GOVERNANCE REPORT
89
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 2020
Year ended 31 December 2019
% difference
107.5
Total personnel costs (£m)
108.1
-0.6%
0
Dividends paid (£m)
0
0%
Implementation of the remuneration policy in 2021 for Executive Directors (unaudited)
• David Richardson, CEO: £597,000 • Andy Parsons, CFO: £415,000
BASE SALARY
David Richardson and Andy Parsons’ salaries will not increase from 1 April 2021, compared to 0.35% for the wider workforce. The Executive Directors will receive a benefits allowance of £20,000 for 2021 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. Maximum STIP opportunity remains unchanged at 150% of salary for Executive Directors. 50% of maximumwill pay out for on-target performance. The core bonus for 2021 will be determined by a balanced scorecard of performance against financial and strategic measures, being: • 50% based on organic capital generation (25% pre management actions and 25% post management actions) • 25% based on new business profit measures The core bonus is modified based on personal performance during the year. While not expected in the normal course, the Committee retains the flexibility to pay up to 20% of the maximum bonus opportunity based on personal performance only. The Committee has chosen not to disclose in advance details of the STIP performance targets for the forthcoming year as these include items which the Committee considers commercially sensitive. An explanation of bonus payouts and performance achieved will be provided in next year’s Annual Report on Remuneration. 40% of any bonus earned will be deferred for three years into awards over shares under the Deferred Share Bonus Plan. Awards will be made over shares with a face value of 150% of salary in 2021 to both the CEO and CFO. The awards made in 2021 will be subject to the measures below, calculated over the three financial years to 31 December 2023, and will be subject to a further two year post-vesting holding period. Targets will be confirmed in next year’s Annual Report on Remuneration. • 15% based on adjusted operating profit • 10% based on management expenses. Measures will be as follows: • 37.5% based on organic capital generation including management actions with a solvency ratio underpin for this measure • 25% on relative TSR – subject to TSR performance relative to FTSE 250 companies, excluding investment trusts • 37.5% on adjusted EPS - calculated as adjusted operating profit before tax divided by the weighted average number of shares in issue by the Group for the period.
BENEFITS AND PENSIONS SHORT TERM INCENTIVE PLAN (“STIP”)
LONG TERM INCENTIVE PLAN (“LTIP”)
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