Components of the single figure

Salary (audited)

Name

Annual base salary as at
1 January 2014

Annual base salary effective
1 March 2014

Total base salary
paid in 2014

Nigel Wilson

750,000

820,000

808,333

John Pollock

560,000

560,000

560,000

Mark Gregory

560,000

560,000

560,000

Mark Zinkula

560,000

560,000

560,000

Benefits (audited)

Benefits include the elements shown in the table below.

Executive director

Car and PMI
£’000

Dividends
£’000
– note i

Discount on SAYE
£’000
– note ii

Matching shares
£’000
– note iii

Relocation assistance
£’000
– note iv

Total benefits
£’000

(i)

Value of all dividends received in 2014 in respect of outstanding AVP awards made under the Share Bonus Plan (SBP), unvested matching shares under the Employee Share Plan (ESP) and Group Performance Shares under the ESP.

(ii)

Value of the discount at grant on SAYE options exercised in the year. The 2013 value originally disclosed was the gain on the SAYE vesting in the year, however we have revised the calculation approach upon the advice of our remuneration consultants. The numbers that appear in the column for 2013 are calculated based on the new approach. This change effected the benefits number for John Pollock only. The original figure for 2013 is also included in brackets for information.

(iii)

Value of matching shares under the ESP at date of purchase and Group Performance Shares awarded in the year valued at the date of award (does not include the amounts that vested).

(iv)

For Mark Zinkula, the relocation assistance includes allowances for schooling, housing and flights, associated tax resulting from his relocation package to the UK and the vesting of shares awarded to him on his appointment to CEO LGIM and prior to him joining the Board amounting to £418,000 for 2014 and £357,000 for 2013.

2014

 

 

 

 

 

 

Nigel Wilson

20

59

0

1

0

80

John Pollock

20

48

0

1

0

69

Mark Gregory

20

41

4

1

0

66

Mark Zinkula

30

51

0

0

759

840

2013

 

 

 

 

 

 

Nigel Wilson

20

45

0

1

0

66

John Pollock

20

41

4 / (12)

1

0

66

Mark Gregory

20

35

0

1

0

56

Mark Zinkula

20

43

0

0

721

784

Pension (audited)

For defined benefit arrangements, the value is based on the HMRC formula for assessing the annual and lifetime allowance limits (i.e. 20 times the post inflation benefit for defined benefit provisions or for the defined contribution pensions the employer defined contributions as set out below).

Nigel Wilson receives a cash allowance of 15% of base salary. Prior to April 2014, Mark Gregory received a pension contribution into a defined contribution plan up to the annual allowance. Any balance above the annual allowance was paid as a cash allowance. From 1 April 2014, Mark elected to opt out of the defined contribution plan and receives a cash allowance of 15% of base salary.

Mark Zinkula receives a cash contribution of 15% of base salary in lieu of joining the UK pension plan. He participates in the Legal & General America 401K plan and cash savings plan. All cash allowances are subject to normal payroll deductions of income tax and National Insurance

Executive director

Cash in lieu £000

Defined benefit £000

Defined contribution £000

Other/Overseas Pension £000

Total pension £000

Notes

(a)

Mark Zinkula contributes to a 401K plan and participates in a non contributory US cash balance plan the values of which are included in the Other Overseas Pension value figure shown in the table above.

2014

 

 

 

 

 

Nigel Wilson

121

0

0

0

121

John Pollock

123

27

0

0

150

Mark Gregory

80

5

5

0

90

Mark Zinkula (a)

84

0

0

4

88

2013

 

 

 

 

 

Nigel Wilson

113

0

0

0

113

John Pollock

112

(15)

0

0

97

Mark Gregory

56

(3)

24

0

77

Mark Zinkula (a)

76

0

0

4

80

Further pension information (audited)

Executive director

Age at 31 December 2014

Accrued DB pension at 31 Dec 2014 £000

Normal retirement date

Additional value of pension on early retirement

Nigel Wilson

58

0

Age 65

0

John Pollock

56

198

Age 60

0

Mark Gregory

51

40

Age 60 in DB plan and age 65 in DC plan

0

Mark Zinkula

47

0

Age 65

0

2014 annual variable pay (AVP) awards

This reflects the total AVP awards to be paid in 2015 based on performance in the year ended 31 December 2014. The value includes both the cash element and the portion deferred into shares (50% of the award).

The executive directors’ AVP awards in relation to performance during 2014 were measured against a basket of metrics and objectives. For Nigel Wilson and Mark Gregory, they were weighted between group financial objectives (80%) and other strategic personal objectives (20%). For Mark Zinkula and John Pollock they were weighted between group financial objectives (50%), divisional objectives (30%) and other strategic personal objectives (20%).

Group financial – Achievement

For 2014, AVP pay-outs as a percentage of the maximum were: Nigel Wilson 91%, John Pollock 85%, Mark Gregory 86%, Mark Zinkula 78%. The tables below illustrate performance against each of the measures.

 

Weightings (as % of total AVP opportunity)

Achieved as a % of maximum

 

Performance measure

Nigel Wilson

Mark Gregory

John Pollock

Mark Zinkula

Threshold

Maximum (100%)

Payout % of maximum

                  

Actual achievement

Operating cash

16%

16%

10%

10%

£1,101m

 

 

 

66%

 

£1,055m

£1,129m

 

Operating profit

16%

16%

10%

10%

£1,275m

 

 

94%

 

£1,150m

£1,280m

 

Net cash

20%

20%

12.5%

12.5%

£1,104m

 

 

99%

 

£1,035m

£1,105m

 

EPS

20%

20%

12.5%

12.5%

16.7p

 

 

95%

 

14.6p

16.75p

 

RoE

8%

8%

5%

5%

16.9%

 

100%

 

14.5%

16.6%

 

Divisional performance – Achievement

 

Weightings (as % of total AVP opportunity)

 

 

Division

John Pollock

Mark Zinkula

Key achievements in the year

Payout (% of maximum)

LGIM

 

30%

2014 represented a strong year for LGIM, with good progress made against the stretching performance targets set by the Committee at the beginning of the year.

Key highlights for 2014 include:

  • Profit before tax of £324m which was driven by strong revenue growth with continued investments in the business for the future
  • Revenues of £636m which were driven by strong growth in the solutions business and fee margin from the property and multi-asset business
Given the level of performance achieved by LGIM over the year against the performance targets for the year, the Committee considered it appropriate to payout 58% of this element of the bonus for Mark Zinkula.

17.5%

LGAS

30%

 

LGAS delivered exceptional financial performance during 2014, with strong performance against all of the stretching maximum targets set by the Committee.

Key highlights for 2014 include:

  • Profit before tax of £453m driven through positive investment variance and tight expense management; and
  • Net cash of £424m highlighting the continued strong business growth in most of the LGAS business
Based on the level of out-performance delivered by LGAS, the Committee considered it appropriate to payout 89% of this element of the bonus for John Pollock.

26.8%

Actual targets have not been disclosed due to commercial sensitivity.

Strategic personal performance – Achievement

Executive director

Weightings (as % of total AVP opportunity)

Key achievements in the year

Payout (% of maximum)

Nigel Wilson

20%

2014 has been another exceptional year for Nigel in his capacity as group Chief Executive. Nigel’s key achievements in the year include:

  • Continuing to build strong relationships with the group’s shareholders and external policy makers
  • Thought leadership on a wider range of business and economic issues to ensure that the business is well placed for the future
  • Strong succession planning and talent pipeline developments
  • Strong personal leadership – Nigel visited a significant number of business locations during 2014 and this was reflected in strong employee engagement and leadership indices across the group

18.3%

Mark Gregory

20%

Mark Gregory has had a strong year in his first full year as group CFO. Mark’s key achievements in the year include:

  • Building strong relationships with the group’s shareholders and analysts
  • Strong capital management, which has meant that the business is well placed for the implementation of Solvency II
  • Mark is on track with the development of the operating model for finance, creating a commercial team based culture in the function. The group finance leadership index increased significantly to 82% in 2014.

14.1%

John Pollock

20%

2014 represented a solid year for John Pollock in his final full year as a group executive director. John’s key achievements in the year include:

  • Increased customer satisfaction in LGAS demonstrated by increases in net promoter scores in critical areas
  • Execution of the digital transformation strategy, which has allowed the group to build both its people and technology capabilities
  • Significant change in LGAS was well managed and the culture of strong customer focus and delivery remained. Employee engagement levels were maintained at a level of 74%.

12.8%

Mark Zinkula

20%

2014 has been a key year for Mark Zinkula in positioning LGIM for the future. Mark’s achievements in the year include:

  • Excellent client engagement both internally and externally: LGIM significantly improved its support to the retirement business
  • Significant progress was made towards enabling LGIM to deliver enhanced customer service with greater operational efficiency through the business transformation programme
  • Mark sponsored the development of our future leaders, playing a key role in our strategic leadership programme.

14.5%

Actual targets for the divisional and strategic personal performance elements have not been disclosed due to commercial sensitivity.

The Committee reviewed a comprehensive report from the chief risk officer to ascertain that the executive directors’ objectives had been fulfilled within the risk appetite of the group. In addition, the Committee received feedback from the group Regulatory Risk and Compliance function and from the group legal counsel that there were no material issues to consider around regulatory breaches, customer outcomes or litigation that would prevent payment of any AVP award or trigger any malus. The Committee was satisfied that the AVP awards should be paid.

For 2013, AVP pay-outs as a percentage of the maximum were: Nigel Wilson 93%; John Pollock 93%; Mark Gregory 90%; and Mark Zinkula 86%.

Deferral policy

In line with our policy, 50% of all 2014 AVP awards were deferred for three years into nil cost options, subject to continued employment and clawback/malus provisions.

Executive director

Cash bonus

Deferred bonus

Total bonus*

*

Total bonus figures have been rounded to the nearest £100.

Nigel Wilson

£557,613

£557,613

£1,115,200

John Pollock

£356,411

£356,411

£712,800

Mark Gregory

£362,959

£362,959

£725,900

Mark Zinkula

£383,030

£383,030

£766,100

Performance share plan (PSP) awards

Details of how the 2011 PSP award vested

The 2011 PSP award vested in full in May 2014 as Legal and General’s TSR exceeded the 80th percentile of the FTSE 100 and the bespoke comparator group over the three-year performance period.

In line with policy, the Committee carefully reviewed the company’s underlying performance over the performance period. The review included considerations of partnerships entered into and maintained, cost management, capital management and risk. The Committee felt the company performance had been strong over the period and saw no reason not to allow the PSP to vest in accordance with the TSR out-turn.

The results are shown below:

Grant date

Performance period

Comparator group

Legal & General’s TSR

Comparator group median rank

Comparator group 80th percentile TSR performance

Legal & General’s notional rank

% of award vesting against comparator group

Percentage of total award vesting

27 April 2011

27 April 2011 to 26 April 2014

FTSE 100

106.2%

48/95

19.5/95

9.2

100%

100%

Bespoke comparator group

12/23

5.1/23

2.4

100%

The values included in the single figure table are calculated by multiplying the number of shares vesting on 9 May 2014 by the share price on 9 May 2014 of £2.214. For 2013 100% of the maximum PSP awards granted to the executives in 2010 vested.

LGIM LTIP Award

LGIM long term incentive plan (LGIM LTIP) awards

Between March 2010 and March 2012 Mark Zinkula was granted LGIM LTIP awards as part of his remuneration as CEO LGIMA and CEO LGIM. Following his appointment as an executive director, Mark receives no further awards under this plan. Under the LGIM LTIP annual awards of notional shares in LGIM are granted to participants. The vesting of these notional shares is subject to the satisfaction of the cumulative growth in PBT condition over the three-year performance period. The value of the notional LGIM shares is delivered in cash after the end of the three-year performance period. Actual targets have not been disclosed due to commercial sensitivity. The table below shows the outcome of his 2011 award, c. 61% vested in 2014.

Executive director

Grant date

% of base salary

No. of notional shares at award

Face value at award
£000

Notional share price at award
£

Value at date of vest (figure shown in single figure of remuneration)
£000

Notional share price at time of vest
£

Mark Zinkula

28 March 2011

120%

126,850

480

3.78

418

5.44

For 2013, 100% of the maximum LGIM LTIP awards granted to Mark Zinkula in 2010 vested.

The final payment due under this plan will be made in 2015 (the March 2012 award).