Aviva 2006 Annual Report Download - page 97

Overview Business review Governance Financial statements Other information
Aviva plc
Annual Report and Accounts 2006 93
Directors’ remuneration in 2006
This section of the report sets out the remuneration paid or payable to the directors in respect of the year to 31 December 2006.
The following sections headed “Directors’ Remuneration”, “Executive Directors’ Pension Arrangements”and “Share incentive plans”
along with their associated footnotes have been subject to audit.
Basic salary decisions
The Committee’s decisions on basic salary increases were made in February 2006 (and implemented from 1 April 2006) against a
backdrop of strong financial performance by the Group as reported in the Company’s 2005 Annual Report and Accounts.
In deciding basic salary increases, the Committee reviewed:
–FTSE 50 basic salaries for executive directors;
–Deloitte’s and Towers Perrin’s basic pay increase projections for 2006; and
–Individual performance in the role, relative to positioning within the FTSE 50 comparator group.
The 1 April 2006 pay review resulted in an increase of 10% to the aggregate basic salaries of the executive directors. This included increases for
Richard Harvey and Andrew Moss that brought their basic salaries into line with FTSE 50 peers and reflected Mr Moss’s increasing contribution
to the Company.The basic salaries of the executive directors are positioned between the median and upper quartile ranking for companies
with a market capitalisation over £16 billion. Given the executive directors’ contribution and experience the Committee considers this to be an
appropriate position. The basic salary increases for the Company’s employees in the UK averaged 4% in 2006 and ranged from 0% to 15%.
Bonus decisions
In December 2005, the Remuneration Committee agreed business targets based upon the Group’s annual business plan and each executive
director’s personal objectives. In August 2006 the financial assumptions used in the planning process were affirmed or amended by the
Committee and in December 2006 it used its discretion to determine how corporate activity and changes in executive responsibilities during
the year should be dealt with in deciding bonuses for 2006. In 2007, once the Group’s results for 2006 were known, the Committee
determined the executive directors’ bonus payments. The Group’s strong financial performance in 2006 resulted in the bonuses shown in
the directors’ remuneration table.
In 2006, customer and employee metrics wereintroduced to balance the financial objectives of the Annual Bonus Plan and to ensurethat
Aviva acted in the interests of all its stakeholders. As a result, 50% of the objectives werefinancial, 10% related to customer measures and
10% to employee morale and leadership. The final 30% of the bonus measures related to personal objectives. This split ensures that the
environmental, social and governance responsibilities of Aviva are encouraged and that the performance measures address the broad range
of Aviva’s objectives. The committee reviews the Annual Bonus Plan targets annually and has discretion to make changes.