures are used, including
measures relating to reputation, customer excellence, organisational
capability and sustainability, given that these will support the long term
goals of the business. Targets for each measure are set at the start of the
performance period and where applicable, are aligned with the Group’s
strategic plan targets. At the end of the period each measure will be
assessed against the target, and vesting will be based on the proportion
of targets fully met (see below), qualified by the Group Remuneration
Committee’s discretion, taking other relevant factors into account.
Commentary will be provided on an annual basis in relation to progress
against the targets, where these are not commercially sensitive.
Vesting point Indicative performance
Does not meet 0% Over half of objectives not met
Partially meets 25% Half of objectives met
Significantly meets 62.5% Two-thirds of objectives met
Fully meets 100% Objectives met or exceeded in all
material respects
Qualified by Group Remuneration Committee discretion taking into
account changes in circumstances over the performance period, the
relative importance of the measures, the margin by which individual
targets have been missed or exceeded, and any other relevant factors.
Directors’ remuneration report continued