During 2012, we reviewed our overall remuneration principles to ensure they were aligned to our strategy. The strategic objectives are to grow the business in several key areas: LGIM international expansion, Retirement Solutions, Protection, Digital Technology and Direct Investments. To deliver the growth requires a much stronger performance culture. The revised remuneration principles take this into consideration.
We also want to ensure we operate within the appropriate culture and therefore the principles support and reinforce customer outcomes, our values, behaviours and risk appetite. Our revised principles aim to be clear and simple, strengthen the link of reward for exceptional performance, as well as emphasise the importance of teamwork.
The revised principles of our Remuneration Policy are summarised below:
- The structure should be fair, simple and transparent, with targets objectively set and independently reviewed by the CRO.
- It should be reflective of external best practice. We should never be laggards and where appropriate we should take a leadership position.
- Overall remuneration should be competitively positioned around the mid-market range in relation to the FTSE 100 and consistent with executives’ experience. It should be sufficient to ensure that we can recruit and retain the best talent to support our strategy.
- Strong performance will be rewarded, but only if consistent with living and respecting Legal & General’s values and behaviours, ensuring that we deliver results within our risk parameters and that we have desired customer outcomes.
- Remuneration should have a balance of reward for short term (one year or less) delivery as well as long term (three plus years) delivery.
- Executives’ interests should be aligned to those of shareholders.
- Both at Board level and below, the reward structure should recognise teamwork and the proportion of an individual’s reward that is linked to overall Legal & General performance as opposed to business unit performance should increase with seniority. At executive level this reinforces the collective responsibility across divisions including LGIM.