FINANCIAL STATEMENTS
STRATEGIC REPORT
GOVERNANCE
2021 FIXED PAY (AUDITED) Base salaries David Richardson and Andy Parsons did not receive a salary increase in 2021 and their salaries remained at £597,000 and £415,000 respectively. The salaries of the wider employee population were reviewed and increases were awarded selectively within a budget of 0.5%. Benefits and pension Benefits include an executive allowance for which the executives can purchase their own benefits, for example private medical cover. The Company also provides permanent health insurance, life assurance and biennial health screening benefits. The Executive Directors each received a cash payment in lieu of the Company pension of 10% of salary, in line with the contribution rate offered to the majority of the wider workforce. Non-Executive Directors’ fees The fees for the Non-Executive Directors in 2021 are as detailed in the table below:
£’000
Fee
Board Chair
200
Basic fee
60 10 20 15
Additional fee for Senior Independent Director
Additional fee for Committee Chair, Risk and Audit Committees Additional fee for Committee Chair, all other Committees
The Board Chair receives a single, all-inclusive fee for the role.
2021 EXECUTIVE DIRECTORS’ SHORT TERM INCENTIVE PLAN (AUDITED) The 2021 bonus outturn was calculated on corporate financial performance measures, split across four measures, and moderated by non-financial performance measures. The bonus is distributed on personal performance based on objectives agreed with the Remuneration Committee each year. In line with our policy, 40% of the 2021 STIP award will be deferred into nil cost options (DSBP), subject to continued employment and clawback/ malus provisions.
Estimated number of shares deferred under DSBP 1
Bonus (balanced scorecard) 80% of maximum 80% of maximum
Cash STIP (£’000)
Deferred STIP (£’000)
David Richardson
£430 £299
£287 £199
331,589 230,502
Andy Parsons
1 The estimated number of shares deferred under the DSBP were determined using the average closing share price between 1 October 2021 and 31 December 2021, being £0.8642. The actual number of shares will be confirmed in the RNS at the time of grant and updated in next year’s Directors’ Remuneration Report. The performance outcome against the targets set for the 2021 STIP was as follows: Core bonus (balanced scorecard) Weighting Threshold (25%) On-target (50%) Maximum (100%) Actual % achieved Organic capital generation (pre management actions) 25% £21m £41m £62m £77m 25% Organic capital generation (post management actions) 25% £51m £101m £152m £183m 25% Cost base reduction 10% £106m £101m £96m £99m 7% IFRS new business profit 25% £181m £227m £272m £225m 12% IFRS operating profit 15% £188m £235m £282m £238m 8% Total 77% As explained earlier in the report, the strategic measures did not impact the financial outturn of 77%. The corporate outturn was moderated to 70.8% and adjusted to reflect personal achievement. The bonus metrics lead to a pool setting the overall cost with individual allocations then determined by reference to personal objectives, with individuals allocated up to 100% of their maximum. Both Executives were assessed to have outperformed against the on-target level, having successfully achieved the majority of their objectives, with their personal outturns moderated to 80% (+3% compared to the formulaic pool) for both the CEO and CFO. Risk consideration The Committee reviewed a comprehensive report from the Group 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 Chief Risk Officer that there were no material issues to consider around regulatory breaches, customer outcomes or litigation that would prevent payment of any STIP award or trigger any malus provisions. Taking into account the risk assessment and the wider context in the year, including the experience of customers, employees and shareholders, the Committee was satisfied that the STIP awards should be paid.
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