This section of the Annual Report and Accounts explains how, why and what we pay to the Directors of Standard Life plc. It will be presented for approval at the Annual General Meeting on 15 May 2009 and the Chairman of the Remuneration Committee will be available to answer any questions you may have.
Some parts of this report have been audited by PricewaterhouseCoopers LLP (PwC) and are marked as 'audited' for clarity.
Remuneration Committee members
The members of the Remuneration Committee are all independent non-executive Directors. The members are Crawford Gillies (Committee Chairman), Hugh Stevenson (who retired on 19 May 2008), Lord Blackwell, Baroness McDonagh and Colin Buchan (who was appointed on 19 May 2008).
Our role
The Remuneration Committee approves the remuneration policy and rewards for the executive Directors and senior executives, and considers and makes recommendations to the Board on the Chairman's fee. A copy of the Remuneration Committee’s terms of reference is available on our website at www.standardlife.com or on request from the Group Company Secretary and General Counsel. In January 2009, we reviewed the terms and modest changes were made.
External advisers
During the year the Remuneration Committee has continued to take advice from Hewitt New Bridge Street (HNBS), a trading name of Hewitt Associates Limited. This is part of the Hewitt group of companies, one of which is a customer of the Corporate Benefits business of the UK financial services division of Standard Life. Recognising this, the Nomination and Governance Committee and the Remuneration Committee considered and sought assurances as to the framework and operation of the internal control process, segregation of duties and remuneration structures within Hewitt/HNBS. As a result of this the Committee continues to view HNBS as independent. The Remuneration Committee receives information on comparative pay data from Towers Perrin. Where appropriate, it receives input from the Chairman, Group Chief Executive, Group Finance Director, Group HR Director and the Head of Group Reward, although this never relates to their own remuneration.
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What we did in 2008
The Remuneration Committee met eight times during 2008 and the standing items included:
- Keeping the remuneration policy under review. This year we have summarised this within a set of remuneration principles
- Reviewing executive Directors' salaries and the Chairman's fee
- Setting annual bonus targets for 2008 and determining bonuses to be paid for 2007
- Granting the 2008 long-term incentive plan (LTIP) awards and measuring the performance condition of the 2005 LTIP awards (we liaise with the Audit, Risk and Compliance Committee on this)
- Reviewing the terms of reference and effectiveness of the Committee
- Approving the 2007 Directors' remuneration report
Extra items included:
- Dealing with the resignation of Trevor Matthews
- Responding to the Financial Services Authority (FSA) on their questions about pay in the financial services sector – more detail on this below
- Redesigning the annual bonus plan for sub Board level executives so that it gives a greater weighting to personal contribution and Group financial performance
FSA's review of remuneration practices
Standard Life welcomed the FSA's approach to learn more about the remuneration practices in the financial services sector and responded to this request. The Chairman of the Remuneration Committee explained how Standard Life's policies compared against the 'good' and 'bad' practices identified by the FSA both by way of letter and conference call. In some aspects Standard Life's policy exceeds the FSA's view of 'good' practice, for example, by having individual annual bonus limits.
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