Aviva 2005 Annual Report Download - page 72

Aviva plc 2005 Governance
Governance continued
Directors’ remuneration report continued
Directors’ remuneration in 2005
This section of the report (which has been subject to audit) sets out the remuneration paid or payable to the directors in respect of the
year to 31 December 2005. The remuneration payable to directors, who held office for any part of the financial year, including amounts
paid to them as directors of subsidiary undertakings, was as follows:
Basic salary/fees Bonuses1Benefits2Total
2005 2004 2005 2004 2005 2004 2005 2004
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Chairman
Pehr Gyllenhammar 345 300 ––20 20 365 320
Executive directors
Richard Harvey 790 752 1,028 355 104 96 1,922 1,203
Andrew Moss 470 283 589 200 20 10 1,079 493
Philip Scott 515 491 583 223 54 35 1,152 749
Patrick Snowball 503 456 693 218 104 21 1,300 695
Non-executive directors3
Guillermo de la Dehesa 77 67 ––––77 67
Wim Dik 59 42 ––––59 42
Mary Francis* 13 –––––13 –
Richard Karl Goeltz 63 28 ––––63 28
George Paul 160 160 ––4–164 160
Carole Piwnica 56 42 ––––56 42
Lord Sharman* 48 –––––48 –
Derek Stevens 91 77 ––––91 77
Elizabeth Vallance 59 42 ––––59 42
André Villeneuve 59 42 ––––59 42
Russell Walls 56 28 ––––56 28
Total emoluments of directors 3,364 2,810 2,893 996 306 182 6,563 3,988
*From date of appointment: Lord Sharman (14 January 2005) and Mary Francis (1 October 2005).
Notes
1. “Bonuses” include the value of shares granted under the free share part of the Aviva All-Employee Share Ownership Plan (maximum £3,000) and the total amounts
earned in respect of the 2005 performance under the Annual Bonus Plan (i.e. including the amounts deferred and granted in the form of shares). The Annual
Bonus Plan which was approved by shareholders in 2005, came into effect for the 2005 financial year replacing the Deferred Bonus Plan which operated in 2004.
The disclosure of the awards made under these plans differs. Under the Deferred Bonus Plan participants were encouraged to defer their cash bonuses (35% of salary
for “Target” performance) into shares by the Company providing matching shares on a 1 for 1 basis, thus effectively doubling the value of the bonus. The bonus
awarded was disclosed in the table showing directors’ remuneration and the matching shares were disclosed in the table showing the share awards. Under the Annual
Bonus Plan, a larger cash bonus is awarded (75% of salary at “Target” performance). Recipients are required to defer two thirds of their bonus into shares. However,
under the Annual Bonus Plan, the deferred shares are not matched. As explained at the time the Annual Bonus Plan was introduced, at “Target” performance the
Annual Bonus Plan would provide a bonus broadly 5% higher than that provided by the Deferred Bonus Plan when the value of the matching shares was taken into
account. However, to encourage and incentivise outperformance the Annual Bonus Plan provides the potential to pay out significantly higher bonuses at Stretch level
of outperformance. (see page 69 regarding the operation of the Annual Bonus Plan).
When calculating the level of bonus under the Annual Bonus Plan, 70% is based on financial measures and 30% is based on personal targets. The constitution of the
financial measures varies between directors. For example, in respect of the Group Chief Executive and the Group Finance Director the performance measures used are
those relating to the Group, whereas for the other executive directors bonuses are based partly on the Group’s performance and partly on the performance measures
relating to the business units for which the directors have responsibility. Performance measures are reviewed in order to determine the financial bonuses for all the
executive directors. For 2005, the performance measures for the Group included new business contribution, operating profit, combined operating ratio (COR), total
expenses and the return on capital employed. Overall performance against these measures in 2005 was better than the targets set. In addition to the Group and
business unit performance measures, the directors were set individual personal targets.
2. “Benefits”. All the executive directors received the benefit of private medical insurance and, along with the Chairman, a car allowance. The above disclosure also
includes, in respect of Richard Harvey, an amount relating to the cost incurred by the Company of insuring the life assurance and spouses’ benefits which, had he died
during the year, could not have been paid by the pension scheme as a result of the “earnings cap” and which would therefore have been met by the Company.
In respect of Mr Snowball the disclosure includes an allowance of £66,000 incurred as a result of him being required to relocate from Norwich to London following a
change in his responsibilities. The disclosure also includes a benefit relating to accompanied travel (Mr Harvey £10,000, Mr Snowball £22,000 and Mr Scott £32,000).
All the numbers disclosed include the tax charged on the benefits. No directors received an expense allowance during the year.
3. Non-executive directors. The benefit disclosed for Pehr Gyllenhammar refers to a car allowance. The fee for George Paul reflects his duties as deputy chairman,
chairman of the Remuneration Committee and for acting as the senior independent director. The fee for Derek Stevens includes an additional amount for serving as
the chairman of the Board’s Audit Committee and of the trustee of the Aviva Staff Pension Scheme. The fee for Guillermo de la Dehesa includes an amount for serving
as the non-executive chairman of the Group’s operations in Spain. No non-executive director accrued retirement benefits during the year.
4. No compensation payment for loss of office was made to any director, or former director, during the year.
5. For the purposes of the disclosure required by Schedule 6 to the Companies Act 1985 the total aggregate emoluments of the directors in respect of 2005 was
£6.6 million. (2004: £4.2 million).
6. Payments to former directors. Since his retirement as a director in 2003, Anthony Wyand has served as a consultant and as a director on the boards of some of the
Group’s European operations. Under this arrangement, a fee of £126,000 was paid to him in 2005. During the year, shares granted to certain former executive
directors under the Company’s incentive plans vested. Details of these awards were fully disclosed in the year of grant.
7. No executive director served on the board of an external company in a personal capacity during the year for which he was remunerated.
8. The total compensation paid during the year to key management personnel, being those having authority and responsibility for planning, directing and controlling the
activities of the Company, including the Company’s directors and non-executive directors (as required to be disclosed by International Accounting Standard 24) is set
out in note 53 on page 189.
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