Remuneration principles

Our overall remuneration principles align to our strategy. The strategic objectives are to grow the business in several key areas: LGIM international expansion, retirement solutions, protection, direct investments and focus on the use of digital technology to enhance customer experience and deliver operational effectiveness. To deliver the growth requires a strong performance culture and our 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 remuneration principles aim to be clear and simple and strengthen the link of reward for exceptional performance, as well as emphasise the importance of teamwork.

The 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 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 (Malus and clawback will apply as appropriate).

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.

The following sets out a summary of our remuneration policy. This does not replace or override the Policy Report, which was approved by shareholders at our 2014 AGM. Full details of the approved Policy can be found on our website in the 2013 Annual Report and Accounts which includes the full remuneration policy table.

We have also set out our policies on recruitment, loss of office, termination and change of control later in this section for reference.






To help recruit and retain executive directors of the calibre required to develop, lead and deliver the business strategy.

The Committee sets base salaries taking into account:

  • The individual’s skills
  • Experience and performance
  • Scope of role
  • Pay and conditions elsewhere in the group
  • Overall business performance
  • Appropriate external market data in other FTSE 100 companies and a bespoke group of financial institutions

No maximum base salary is set, although increases for executive directors will normally be in line with the range of increases for other UK employees in the wider group.

For 2015, base salaries have been set as follows:

  • Group chief executive – £860,000
  • CFO – £575,000
  • CEO, LGIM – £575,000
  • CEO, LGAS – £560,000 (pro-rated for time)


Benefits are provided to executive directors to attract and retain the best talent for the business and to ensure that the total package is competitive in the market.

Benefits currently provided include a car or car allowance, private medical insurance, life assurance, Group Income Protection, and insured death in service arrangements. These are all in line with our general policy for other senior employees in the UK.

In line with our mobility policy, where an executive is required to re-locate additional benefits may be provided.

In line with other Legal & General employees, executive directors can choose to acquire Legal & General products, and are eligible to participate in the company’s voluntary benefits which they fund themselves. In addition, they are eligible to participate in the UK all-employee share plans on the same terms as other employees.

There is no maximum level for benefits as this is dependent on the individual’s circumstances and the cost to the company.

The maximum opportunity for participation in current all-employee share plans is in line with other employees and takes into account prevailing HMRC rules.


The policy aims to provide competitive post-retirement benefits and therefore recognise sustained contribution.

In line with other employees in the UK, executive directors currently participate in either a defined contribution pension plan, a defined benefit pension plan or receive a cash allowance in lieu of pension, or have some combination thereof.

Non-UK national executives may be permitted to participate in home-country pension plans where relevant.

Base salary is the only element of pensionable remuneration.

  • Group chief executive – Cash allowance of 15% of salary
  • CFO – Cash allowance of 15% of salary
  • CEO, LGIM – Cash allowance of 15% of salary. Part of this may be used to contribute into a US 401K pension plan. Also a member of a cash balance plan in the US
  • CEO, LGAS – Cash allowance of 22% of salary

Annual variable pay

Incentivise executive directors to achieve specific group and/or divisional, financial, strategic and personal predetermined goals, within the group’s risk appetite and taking into consideration the company’s culture and values, on an annual basis.

The deferred proportion of AVP into shares reinforces retention and enhances alignment with shareholders.

Performance is normally assessed over a one year period against an appropriate mix of group and/or Divisional financial performance targets as well as strategic (including customer and employee measures) and personal measures. Normally, up to 80% is based on financial targets.

AVP out-turns are determined by the Committee after the year end, taking into consideration performance against targets, the underlying performance of the business and individual performance.

50% of any AVP awarded is deferred in to shares with awards normally vesting after three years. Deferred shares accrue dividend equivalents.

Cash payments and deferred awards subject to clawback provisions. Deferred awards also subject to malus provisions.

For 2015 the maximum opportunity is as follows:

  • Group chief executive – 150% of salary
  • CFO – 150% of salary
  • CEO, LGIM – 175% of salary
  • CEO, LGAS – For 2015 – 75% of salary, pro-rated for time
The award opportunity at threshold performance is 0%, with up to 75% of base salary normally payable for target performance for the group chief executive and CFO and up to 105% of base salary payable for target performance for the CEO LGIM.

Performance share plan

Awards under the PSP are reflective of the Committee’s desire that the remuneration of executives should be weighted towards the delivery of sustainable returns to shareholders over the longer term.

They also enhance alignment with shareholders by focusing executives on the longer-term performance of the business.

Award of shares or options which are subject to a performance period of normally no less than three years. Subject to performance, awards are normally released in three equal tranches following the third, fourth and fifth anniversaries of the start of the performance period.

For awards to be made in 2015, performance will be measured against the following criteria:

The Remuneration Committee may reduce the final level of vesting dependent on the underlying performance of the group.

Awards are subject to malus and clawback provisions.

The maximum award opportunity under the PSP is 300% of salary.

For 2015, PSP awards will be made as follows:

  • Group chief executive – 250% of salary
  • CFO – 250% of salary
  • CEO, LGIM – 250% of salary
  • CEO, LGAS – For 2015 – no award
15% of the award normally vests for threshold performance increasing to 100% of the award for maximum performance.