STRATEGIC REPORT
FINANCIAL STATEMENTS
Governance
2022 EXECUTIVE DIRECTORS’ SHORT TERM INCENTIVE PLAN (AUDITED) The 2022 bonus outturn was calculated on corporate financial performance measures, split across three 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 2022 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
Cash STIP (£’000)
Deferred STIP (£’000)
Bonus (balanced scorecard)
David Richardson
75% of maximum 75% of maximum
£411 £286
£274 £190
400,073 277,883
Andy Parsons
1 The estimated number of shares deferred under the DSBP were determined using the average closing share price between 1 October 2022 and 31 December 2022, being £0.6850. 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 2022 STIP was as follows: Core bonus (balanced scorecard) Weighting Threshold (25%) On-target (50%) Maximum (100%) Actual % achieved IFRS new business profit 40% £210m £235m £260m £233m 19.2% IFRS operating profit 20% £215m £240m £265m £336m 20% Underlying organic capital generation 40% £20m £30m £50m £29m 19.2% Total 58.4% The financial component of the pool is subject to adjustment of up to +/- 15% of potential based on various pre-set non-financial performance measures. This is a change from 2021 where the non-financial performance measures could only decrease the pool by up to 15%. As explained earlier in the report, the non-financial performance measures increased the financial outturn of 58.4% by 8.4% to achieve a final corporate outturn of 66.7%. 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 each successfully achieved an extensive range of stretching objectives set at the beginning of the year, including exceeding expectations on several of them, with their personal outturns moderated to 75% (+8.3% 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.
Personal performance Strategic personal objective
75%
David Richardson
Key achievements
Enhance Just’s position in the DB market.
The considerable expansion and transformation of the DB proposition has enabled Just to fully participate in the market shift from Buy-in to Buy-out transactions. In addition, a competitive advantage has been established at the smaller end of the market which is supporting profitable growth. 2022 was a landmark year for the business through the achievement of £1bn invested in illiquid assets. This achievement was delivered a year ahead of the original target. Combined with the increased scale of deferred DB business, David has built a more viable business model with less reliance on LTMs. It will also allow the Group to target more ambitious growth for DB in the coming years. Two new hires into the executive team within 2022 has strengthened the team, signalling greater ambition on building talent and a performance driven culture within the Group. Constructive relationships maintained and reputation enhanced through strong delivery.
Increase the resilience and scalability of the business model.
Strengthen the talent within the executive team to set the business up to achieve its future ambitions.
Maintain effective regulatory relationships.
Strategic personal objective
75%
Andy Parsons
Key achievements
Achieve Group business plan targets (primarily measured through STIP targets) and identify cost effective opportunities to improve solvency and reduce risk.
Andy has delivered strongly against the business plan targets, with the target for IFRS operating profit significantly exceeded, despite the very volatile economic backdrop impacting the balance sheet, hedging, financial dynamics and products. BAU costs were within budget despite inflationary pressures and the capital ratio was close to 200% at the end of the year. Delivery on the finance transformation was very strong. Excellent progress was made on implementing an overarching financial controls framework, and a new treasury system. The new finance platform went live successfully in January 2023. The investment in this area will improve reliability of data and strengthen financial processes and controls across the business. Very positive feedback from analysts and investors on the investments and DB seminars in Q2 and Q4 with good progress made gaining support from analysts regarding their assessment of the business as an investment opportunity. Encouraging initial progress has been made with a number of potential new investors.
Deliver the finance division transformation programme to build efficiency and effectiveness.
Improve shareholder value through showcasing the value and growth potential in the business, engaging with analysts in particular to explain the transition to IFRS 17.
Maintain effective regulatory relationships.
Constructive relationships maintained with regulators.
Support development of business capabilities to strengthen and broaden DB de-risking market presence.
Business capabilities (investments, reinsurance, operations) enhanced to enable a stronger presence in the DB de-risking market, reducing reliance on LTMs.
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