Strategic Report
Financial Statements
Governance
121
RELATIVE IMPORTANCE OF SPEND ON PAY (UNAUDITED) The table below illustrates the relative importance of spend on pay compared to shareholder dividends paid.
Year ended 31 December 2024
Year ended 31 December 2023
% difference
Total personnel costs (£m)
149
127
17% 21%
Dividends paid (£m)
23
19
CONSIDERING THE POLICY (UNAUDITED) The Committee continues to consider the policy against a number of different factors, including maintaining a link with the broader remuneration framework to ensure consistency and common practice across the Group. In determining the overall levels of remuneration of the Executive Directors, the Committee also pays due regard to pay and conditions elsewhere in the organisation. In particular, the Committee takes an active role in approving the remuneration of senior executives, which covers eight roles in addition to the Executive Directors across the Group, as well as overseeing the remuneration of Solvency II staff. As set out in the UK Corporate Governance Code, the Policy has been viewed in the context of six factors: • Clarity – the policy has a clear objective: to recruit, retain and motivate high-calibre individuals to deliver long-term sustainable performance which benefits all stakeholders in a manner which remains well understood by participants. • Simplicity – the policy aligns with standard UK market practice, consisting of an annual bonus plan alongside a single LTIP, keeping remuneration structures simple and easy to communicate. • Risk – relevant individual and plan limits prevent excessive outcomes under the annual bonus or LTIP. Regular interaction with the Group Chief Risk Officer ensures relevant risk implications are understood when setting or assessing performance targets. Comprehensive clawback and malus provisions are in place across all incentive plans and the Committee retains the ability to exercise discretion to override formulaic outcomes which are considered inappropriate amidst wider Company performance and the broader stakeholder experience. • Predictability – the possible reward outcomes are quantified and reviewed at the outset of the performance period, with potential outcomes under different performance scenarios laid out in the ‘Illustrations of 2024 Remuneration Policy’ on page 103 of the 2023 annual report. • Proportionality – incentives only pay out if strong performance has been delivered by the Executive Directors against performance measures which have a direct link to the KPIs of the business • Alignment to culture – incentive structures incentivise and reward for strong performance in accordance with the Company’s expected behaviours and values. Shareholder views The Committee engaged with its largest shareholder and the main proxy advisory firms as part of the policy renewal process and were comfortable with the policy changes proposed in 2023. Employee As explained on page 84, Michelle Cracknell hosted a “take on board” session on remuneration matters with the wider workforce, which created an opportunity for colleagues to ask questions and provide feedback. The full Directors’ Remuneration Policy is set out in the 2022 Annual Report which can be found on our website.
IMPLEMENTATION OF THE REMUNERATION POLICY IN 2025 FOR DIRECTORS (UNAUDITED)
Element
Policy approach
BASE SALARY
David Richardson, CEO: £721,000 Mark Godson CFO £440,000
David Richardson’s and Mark Godson’s salary will increase by 3% and 10% respectively from 1 April 2025, compared to 3% awarded to most colleagues (with the salary increase budget available for the wider workforce eligible to be considered sitting at 4%).
NON-EXECUTIVE DIRECTORS FEES
Board Chair Basic fee Additional fee for Senior Independent Director Additional fee for Committee Chair, Risk and Audit Committees Additional fee for Committee Chair, all other Committees
£230,000 £65,000 £10,000 £20,000 £15,000
BENEFITS AND PENSIONS
The Executive Directors will receive a benefits allowance of £20,000 for 2025 and a Company pension contribution or cash in lieu of 10% of salary. All employees are enrolled into the Company Group Life Assurance and Group Income Protection schemes.
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