STATEMENT OF THE CONSIDERATION OF EMPLOYMENT CONDITIONS ELSEWHERE IN THE COMPANY
The general principles of the Group’s remuneration policy are broadly applied throughout the Group and are designed to support recruitment, motivation and retention as well as to reward high performance in a framework of approved risk management.
We define core remuneration as base salary, annual bonus which is closely aligned to performance and other benefits e.g. pension. There is also the possibility to participate in the Performance Share Plan (PSP) for certain key employees.
In determining the remuneration arrangements for the executive directors, the Committee is presented with information for UK employees (as this is the location of the Group’s head office and where the executive directors are normally based) regarding base salary increases and anticipated spend under the Group’s annual variable pay plans. This includes relevant background information that allows the Committee to work with the management to ensure a consistency of approach throughout the company. The Committee also has oversight over the grant of all PSP and LGIM LTIP awards across the company.
Note - Further details on the above can be found in the Other information section of the annual report on remuneration.
The company does not specifically invite employees to comment on the directors’ remuneration policy. However, the annual employee survey includes general questions around pay and benefits.
STATEMENT OF CONSIDERATION OF SHAREHOLDER VIEWS
As set out in the Remuneration Committee chairman’s statement, over the course of 2013 and early 2014 the Committee sought the views of the Group’s major shareholders on the proposed changes to executive arrangements for 2014 onwards. The Committee would like to thank shareholders for the time they have given and appreciates the constructive debate.
It was clear from the discussions that there are a number of emerging models and differing views on executive remuneration structure from commentators and industry groups as well as shareholders. However, the Committee also acknowledges the general consensus around:
- providing greater clarity on the links between reward, strategy and performance (this includes the ability to both positively recognise performance while being mindful of quantum, as well as the ability to exercise malus or clawback in the event that this is warranted);
- ensuring structures are focused on the long term;
- that they are simple and clear; and
- that they include provisions to bind executives further to the business by increasing shareholding requirements.
The Committee has carefully considered all the comments received. As a result of shareholder views we have simplified the proposed structure and revised the quantum. We have also been mindful that we wished our final policy not only to align with shareholders but to complement our remuneration principles and be right for our business. We believe the final proposals put forward are reflective of the consensus feedback received. The new performance share plan includes financial metrics that link to strategy, we have tightened our leaver terms, strengthened our ability to exercise malus and clawback and increased shareholding guidelines. We believe the proposed remuneration policy aligns to our strategy and will help drive the company to the next stage in its development.