Strategic Report | Governance | Financial Statements | 119
Operation (including framework used to assess performance)
Element
Purpose and link to strategy
Opportunity
Encourages employee share ownership and therefore shareholders.
A tax-advantaged share scheme which the Executive Directors are eligible to participate as well as all of the UK based employees. Free shares were awarded to the UK-based employees in 2016 and this scheme is not currently in operation. Each Executive Director must build up and maintain a shareholding in the Group equivalent to 200% of base salary. Until the guideline is met, Executive Directors are required to retain 50% of any LTIP or DSBP awards that vest (or are exercised), net of tax and NICs. For these purposes, deferred bonuses and shares under the LTIP which have vested but are subject to a holding period would count towards these guidelines. The post cessation guideline is that, with the lower of the holding on cessation or the full guideline applying for two years. The post cessation guideline only applies to awards granted after the last Remuneration Policy was approved in May 2023.
The scheme is subject to the limit and rules set by HMRC from time to time.
SHARE INCENTIVE PLAN (“SIP”)
Encourages Executive Directors to build a meaningful shareholding in the Group so as to further align interests with shareholders.
Not applicable.
SHAREHOLDING GUIDELINES
Non-Executive Directors
Element
Purpose and link to strategy
Operation (including framework used to assess performance)
Opportunity
To attract and retain a high- calibre Chair and Non-Executive Directors by offering market- competitive fee levels.
The Chair is paid a single fixed fee. The Non-Executive Directors are paid a basic fee, with additional fees paid to the Chairs of the main Board Committees and the Senior Independent Director and other specific roles including roles on subsidiary boards to reflect their extra responsibilities. In exceptional circumstances, additional fees may be paid where the normal time commitment of the Chair or a Non-Executive Director is significantly exceeded in any year. Fees are reviewed periodically by the Committee and CEO for the Chair, and by the Chair and Executive Directors for the Non-Executive Directors. Fees are set taking into consideration market levels amongst relevant insurance peers and other companies of equivalent size and complexity, the time commitment and responsibilities of the role, and to reflect the experience and expertise required. The Chair and the Non-Executive Directors are entitled to the reimbursement of reasonable business-related expenses (including any tax thereon). They may also receive limited travel or accommodation-related benefits (including any tax thereon) in connection with their role as a Director.
The Company’s Articles of Association place a limit on the aggregate fees of the Non-Executive Directors of £1m per annum. Any changes to fee levels are guided by the general increase for the broader employee population, but on occasions may need to recognise, for example, changes in responsibility and/or time commitments.
FEES
1 T he Committee has the authority to apply a malus adjustment to all, or a portion of, an outstanding STIP or LTIP award in specific circumstances. The Committee also has the authority to recover (clawback) all, or a portion of, amounts already paid in specific circumstances and within a defined time frame. These provisions apply to both the cash and deferred elements of the STIP.
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