Aviva 2007 Annual Report Download - page 107
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Please find page 107 of the 2007 Aviva annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Aviva plc
Annual Report and
Accounts 2007
103
Governance
Planned Future Changes
The Committee reviewed in 2007 the remuneration package of Aviva’s senior executives. This was against a background
of the Chief Executive, Andrew Moss’ clear strategic imperative for the Group to deliver “one Aviva, twice the value”.
“Twice the value” will be measured in terms of growth in the Company’s Earnings Per Share (EPS) with a target of
doubling EPS in five years. Management also has an incentive to achieve the goal more quickly. No current element of
executive remuneration is focused on EPS growth. The use of this measure will achieve direct alignment between a
portion of executive remuneration and the additional financial goals of the new strategy.
The remuneration review also showed that the potential rewards represented by Aviva’s long-term incentives fall short of
benchmark figures in the comparator groups for our executive directors.
As a result of the review, and subject to the outcome of consultation with institutional investors, we therefore to intend
to put to shareholders at the 2008 Annual General Meeting a proposal to introduce a matching element to a proportion
of the shares deferred under the ABP, with the following key features:
– The proportion of the deferred shares eligible for the matching award will be 100% for the CEO and 75% for the
Finance Director and Executive Committee. The matching element will be extended to the top 400 executives within
the Company with a reducing proportion of the deferred element matched depending on seniority.
– The maximum match will be two shares for each share eligible for matching. Vesting of the matching shares will
depend upon the Company’s EPS performance over a three year period as follows:-
Performance Level Annualised EPS Growth Matching Ratio
Below threshold Less than 10% pa Nil
Threshold 10% pa 0.1 for 1
Stretch 26% pa 2 for 1
– Matching will be on a straight-line basis for performance between threshold and stretch.
– Subject to shareholder approval, the first award of matching shares will be made in 2008, matching a proportion of
deferrals made under ABP in respect of 2007 performance.
The Committee has satisfied itself that following the introduction of the matching share element the total remuneration
of the CEO and Finance Director would be positioned consistent with our policy on FTSE 30 and FTSE 50 benchmarking.
Further details on the proposals are included in the notice of meeting for the 2008 Annual General Meeting.
Other than this proposal, we do not anticipate any further significant changes in remuneration in 2008.
Performance graph
The following graph compares the TSR performance of the Company over the past five years with the TSR of the
FTSE 100 Return Index. This index has been chosen because it is a recognised equity market index, of which Aviva
is a member.
The companies which compose the current LTIP comparator group for TSR purposes were chosen on the basis of product
and geographic match to Aviva and are listed above. The TSR graph for the comparator group has been plotted using
both the 19 companies (excluding Aviva) in the comparator group for pre-2005 grants and the 15 companies (excluding
Aviva) in the group for grants in 2005 to date.
0
50
100
December
2007
December
2006
December
2005
December
2003
December
2004
December
2002
Financial year-end
200
150
TSR (rebased to 100)
Aviva plc five-year TSR performance against the FTSE 100 Index and median of the two comparator groups
Aviva
FTSE 100
Comparator Group Median