Aviva 2002 Annual Report Download - page 56

Cash bonus – Under this part of the plan, executive directors would receive a cash bonus of up to 50% of their basic salary if
appropriate performance conditions were met. Half of the bonus would be achieved if either the Group or business unit, as appropriate,
met their integration savings targets, and the other half would be achieved if the Group or business unit met their trading performance
targets during 2000 and 2001. The integration targets were met in full but some of the Group and business unit trading targets were
not fully achieved. As a consequence, the executive directors became eligible to receive cash bonuses which were paid in March 2002.
The amounts are included in “Salary and Bonuses” disclosed above on page 38.
In addition to focusing senior executives on the achievement of both trading performance and integration savings, the integration
incentive plan achieved the objective of retaining key employees throughout the integration period.
Norwich Union Restricted Share Plan – Norwich Union had a deferred bonus arrangement in which a small number of senior managers
participated. Awards were granted which vest after three years, subject to the attainment of a performance measure based on Total
Shareholder Return (TSR). To vest, Norwich Union’s ranking against the TSR of the FTSE 100 companies would have to be better than
median, when 25% of the awards would vest, rising to 100% of the awards vesting if the Company ranked 20th or above. This plan
lapsed in 2000 upon the merger of CGU and Norwich Union. However, a one-off arrangement based on “phantom shares” was
introduced at that time to replicate the plan but only in respect of the three-year performance period which commenced in 1999.
Based on the TSR over the performance period (subject to appropriate weighted adjustments being made to recognise that the
Company, for the purpose of the calculation, was Norwich Union plc up to 30 May 2000), the Company was ranked 43rd against
the FTSE 100 and therefore a cash award, based on 42.5% of the number of “phantom shares” awarded and the market value of an
ordinary share, was paid in March 2002. Mr Snowball was the only executive director to participate in this phantom plan as it was
not extended to those former Norwich Union executives who became directors of Aviva at the time of the merger. In respect of these
directors, the Committee reserved the right to approve a discretionary cash payment and, in this regard, the Committee awarded a cash
bonus to these directors based on a number of shares and the Company’s share price on 8 March 2002. The cash bonuses were paid in
March 2002 and are disclosed under “Salary and Bonuses” above on page 38.
Non-executive Directors
The Company’s articles of association provide that the total remuneration paid to directors shall be determined by the Board within
the limits set by shareholders. The current limit is £1 million per annum as approved by shareholders at last year’s Annual General
Meeting. Executive directors receive no fees for acting as directors.
The emoluments paid to the Chairman and Deputy Chairman take into account their duties and the amounts paid by competitors and
similar-sized companies.
Non-executive directors receive a basic annual fee in respect of their Board and Board committee duties, with a further fee being paid to
those directors (other than the Chairman and Deputy Chairman) who have the additional responsibility of chairing the meetings of the
Board committees. These fees are reviewed, but not necessarily increased, annually and are set by the Board to attract individuals with
the broad range of skills and experience appropriate for a major international company. In determining the level of non-executive
directors’ fees, including the Chairman’s and Deputy Chairman’s fees, the recommendation of executive directors is considered, which
takes into account the time commitment expended in preparing for and attending meetings as well as market practice. Other than the
Chairman who receives a car allowance, non-executive directors receive no benefits in addition to their fees nor do they participate in
any incentive or performance plans.
The emoluments paid to the non-executive directors during the year were:
2002 2001
£’000 £’000
Pehr Gyllenhammar 297 268
Guillermo de la Dehesa 68 57
Wim Dik 38 36
Sir Michael Partridge 38 36
George Paul 160 160
Derek Stevens 63 54
Dr Elizabeth Vallance 38 36
André Villeneuve 38 36
The fee disclosed for Pehr Gyllenhammar includes a car allowance. The fee for George Paul reflects his duties as Deputy Chairman,
which includes chairing the Remuneration Committee and acting as the senior non-executive director. The fee for Derek Stevens includes
an additional amount for acting as the Chairman of the Board’s Audit Committee and of the Aviva Staff Pension Scheme and that for
Guillermo de la Dehesa includes a fee for acting as the non-executive chairman of the Group’s operations in Spain. No non-executive
director accrued retirement benefits during the year.
The aggregate amount of emoluments, paid to directors in 2002 was £6.6 million (2001: £6.6 million).
Approved by the Board on 25 February 2003
George Paul
Chairman
Remuneration Committee
Directors’ remuneration report continued
42 Aviva plc
Annual report + accounts 2002