Aviva 2013 Annual Report Download - page 99

Strategic report Governance IFRS Financial statements Other information
Aviva plc
Annual report and accounts 2013
97
Directors’ remuneration report continued
The main driver of the Group CEO’s bonus is the performance of the Group against key financial targets, with further consideration
given to targets relating to employee engagement and customer satisfaction. Additionally, the individual performance of the CEO
is taken into account.
In considering the Group CEO’s 2013 bonus the committee took full account of the Group outcomes and noted in particular
the performance against financial targets. The performance on net capital returns, IFRS profit before tax, the MCEV value of new
business and total expenses were pleasing, with demanding targets having been achieved. The combined operating ratio
performance reflected some significant weather related events, notably two large flood events in our Canadian business.
Against a background of significant change and restructuring, the business required reductions in job numbers in 2013. We are
striving to minimise large scale restructuring going forward, but in 2013 these changes impacted our employees and our targeted
engagement scores were missed. We have set targets for 2014 which we believe will require significant efforts to achieve. This
element of the bonus did not produce any payment in 2013.
Aviva remains committed to providing a great service to our customers and it is disappointing that the progress we wanted to
make in 2013 on this measure was not achieved in full. Again, we have set 2014 targets that continue to challenge the business to
make progress in this area.
Mark Wilson’s personal performance was rated highly by the Board who particularly recognised the increase in the value of
new business, the major improvement in the capital and liquidity base, the substantive progress on building a first-class
management team and the restructuring of the cost base.
Based on the outcomes against the KPIs, and an assessment of Mr Wilson’s individual strategic performance, the Committee
approved a bonus of 75% of the maximum, equivalent to 112.5% of basic salary with a total value of £1,102,500. This is set out
in the annual bonus column of table 8.
Table 10: Individual strategic 2013 performance
Weighting (% of total
bonus opportunit
y
)
Executive director
Plan
(%)
Stretch
(%)
Actual
outcome
(%)
Mark Wilson (30%) 15 30 27.46
Patrick Regan (30%)1 15 30 0
Note
1 Patrick Regan tendered his resignation as CFO on 22 January 2014 and will leave the Board and the Group before the AGM. He will therefore receive no bonus in respect of 2013 performance.
One third of the bonus award for Mark Wilson will be delivered in cash, with two thirds being deferred into shares for three years.
As reported in the 2012 DRR, the Committee agreed with shareholders that it would consider additional “underpin” metrics
in 2012 and 2013 once bonuses had been calculated to assure themselves of continuing alignment between bonuses paid and
shareholder experience. Those metrics were measures of Economic Value Added, Economic Capital and TSR. The Committee
considered Aviva’s performance against those metrics for 2013 and was satisfied that the progress made did not require any
adjustment to bonus outcomes.
LTIP award vesting in respect of 2013
The LTIP value shown in the single total figure for remuneration is for the award expected to vest in March 2014. The only current
or former ED who will receive a vesting amount from this award is Trevor Matthews. The performance conditions for this award are
set out in table 11 below.
Table 11: LTIP performance conditions
Wei
g
htin
g
Threshold
(20% vests)
Maximum
(100% vests) Outcome
Vesting
(% of maximum)
Return on Equity (ROE) performance over 3 years 50% 33.0% 40.5% 37.6% 34.48%
Relative Total Shareholder Return (TSR) performance 50% Median
Upper quintile
and above Below median 0%