RBS 2013 Annual Report Download - page 75
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Directors’ Remuneration Policy
73
Policy start date
The remuneration policy will be effective from the date of the 2014 AGM,
subject to shareholder approval. It is intended that the policy will apply for
three years unless changes are required in which case a revised policy
will be submitted to shareholders for approval.
Recruitment remuneration policy
• The approach to recruitment of directors is to consider both internal
and external candidates and to pay no more than is required to
attract the most suitable candidate for the role.
• The policy on the recruitment of new directors aims to structure pay
in line with the framework and quantum applicable to current
directors, competitive in a market context and including the
components detailed in the policy table, taking into account that
some variation may be necessary to secure the preferred candidate.
• Consideration will be given to the skills and experience held by the
individual being recruited as well as the incumbent’s position. The
present circumstances of the company will also be taken into
account.
• In the event of an internal promotion, existing contractual
commitments can continue to be honoured.
• Any awards granted on recruitment may be made as part of the
company’s share plans from time to time or under the provisions
provided by Section 9.4.2 of the Listing Rules and will need to
comply with the requirements of the PRA Remuneration Code. No
sign-on awards or payments will be offered over and above the
normal buy-out policy to replace awards forfeited or payments
foregone. The Committee will seek to minimise buy-outs wherever
possible and will seek to ensure they are no more generous than,
and on substantially similar terms to, the original awards or
payments they are replacing.
• The maximum level of variable pay which may be granted to new
executive directors is the same as that applicable to existing
executive directors, excluding any buy-out arrangements. Non-
executive directors do not receive variable pay. Full details will be
disclosed in the next remuneration report following recruitment.
Discretion
The Committee has certain discretions that allow it, in appropriate
circumstances, to vary the remuneration provided to directors. For
example, under the LTIP rules and also the proposed RBS 2014
Employee Share Plan, the Committee can determine: whether a leaver
would fall into circumstances that would allow awards to vest following
leaving; to decide to vest earlier than the normal vesting date; and to vary
the pro-rating for time elapsed that would normally apply. Such
discretions would only be used in exceptional circumstances to ensure a
fair outcome for the director and for shareholders, taking into account the
circumstances of departure, the performance of the director and the need
to ensure an orderly transition. If discretion is applied in these
circumstances then it will be disclosed.
Further discretions include the ability to: treat awards in a range of ways
in the event of a change of control; change measures, targets, and adjust
awards if major events occur (for example transaction and capital
raisings); and make administrative changes to the plan rules.
In addition, the Committee retains discretion to apply clawback to awards
and also adjust the vesting outcome in relation to certain long-term
incentive awards through the application of a risk underpin. This allows
the Committee to reduce or lapse awards if it considers that the vesting
outcome does not reflect underlying financial results or if it considers that
the results have been achieved with excessive risk.
Consideration of employment conditions elsewhere in the company
The Committee retains oversight of remuneration policy for all employees
to ensure there is a fair and consistent approach throughout the
organisation. This includes the use of deferral and clawback to promote
effective risk management and alignment with shareholders. Further
details on our remuneration policy for all employees are set out on pages
88 and 89.
While employees are not directly consulted on setting directors’
remuneration, consultation on remuneration generally takes place with
our social partners, including representatives from UNITE. We continue
to pay our permanent employees in the UK at or above the “Living Wage”
benchmarks (National and London), and intend to apply for full
accreditation. An annual employee opinion survey takes place which
includes a number of questions on pay and culture. This includes
questions as to whether employees believe they are paid fairly for the
work they do, how remuneration at RBS compares to other financial
services organisations and how good a job the organisation is doing in
matching reward to performance.
Around 34,000 of our employees are shareholders through incentive and
all-employee share plans and have the ability to express their views
through voting on the Directors’ Remuneration Report.