RBS 2012 Annual Report Download - page 327

RBS GROUP 2012
325
Policy Report
Our Group-wide Remuneration Policy
The remuneration policy supports the Group’s business strategy and is
designed to:
x attract, retain, motivate and reward high-calibre employees to deliver
long term business performance within acceptable risk parameters;
and
x provide clear alignment between annual and long-term targets for
individuals and Group/divisional strategic plans.
Consultation on remuneration policy takes place with our social partners,
including representatives from UNITE. The National Living Wage and
London Living Wage are important benchmarks that we monitor each
year as part of the annual pay review process. An annual Group-wide
employee opinion survey takes place which includes a number of pay
related questions.
The remuneration policy applies the same principles to all employees
including Code Staff (1). The current key principles underpinning the
Group-wide remuneration policy are set out below:
Element of pay Objective Operation
Base salary To attract and retain employees
by being competitive in the
specific market in which the
individual works.
Base salaries are reviewed annually and should reflect the talents, skills and competencies
that the individual brings to the Group. Salaries should be sufficient so that inappropriate
risk-taking is not encouraged.
Annual incentives To support a culture where
employees recognise the
importance of serving
customers well and are
rewarded for superior individual
performance.
The annual incentive pool is based on a balanced scorecard of measures including
customer, financial, risk and people measures. Allocation from the pool depends on
divisional, functional and individual performance. Individual performance assessment is
supported by a structured performance management framework.
Our policy is that awards are subject to individual performance. Guaranteed awards are
only used in very limited circumstances in accordance with the FSA Remuneration Code.
Immediate cash awards are limited to a maximum of £2,000.
Under the Group-wide deferral arrangements a significant proportion of annual incentive
awards for our more senior employees are deferred over a three year period. Deferred
awards are subject to clawback. For Code Staff, 50% of any annual incentive is delivered in
the form of Group shares and subject to an additional six month retention period post
vesting.
In certain circumstances, formulaic short-term incentive arrangements are used to align the
objectives of employees with the strategy of the relevant division in which they work.
All incentive awards are subject to appropriate governance, including independent review
by the risk management, finance and human resources functions, with oversight from the
Group Performance and Reward Committee, which has delegated authority from the
Committee over incentive schemes operating over a period of 12 months or less.
Long-term Incentive
Plan (LTIP)
To encourage the creation of
value over the long term and to
align further the rewards of the
participants with the returns to
shareholders.
The Group provides certain employees in senior roles with long-term incentive awards.
Awards are structured as performance-vesting shares. Vesting after a three year period will
be based partly on divisional or functional performance and partly on performance across
the Group. All awards are subject to clawback.
Other share plans To offer employees in certain
jurisdictions the opportunity to
acquire Group shares.
Employees in certain countries are eligible to contribute to share plans which are not
subject to performance conditions.
Benefits
(including pension)
To give employees an
opportunity to provide for their
retirement.
In most jurisdictions, employee benefits or a cash equivalent are provided from a flexible
benefits account.
Note:
(1) The following groups of employees have been identified as meeting the FSA’s criteria for Code Staff:
- Members of the Group Board and Group Executive and Management Committees;
- Staff performing a Significant Influence Function within RBS Group;
- Employees who have approval authorities such that their decision-making could have a material impact on the RBS Group income statement;
- Employees who are responsible for a business or businesses whose performance could have a material impact on the RBS Group income statement; and
- Key control function roles.
Directors’ remuneration report Policy Report