RBS 2013 Annual Report Download - page 90
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Other Remuneration Disclosures
88
Our Group-wide Remuneration Policy
The remuneration policy supports the business strategy and is designed to:
• Attract, retain, motivate and reward high-calibre employees to deliver long-term business performance within acceptable risk parameters; and
• Provide clear alignment between annual and long-term targets for individuals and strategic plans
The remuneration policy applies the same principles to all employees including Code Staff (1). The current key principles underpinning the remuneration
policy for all employees are set out below.
Element of pay Objective Operation
Base salary To attract and retain employees
by being competitive in the
specific market in which the
individual works.
Base salaries are reviewed annually and should reflect the talents, skills and
competencies that the individual brings to the business.
Role-based allowance To provide fixed pay that
reflects the skills and
experience required for, and the
responsibilities of, the role.
From 2014 onwards, allowances will be provided to certain employees in key roles and
reviewed at appropriate intervals, to reflect the skills, experience and competencies
required for the role. They will be delivered in cash and/or shares depending on the level
of the allowance and the seniority of the recipient. Shares will be subject to an
appropriate retention period, not less than six months.
Benefits
(including pension)
To provide a range of benefits
and give employees an
opportunity to provide for their
retirement.
In most jurisdictions, employee benefits or a cash equivalent are provided from a flexible
benefits account.
Annual incentives To support a culture where
employees recognise the
importance of serving
customers well and are
rewarded for superior
performance.
The annual incentive pool is based on a balanced scorecard of measures including
customer, financial, risk and people measures. Allocation from the pool depends on
divisional, functional and individual performance. Individual performance assessment is
supported by a structured performance management framework.
Guaranteed awards are only used in very limited circumstances in accordance with the
PRA Remuneration Code. Immediate cash awards are limited to a maximum of £2,000.
Under the deferral arrangements a significant proportion of annual incentive awards for
our more senior employees are deferred over a three year period. Deferred awards are
subject to clawback. For Code Staff, a minimum 50% of any annual incentive is
delivered in the form of RBS shares and subject to an additional six month retention
period post vesting. Under the deferral arrangements for the 2013 performance year, the
vast majority of any annual incentive award to Code Staff is delivered in shares.
In certain circumstances, formulaic short-term incentive arrangements are used to align
the objectives of employees with the strategy of the relevant division in which they work.
Long-term incentive
awards
To encourage the creation of
value over the long term and to
align further the rewards of the
participants with the returns to
shareholders.
RBS provides certain employees in senior roles with long-term incentive awards.
Awards are structured as performance-vesting shares. Vesting may occur after a three
year period and will typically be based partly on divisional or functional performance and
partly on performance across the business.
The amount of the award that vests may vary between 0-100% depending on the
performance achieved. All awards are subject to clawback and an additional six month
retention period applies to Code Staff post vesting.
Other share plans To offer employees in certain
jurisdictions the opportunity to
acquire RBS shares.
Employees in certain countries are eligible to contribute to share plans which are not
subject to performance conditions.
Note:
(1) The following groups of employees have been identified as meeting the PRA’s criteria for Code Staff:
- Members of the Board and Executive and Management Committees
- Staff performing a Significant Influence Function within RBS
- Employees who have approval authorities such that their decision-making could have a material impact on the income statement
- Employees who are responsible for a business or businesses whose performance could have a material impact on the income statement; and
- Key control function roles
The RBS Staff Dealing Rules and the conditions attaching to discretionary share-based awards prohibit the use of any personal hedging strategies to
lessen the impact of a reduction in value of such awards.