RBS 2012 Annual Report Download - page 328

Summary of remuneration policy for executive directors for 2013
The remuneration policy for executive directors follows the Group-wide policy applicable to other employees but with greater emphasis on variable
performance-related pay. This is to ensure that delivery of total remuneration to executive directors is more dependent on performance and can only be
achieved if specific strategic targets and other measures are met. The structure of remuneration for executive directors involves greater delivery in
shares in order to align further their reward with the long-term interests of shareholders. A summary is set out below:
Element of pay Operation Maximum potential Performance metrics and period
Changes to policy since
last approved
Base salary Reviewed annually and
considered against annual
market data and in the context
of wider Group increases.
Rate at 1 January 2013:
Stephen Hester: £1,200,000
Bruce Van Saun: £750,000
N/A A 2% increase to the
salary of Bruce Van
Saun to £765,000
with effect from
1 April 2013.
Annual incentive Any annual incentive to be
awarded entirely in shares.
Shares vest in two equal
tranches on the first and
second anniversary of the date
of grant.
Provision for clawback prior to
vesting.
Additional six month holding
period post vesting.
Normal maximum:
200% of base salary
Exceptional maximum:
250% of base salary
Balanced scorecard of KPIs measured
over the financial year.
KPIs are:
x Strategic progress;
x Business delivery and financial
performance;
x Risk and control;
x Stakeholder management; and
x People management
See page 328 for further details
No change.
Long-term incentive Awards granted over shares
which vest at the end of a
three year period subject to
performance conditions being
met.
Provision for clawback prior to
vesting.
Additional six month holding
period post vesting.
Maximum under plan rules is
400% of salary.
2013 LTIP awards will be
granted subject to an overall
cap of 300% of salary at
grant.
Each of the four performance
elements has the potential to
deliver shares worth 100% of
salary at grant.
However, there is an overall
cap on vesting equivalent to
300% of salary at grant.
The notional value of these
awards would be 45% of face
value, which is 135% of
salary.
Performance conditions measured over
three financial years.
Performance measures and relative
weightings are:
x Core Bank Economic Profit - 25%
x Total Shareholder Return (TSR)
relative to comparator group of
international banks - 25%
x Balance sheet and risk - 25%
x Strategic scorecard - 25%
x Financial and risk performance
underpin.
The LTIP measures have been selected
in consultation with shareholders. The
objective is to have a balanced range of
measures that encourage the building of
a safer, stronger and more sustainable
business. See page 329 for further
details on the measures.
No change.
Benefits (including
pension)
Flexible benefits opportunity as
for all employees.
Pension allowance.
Opportunity to sacrifice salary
into defined contribution
pension scheme.
Pension allowance of 35% of
salary.
N/A No change.
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Directors’ remuneration report Policy Report continued