GOVERNANCE REPORT
83
Personal performance
Strategic personal objective
85%
David Richardson
Key achievements
• Deliver a combination of actions over 2020, which transforms the business and delivers the actions required to improve the capital position of the Company • Engage with the Board on building the strategic direction of the Company and the key initiatives to support future growth • Ensure the organisation remains focused on key regulatory issues and continue to build closer relationships with the PRA • Maintain focus on customers during the business transformation • People leadership: increase engagement and gender diversity and promote and embed a healthy risk culture across the Company.
David has shown strong leadership in all areas, in particular: • Capital self-sufficiency has been achieved more than a year in advance of the original target • A strong foundation has been established on which the Company is able to pursue progressive growth plans over the next five years • David’s relationship with the regulators has continued to strengthen through the delivery of key initiatives and his collaborative approach • Targeted investment has been made to develop new propositions that will support growth in the medium term including an extended deferred proposition in the DB market, SLI and Destination Retirement • In an exceptionally difficult year, employee engagement has improved significantly as David has led a comprehensive engagement strategy with employees, which has included a significant focus on employee wellbeing • The gender diversity target to increase female employees at Global Grade 14+ by 5% has been achieved • A healthy risk culture continues to be embedded at all levels of the business.
Strategic personal objective
80%
Andy Parsons
Key achievements
• Deliver key actions during 2020 to transform the business by improving the capital position and addressing property risk • Together with the CEO, identify and implement the key initiatives to support future growth • Build internal profile and relationships; focus on leadership and engagement of the team and assess future talent and succession for key functions • Promote and embed a healthy risk culture through role modelling • Deliver transformation plan to deliver cost and process efficiencies.
Andy has shown strong leadership in all areas, in particular: • Capital self-sufficiency has been achieved more than a year in advance of the original target • A strong foundation has been established on which the Company is able to pursue progressive growth plans over the next five years • Invested significant time in fostering strong relationships with external stakeholders • Built his profile and relationships internally, proactively engaging with key stakeholders and has strengthened the talent in his key functions • Has delivered stretching cost and process efficiencies across all areas of the business.
VESTING OF LTIP AWARDS WITH A PERFORMANCE PERIOD ENDING IN 2020 (AUDITED) 2018 awards The 2018 LTIP award performance period ended on 31 December 2020. The award is forecast to vest at 19.75% on 29 March 2021 based on earnings per share growth and relative TSR performance over the three year period ending 31 December 2020.
Number of shares awarded
Dividend equivalent due
Number of shares due to vest 1
Value of shares due to vest 1
Date of grant
Type of award
% vesting 19.75%
David Richardson 29March 2018 Nil-cost options
520,958
£2,624
102,889
£54,233
1 The 2018 LTIP is due to vest on 29 March 2021. The value shown is based on the three month average share price to the year end, being £0.5271. This value will be trued up to reflect the actual share price at vesting in next year’s single total figure table. Summary of performance Measure Weighting Target Vesting
Adjusted earnings per share growth1
50%
Threshold: 6% p.a. 25% Between threshold and maximum Between 25% and 100% on a straight-line basis Maximum: 12% p.a. or above 100% Actual: 7.2% p.a. 39.5% 25% Between threshold and maximum Between 25% and 100% on a straight-line basis Maximum: upper quartile or above 100% Actual: Belowmedian 0% Threshold: median
Relative TSR vs FTSE 250
50%
Total
–
–
19.75%
1 Adjusted EPS is calculated as adjusted operating profit before tax divided by the weighted average number of shares in issue by the Group for the period.
Consistent with past practice, the adjustment to the interest and number of shares reduced the reinsurance and bank financing costs by £42m, thereby increasing operating profit to £272m and the number of shares to 933m, resulting in an adjusted EPS of 29.2 pence.
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