RBS 2012 Annual Report Download - page 337

RBS GROUP 2012
335
Executive directors long-term incentive plan (LTIP) awards granted in
2009 and 2010 - assessment of performance outcome
Awards to executive directors under the Executive Share Option Plan and
Medium-term Performance Plan in 2009 did not vest in 2012 as a result
of the relative and absolute TSR measures not being met.
Awards to executive directors under the LTIP granted in 2010 are subject
to improvements in economic profit, relative TSR and absolute TSR.
These awards are due to be formally assessed by the Committee in May
2013 to determine the final level of vesting.
2010 LTIP
Performance
measure Weighting Rationale Vesting Current assessment of performance
Economic profit 50% Ensures that
performance reflects
enduring earnings for
the Bank.
Maximum vesting of the economic profit measure will be
triggered by early delivery of Core business profitability,
well ahead of the range implied by the published Strategic
Plan targets and also in excess of the cost of capital.
Analysis of economic profit
outcome is currently under
review and decision on vesting
level will be taken before the
awards vest in May 2013.
Relative TSR 25% Ensure alignment
with shareholders.
Threshold: 20% vesting if the Group’s TSR is at the
median of the companies in the comparator group.
Maximum: 100% vesting if the Group’s TSR is at the upper
quartile of the companies in the comparator group.
Pro-rata vesting in between these points.
Based on share price
performance over the
measurement period ending 31
December 2012, this element of
the award will not vest.
Absolute TSR 25% Ensure alignment
with shareholders.
Threshold: 20% vesting if the Group’s share price reaches
£5.75.
Maximum: 100% vesting if the Group’s share price reaches
£7.75.
Pro-rata vesting in between these points.
Based on share price
performance to date, the
threshold targets have not yet
been met.