RBS 2012 Annual Report Download - page 333

RBS GROUP 2012
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Stephen Hester
In the event of his personal underperformance, the company is entitled,
after giving reasonable opportunity to remedy any failure, to terminate
Stephen Hester’s contract by giving written notice with immediate effect
and without making any payment in lieu of notice and Stephen Hester will
forfeit any unvested stock awards. In the event that Stephen Hester's
employment is terminated by the company (other than by reason of his
personal underperformance or in circumstances where the company is
entitled to dismiss without notice), or if he resigns in response to a
fundamental breach of contract by the company, he will be entitled to
receive a payment in lieu of notice to the value of base salary, annual
incentive and benefits (including pension contributions). If he resigns
voluntarily and the company does not require him to work out his notice
period, Stephen Hester may receive a payment in lieu of notice based on
salary only (i.e. no annual incentive or benefits). In both cases the
treatment of any other unvested stock awards will be determined by the
Committee and the Board, having due regard to the circumstances of the
departure.
Bruce Van Saun
In the event of his personal underperformance, the company is entitled,
after giving reasonable opportunity to remedy any failure, to terminate
Bruce Van Saun’s contract by giving written notice with immediate effect
and without making any payment in lieu of notice and Bruce Van Saun
will forfeit any unvested stock awards. Any payment in lieu of notice that
may be made to Bruce Van Saun would be based on salary only (i.e. no
annual incentive or benefits). The company has agreed that, provided
certain conditions are met, on leaving employment, Bruce Van Saun will
not forfeit awards under the rules of the Group’s share plans.
Chairman and non-executive directors
Information regarding the terms of appointment for the Chairman and
non-executive directors is shown below.
Re-election
Under the Articles of Association of the company, directors must stand for
re-election by shareholders at least once every three years. However, in
accordance with the provisions of the Code, all directors of the company
stand for annual re-election by shareholders at the company’s Annual
General Meetings.
Letter of engagement
The non-executive directors do not have service contracts or notice
periods although they have letters of engagement reflecting their
responsibilities and commitments.
Time commitments
Letters of engagement make clear to non-executive directors the time
commitment they are expected to give to their Board duties. Since 2010,
non-executive directors letters of engagement specifically state that their
time commitment should be in line with the Walker Review of corporate
governance of banks and other financial institutions in respect of their
general Board duties. Additional time will be spent as necessary in
respect of committee duties, including in particular any committees which
they chair.
Termination
No compensation would be paid to any non-executive director in the
event of termination of appointment.
Arrangements for the Group Chairman
Philip Hampton is entitled to receive a cash payment in lieu of notice if his
appointment is terminated as a result of the Group's majority shareholder
seeking to effect the termination of his appointment. The applicable
notice period is twelve months. In the event that the company terminates
Philip Hampton's appointment without good reason, or his re-election is
not approved by shareholders in General Meeting resulting in the
termination of his appointment, he will be entitled to receive a cash
payment in lieu of notice of twelve months' fees.
Fees for non-executive directors
The table below sets out the remuneration structure for non-executive
directors for the year ended 31 December 2012. The Senior Independent
Director and Chairs of the Board committees receive a composite fee and
therefore do not receive additional fees for membership of any other
committees or the Board.
The level of remuneration for non-executive directors reflects their
responsibility and time commitment and the level of fees paid to non-
executive directors of comparable major UK companies. Non-executive
directors do not participate in any incentive or performance plan. Non-
executive directors’ fees are reviewed regularly.
Chairman’s fee £750,000
Senior Independent Director (composite fee) £150,000
Chairman of Group Audit Committee, Board Risk Committee or Group Performance and Remuneration Committee (composite fee) £150,000
Non-executive Director Group Board fee £72,500
Membership of Group Audit Committee, Board Risk Committee or Group Performance and Remuneration Committee fee £25,000
Membership of Group Sustainability Committee fee £12,500
Membership of Group Nominations Committee fee £5,500
No director received any expense allowances chargeable to UK income tax or compensation for loss of office/termination payment. The non-executive
directors did not receive any annual incentive payments or benefits.