Remuneration Committee

The table below shows the members and attendees of the Remuneration Committee during 2014.

Committee Members, attendees and advice

Members: during 2014 the Remuneration Committee was made up of the following NEDs:

Name

Number of Remuneration Committee meetings during 2014

Rudy Markham

8 / 8

Stuart Popham

7 / 8

Lindsay Tomlinson

8 / 8

Richard Meddings

1 / 1

Carolyn Bradley

1 / 1

Mike Fairey (until May)

5 / 5

At the invitation of the Remuneration Committee, the group Chairman, John Stewart, attends Committee meetings. Where appropriate, the group chief executive, Nigel Wilson and the group HR director, group talent, reward and performance director and group chief risk officer also attend meetings. No person is present during any discussion relating to his or her own remuneration.

At the invitation of the Remuneration Committee, a representative from Deloitte LLP also attends Committee meetings. During 2014, Deloitte principally advised the Committee on external developments affecting remuneration as well as specific matters raised by the Remuneration Committee. Deloitte were appointed by the Committee. It is the view of the Committee that the Deloitte LLP engagement team that provide remuneration advice to the Committee are independent. Deloitte are signatories to the Remuneration Consultants’ Group Code of Conduct in relation to Executive Remuneration Consulting in the UK. The total fees paid to Deloitte in relation to Remuneration Committee work during 2014 were £108,000 (excluding VAT). While fee estimates are required for bespoke pieces of work, fees are generally charged based on time with hourly rates in line with the level of expertise and seniority of the adviser concerned. During the year, Deloitte also provided the Company with international tax advice, other consulting services and real estate advice.

Terms of reference

The Committee’s Terms of Reference are available on our website. The remit of the Committee includes the remuneration strategy and policy framework for the whole company as well as the executive directors.

The Committee particularly focuses on:

  • Determining the individual remuneration for executive directors and for other designated individuals or for those who are discharging a head of control function role
  • Undertaking direct oversight on the remuneration of other high earners in the group
  • Oversight of the remuneration of Code staff and employees in the control and oversight functions

Meetings in 2014

During 2014 the Committee met eight times and in addition had ongoing dialogue via email or telephone discussion.

Regular meetings were held to review and discuss AVP awards in relation to performance in 2014, base salary adjustments for 2015 and budgets for the company 2015 pay review. The Committee also met a number of times to discuss the review of the executive directors’ remuneration structure undertaken at the beginning of 2014.

Considering risk

The Reward Steering Committee (RSC) and the Group Regulatory Risk and Compliance Function make a key contribution to the process of designing reward structures and evaluating whether achievement of objectives and any payment from plans have taken into account the overall risk profile of the company.

Reward Steering Committee (RSC)

Reporting to the Remuneration Committee, the RSC helps set the framework within which our incentive arrangements are normally reviewed and implemented, with a view to supporting business strategy, whilst acting within the group’s risk appetite. The members of the RSC include group and business HR directors, reward and performance director, the group director of regulatory risk and compliance, the regulatory risk director and the chief compliance Officer, LGIM.

Where a business unit tables a proposal for consideration, the relevant business manager is required to attend the RSC meeting to explain the background and to answer all questions and challenges from the RSC.

Group regulatory risk and compliance function

The Remuneration Committee also works closely with the group regulatory risk and compliance function with respect to remuneration proposals.

In particular the Function reports to the Committee on an annual basis on whether any risks have been taken outside of pre-agreed parameters, there have been regulatory breaches, or they are aware of any other considerations that may lead the Committee to consider whether it should impact the payment of bonuses to staff (including in particular the executive directors and Code Staff).

The CRO also 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.

Engagement with shareholders

The Committee seeks to maintain an active and productive dialogue with investors on developments in the remuneration aspects of corporate governance generally and any changes to the company’s executive pay arrangements. During early 2014, the Remuneration Committee sought the views of the group’s major shareholders on the proposed changes to executive remuneration arrangements for 2014 onwards. Following the strong support received from shareholders at both individual meetings and at the AGM, the Committee considered it appropriate to enact the proposed changes to the policy during 2014. The Committee remains committed to open dialogue with shareholders and as such will engage with shareholders as appropriate in 2015.

Statement of voting at the annual general meeting (AGM) 2014

The table below shows the voting outcomes on the Directors’ Remuneration Policy and Directors’ Remuneration Report at the last AGM in May 2014.

Item

For %

Against

Abstain Number

2013 directors’ remuneration policy

97.62%

2.38%

4,154,433,976

101,243,790

21,675,250

2013 remuneration report

98.72%

1.28%

4,196,919,449

54,395,176

26,045,069