Aviva 2013 Annual Report Download - page 88

Aviva plc
Annual report and accounts 2013
86
Directors’ remuneration report
Dear shareholder
On behalf of the Board, the Remuneration
Committee is pleased to present the Directors’
Remuneration Report (DRR) for the year ended
31 December 2013.
Responding to new requirements
Aviva’s 2013 DRR reflects the new reporting
requirements introduced by the Department for
Business, Innovation & Skills (BIS) regulations.
We have endeavoured to reflect the letter and
the spirit of those new requirements in this
report. We have drawn on the guidance
produced, notably by the GC100 and Investor
Group, in its preparation. In addition, we have
consulted widely with shareholders on the
contents of our new directors’ remuneration
policy and, following consideration of their
comments, we have made a number of
amendments in this final version.
We believe our DRR is a full disclosure of
our policies and practices in line with the
requirements of the new regulations. However,
this is the first year in which companies are
reporting in this form and we are aware that
new best practice will emerge. We will review
the results of this reporting round prior to our
next DRR and will aim to meet what will be
evolving good practice.
Paying for performance
We believe there is a clear link between the
performance of the Group, the value we add for
shareholders and the remuneration of our most
senior executives. Our remuneration policy and
practice reflects performance against the
Group’s main strategic priorities, which are:
 Improve financial performance – Total
remuneration is heavily weighted towards
pay dependent on outcomes against the
key performance indicators (KPIs) of our
business, notably cash flow, profit and
return on equity (ROE)
 Build capital and financial strength – The
expenditure on variable pay is very much
aligned to the measurement of the financial
strength of our business. The Remuneration
Committee assures itself that any bonus
proposed is justifiable based on the business
being sustainable over the long term
 Focus on core businesses – Through the
measurement of a number of key financial,
operational and longer-term return
measures, overall remuneration is closely
aligned to the achievement of the Group’s
strategic objectives
Our reward approach in practice
The application of our policies and practices
in the 2014 reward round has resulted in the
following outcomes for the Group Chief
Executive Officer (Group CEO), Mark Wilson:
 Basic pay – basic salary of £980,000 will
remain unchanged.
 Annual bonus – a 2013 bonus of 112.5%
of basic salary, equivalent to £1,102,500
was approved. The basis for this decision is
set out in the remuneration report. The
committee will continue to assure itself that
there is strong alignment between bonus
outcomes for our Group CEO and other
senior staff and shareholder experience
 LTIP – an LTIP grant in 2014 with a face
value of £2,940,000 which is 300% of
basic salary.
In approving these outcomes the Committee
also considered Aviva’s performance against
the “underpin” measures put in place for the
2012 and 2013 performance years.
Appointment of new CFO
The Board announced on 28 February 2014 the
appointment of Tom Stoddard as CFO. He will
join Aviva on 5 May 2014. Details of his
remuneration arrangements were included in
the announcement of his appointment and are
set out in this report.
Continuing the shareholder dialogue
We have met our major institutional
shareholders and the main proxy agencies
regularly in the course of 2013. We believe this
regular contact is proving beneficial for both
parties in increasing mutual understanding,
addressing and resolving issues of concern and
helping informed decision making. We remain
committed to continuing that dialogue.
Remuneration reward review
Our remuneration policy report reflects our
reward framework as we will apply it for senior
executive remuneration in 2014.
We regularly undertake strategic reviews
of our executive remuneration to ensure our
reward frameworks, policies and practices
remain fit for purpose, aligned with the wider
talent market and compliant with relevant
regulation. We have made no major changes this
year, but we will carry out such a review in 2014.
If that review leads to proposed changes to our
remuneration policy, we expect to consult with
shareholders in the latter half of 2014. Subject to
the outcomes of that consultation, we will aim
to put proposals to shareholders at our 2015
Annual General Meeting (AGM) for approval.
Usual practice would be that our
remuneration policy is put to a vote every
three years.
Finally, the Remuneration Committee would
ask shareholders to consider and approve the
policy report and annual remuneration report set
out in the following pages.
Patricia Cross
Chairman, Remuneration Committee