Considering risk.

The Bonus Steering Committee (BSC), the Chief Risk Officer (CRO) and the Group Director of Regulatory Risk and Compliance play key roles in the process of setting reward structures and evaluating whether achievement of objectives and any payment from plans have taken into account the overall risk profile of the Company.

Bonus Steering Committee

Reporting to the Remuneration Committee, the BSC has continued to review and ‘challenge’ all bespoke bonus schemes on a regular basis. They ensure they support business strategy while delivering within our risk appetite and highlight any factors that the Committee should consider. The BSC is trying to reduce the number and complexity of bonus plans and therefore always considers whether the general discretionary bonus plan would be more appropriate. Its Terms of Reference are reviewed and agreed by the Remuneration Committee and its members include the Group HR Director and Group Head of Reward and Executive Remuneration as well as the Group Remuneration Team, Business Heads of HR, the CRO and Group Director of Regulatory Risk and Compliance. Members of the businesses also attend as necessary to provide support or provide context for any remuneration proposals. Bonus schemes must be agreed by the BSC prior to submission to the Remuneration Committee which retains overall discretion and approval.

Role of the Chief Risk Officer and Group Director of Regulatory Risk and Compliance

The Remuneration Committee also works closely with the CRO and Group Director of Regulatory Risk and Compliance in relation to remuneration proposals. In particular, the Group Director of Regulatory Risk and Compliance reports to the Committee on an annual basis regarding payment of bonus schemes for the year and provides input into how those schemes operate for the following year. The Group Director of Regulatory Risk and Compliance confirms whether any risks have been taken outside of pre-agreed parameters that may lead the Committee to consider whether it should impact the payment of bonus schemes and confirms that all plans for the following year meet business objectives without encouraging undue risk. The CRO specifically looks at the overall risk profile of the Company and whether executive directors have achieved objectives within the Company’s accepted risk appetite. The CRO also reviews the executive directors’ objectives for the forthcoming year to ensure they are in line with the risk parameters.