RBS 2013 Annual Report Download - page 76
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Directors’ Remuneration Policy
74
Service contracts and policy on payments for loss of office – directors
Provision Policy Details
Payments for loss
of office
Payment in lieu of
notice only
If either party wishes to terminate an executive director’s service contract they are required to give 12
months’ notice to the other party.
The service contracts do not contain any pre-determined provisions for compensation on termination.
The service contracts give RBS the discretion to make a payment in lieu of notice, which is on base
salary only (with no payment in respect of any other benefits, including pension) and is released in
monthly instalments. During the period when instalments are being paid, the executive director must take
all reasonable steps to find alternative work and any remaining instalments will be reduced as
appropriate to offset income from any such work.
Treatment of
annual and long-
term incentives on
termination
Treatment in line with
the relevant plan rules
as approved by
shareholders
Existing annual incentive awards under the Deferral Plan will not normally lapse on termination, unless
termination is for Cause (as defined in the rules of the Deferral Plan). The awards will normally continue
to vest on the original vesting dates, subject to provisions regarding clawback, competitive activity and
detrimental activity.
Existing long-term incentive awards normally lapse on leaving unless the termination is for one of a
limited number of specified ‘good leaver’ reasons or the Committee exercises its discretion to prevent
lapsing. The Committee may exercise this discretion where it believes this is an appropriate outcome in
light of the contribution of the participant and shareholders’ interests. Where awards do not lapse on
termination, any vesting will normally take place on the original vesting dates, subject to the performance
conditions being met and pro-rating to reflect the proportion of the period that has elapsed at the date of
termination. Clawback provisions will also apply. These provisions will also apply to variable
remuneration delivered under the RBS 2014 Employee Share Plan, subject to shareholder approval at
the 2014 AGM.
Fixed share
allowances
Treatment in line with
the plan rules as
approved by
shareholders
Any shares already received under fixed share allowances will not be forfeited on termination but must
continue to be held for the original retention periods. In leaver circumstances executive directors will also
be eligible to receive a pro-rated fixed share allowance.
Other provisions Standard contractual
terms in line with
market practice
Contracts include standard clauses covering remuneration arrangements and discretionary incentive
plans (as set out in the main policy table above), reimbursement of reasonable out-of-pocket expenses
incurred in performance of duties, redundancy terms and sickness absence, the performance review
process, the disciplinary procedure and terms for dismissal in the event of personal underperformance or
breaches of RBS policies.
Other payments Discretionary The Committee retains the discretion to make payments (including but not limited to professional and
outplacement fees) to mitigate against legal claims, subject to any payments being made pursuant to a
settlement or release agreement.
Provisions for non-
executive directors
(NEDs) and the
Group Chairman
NEDs do not have service contracts or notice periods although they have letters of engagement reflecting
their responsibilities and time commitments. No compensation would be paid to any NED in the event of
termination of appointment.
Arrangements for the Chairman
Philip Hampton is entitled to receive a cash payment in lieu of notice of 12 months’ fees in the event that
his appointment is terminated as a result of the majority shareholder seeking to effect the termination of
his appointment, or if RBS terminates his appointment without good reason, or if his re-election is not
approved by shareholders in General Meeting resulting in the termination of his appointment.
In accordance with the provisions of the UK Corporate Governance Code, all directors of the company stand for annual election or re-election by
shareholders at the company’s Annual General Meetings.