RBS 2012 Annual Report Download - page 324

Report of the Group Performance and Remuneration Committee
The role and responsibilities of the Committee
The Committee is responsible for setting the Group’s policy on
remuneration and overseeing its implementation. It reviews performance
and makes recommendations to the Board in respect of the Group’s
variable incentive pools and the remuneration arrangements of the
executive directors of the Group. No director is involved in decisions
regarding his or her own remuneration.
The Committee is also responsible for approving remuneration and
severance arrangements for members of the Group’s Executive and
Management Committees, FSA ‘Code Staff’, as well as overseeing
arrangements for employees who are ‘In-Scope’ under the Asset
Protection Scheme (APS). Details of the FSA Remuneration Code can be
found at www.fsa.gov.uk and a definition of Code Staff is provided on
page 325.
The terms of reference of the Group Performance and Remuneration
Committee are available on the Group’s website www.rbs.com and these
are reviewed at least annually by the Committee and approved by the
Board.
Summary of the principal activity of the Committee during 2012
Set out below is a summary of the activity of the Committee on a
quarterly basis:
First quarter
x Year end performance reviews and remuneration arrangements for
members of the Group’s Executive and Management Committees
and objectives for 2012. The year end performance reviews included
input from the Board Risk Committee on the risk management
performance of Executive and Management Committee members;
x Year end performance reviews and remuneration arrangements for
APS in scope employees, Code Staff, and High Earners;
x Approval of Group and Divisional variable pay pools;
x Approval of the Directors’ remuneration report;
x Outcomes of the annual performance evaluation of the Committee;
x Remuneration arrangements for executive directors which included
a reduction to the LTIP award level for executive directors;
x Introduction of a new accountability review process which informs
clawback decisions; and
x Assessment of the performance to date of unvested LTIP awards
and award levels and performance targets for 2012 awards.
Second quarter
x Outcomes of the first quarter accountability reviews;
x Review of remuneration proposals for Direct Line Insurance Group
plc on divestment;
x Presentation from the Wealth division on business and strategic
priorities and people plan;
x Review of government proposals on Shareholder Voting Rights and
remuneration aspects of CRD IV; and
x Update on LTIP performance conditions and vesting outcomes for
executive directors 2009 long term incentive awards.
Third quarter
x Half year performance reviews for executive directors, Group
Executive and Management Committee members;
x Outcomes of the second quarter accountability reviews;
x Formal remuneration strategy session to discuss and agree
remuneration approach and priorities for the forthcoming year;
x Presentation from Markets and International Banking on business
and strategic priorities and people plan; and
x Approval of remuneration arrangements for Direct Line Insurance
Group plc on divestment.
Fourth quarter
x Approval of remuneration approach for the most senior and highest
paid employees in the Group (including executive directors and
Group Executive and Management Committee members);
x Outcomes of the third quarter accountability reviews;
x Assessed and affirmed accountability review decision making
principles;
x 2012 preliminary variable pay pool discussions for Group and
Divisions;
x Content for shareholder consultations undertaken in December 2012
and January 2013;
x Review of Committee remit and name;
x Review of incentive plans;
x Approval of revised shareholding requirements for executive
directors and the introduction of new shareholding requirements for
Group Executive Committee members; and
x Improved review of performance across key areas of customer; risk;
people and financial.
322
Directors’ remuneration report Remuneration Governance