RBS 2013 Annual Report Download - page 73
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Directors’ Remuneration Policy
71
Other pay elements
Element of pay
Purpose and link to
strategy Operation Maximum potential value
Performance
metrics and
period
Shareholding
requirements
To ensure EDs build and
continue to hold a significant
shareholding to align
interests with shareholders.
A period of five years is allowed in which to build
up shareholdings to meet the required levels.
Any unvested share awards are excluded in the
calculation.
Group Chief Executive -
250% of salary.
Other EDs - 125% of salary.
Requirements may be
reviewed and increased in
future.
N/A
All-employee
share plans
An opportunity to acquire
RBS shares.
Opportunity to contribute from salary to the RBS
Sharesave and Buy As You Earn Plan.
Statutory limits imposed by
HMRC.
N/A
Legacy
arrangements
To ensure RBS can continue
to honour payments due to
EDs.
In approving this policy, authority is given to
honour any previous commitments or
arrangements entered into with current or former
directors, including share awards granted under
the 2010 Deferral Plan and 2010 Long Term
Incentive Plan (LTIP) and awards granted prior to
appointment as an executive director that may
have different performance conditions aligned with
divisional performance.
In line with existing
commitments.
In line with existing
commitments.
Notes to policy table
• The Committee sets performance targets taking into account the
Group’s Strategic Plan, financial forecasts and wider non-financial
metrics. The performance conditions for variable pay awards made to
EDs have been chosen to promote the building of a safer, stronger
and more sustainable business. The Committee selects the
measures each year after consultation with major shareholders.
• Clawback - An accountability review process is operated that allows
the Committee to respond in instances where new information would
change the variable pay decisions made in previous years and/or the
decisions to be made in the current year. As a result, clawback can
be applied to reduce or lapse any unvested awards as well as
reducing any current year’s variable pay. The Committee will also
consider its approach to the operation of post vesting clawback in
light of emerging market practice and regulatory requirements.
Further details can be found on page 89.
• Remuneration for EDs broadly follows the policy for all employees but
with greater emphasis on delivery in shares and a significant element
of variable performance-related pay. This is to ensure that total
remuneration to EDs is more aligned with the long-term interests of
shareholders and dependent on specific performance measures
being met. Further details on the remuneration policy for all
employees can be found on page 88 and 89.
Changes for Executive Directors
• EDs will no longer be eligible to receive annual bonuses.
• The new structure outlined in the policy table introduces a fixed share
allowance for EDs which will be released in equal tranches over a
five year period. However, the Group Chief Executive will not receive
a fixed share allowance for 2014.
• Future long-term incentive awards will be subject to an overall five
year vest period, with a three year performance period and vesting in
equal tranches in years four and five.
• The new structure results in a reduction of 16% of maximum
remuneration opportunity, maintaining significant exposure to shares
and clawback but with increased holding periods.
• The policy reflects our objective of moderating total remuneration
while providing strong alignment with shareholders over the longer-
term.