RBS 2013 Annual Report Download - page 87
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Annual report on remuneration
85
Consideration of matters relating to directors’ remuneration
The role and responsibilities of the Committee
The Committee is responsible for setting the policy on remuneration and
overseeing its implementation. It reviews performance and makes
recommendations to the Board in respect of variable incentive pools and
the remuneration arrangements of the executive directors. No director is
involved in decisions regarding his or her own remuneration.
The Committee is also responsible for approving remuneration and
severance arrangements for members of the Group’s Executive and
Management Committees and overseeing arrangements for PRA ‘Code
Staff’. Details of the PRA Remuneration Code can be found at
www.bankofengland.co.uk/pra. A definition of RBS Code Staff along with
details of how risk is taken into account in the remuneration process is
provided on pages 88 and 89.
The terms of reference of the Group Performance and Remuneration
Committee are available on www.rbs.com and these are reviewed at
least annually by the Committee and approved by the Board.
Summary of the principal activity of the Committee during 2013
The Committee considered issues under the accountability review
process at every meeting held in 2013 and CRD IV implementation at the
majority of meetings held in 2013. Set out below is a summary of other
key activities considered by the Committee.
First quarter
• 2012 performance reviews and arrangements for members of the
Group’s Executive and Management Committees, APS in scope
employees, Code Staff and high earners. 2013 objectives for the
Group’s Executive and Management Committee members.
• Approval of Group and Divisional variable pay pools and Directors’
Remuneration Report.
• Outcomes of the annual performance evaluation of the Committee.
• Assessment of the performance to date of unvested LTIP awards and
performance targets for 2013 awards.
• Consideration of long-term incentive and deferral structure.
Second quarter
• Group Chief Executive departure terms and consideration of
appointment and remuneration terms for various senior positions.
• Presentations from Markets, Corporate and Ulster Bank on business
and strategic priorities and people plans.
• Review of the implementation of the remuneration policy.
• Review of the Committee’s agenda planner, Terms of Reference and
delegated authorities for individual remuneration governance.
• Terms of Reference for Group Sales and Service Incentives
Committee – which considers short term incentive design principles.
Third quarter
• Half year performance reviews for members of the Group’s Executive
and Management Committees.
• Presentation from Retail on business and strategic priorities and
people plans.
• Areas of focus for remuneration strategy.
• Purpose, Vision & Values and reward issues presentation.
• Consideration of the future shape of pay.
Fourth quarter
• 2013 preliminary variable pay pool discussions for Group and
Divisions.
• Remuneration Policy Statement for the PRA.
• Update on Group Internal Audit’s review of Code Staff processes.
• Share plan rules review update and AGM considerations.
• Update on shareholder consultation undertaken in December 2013
and planned for January 2014.
Performance evaluation process
A thorough internal review of the effectiveness of the Group Performance
and Remuneration Committee was conducted during 2013 involving
questionnaires and follow-up interviews. The Committee considered the
outcomes of the evaluation and is satisfied with the way in which the
evaluation has been conducted.
The review concluded that the Committee continued to operate
effectively. Themes that emerged from the evaluation included
recognition of the Committee workload and time spent outside of
meetings, the ongoing importance of independence, management
support and interaction with other Board Committees. Priorities that were
identified for 2014 included recruiting an additional member of the
Committee and considering how to streamline the agenda to maintain
rigorous scrutiny and challenge on key issues. The outcomes of the
evaluation have been reported to the Board.
Membership of the Group Performance and Remuneration
Committee
All members of the Committee are independent non-executive directors.
The Committee held nine scheduled meetings in 2013 and a further
seven unscheduled meetings.
Attended/
scheduled
Penny Hughes (Chair) 9/9
Sandy Crombie 9/9
Alison Davis 9/9
Art Ryan (1) 7/7
Note:
(1) Art Ryan stepped down from the Committee on 30 September 2013