Aviva 2007 Annual Report Download - page 108
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Please find page 108 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
104
Governance
Directors’ remuneration report continued
Executive directors’ service contracts
Service contracts agreed with each executive director incorporate their terms and conditions of employment. Contracts
were reviewed during 2006 and new contracts issued, bringing them into line with good market practice, particularly
in respect of mitigation and phased payments. The aim is to strike a fair balance between the Company’s and the
employee’s interests taking into account good market practice. The key terms are as follows:
Provision Policy
Notice period
By the director – Six months.
By the Company – 12 months, rolling. No notice or payment in lieu to be paid where the Company
terminates for cause.
Termination payment – Pay in lieu of notice up to a maximum of 12 months’ basic salary. This may be increased
by a discretionary redundancy payment (where appropriate) but any such further
termination payment is capped at 12 months’ basic salary.
– Any amount is subject to phased payments and mitigation requirements.
Remuneration and benefits – As described in this report. The detailed operation of the annual bonus and LTIP plans
is at the Company’s discretion and in the case of the long-term savings plans at the
trustees’ discretion.
Expenses – Reimbursement reasonably incurred in accordance with their duties.
Holiday entitlement – 30 working days plus public holidays.
Sickness – In line with senior management terms, ie 100% basic salary for 52 weeks,
and 75% thereafter.
Non-compete – During employment and for six months after leaving.
Contract dates Director Date current contract commenced
Andrew Moss 1 January 2007
Philip Scott 15 November 2006
Tidjane Thiam 3 April 2006
Patrick Snowball 15 November 2006
Richard Harvey 15 November 2006
Share ownership requirements
A requirement was introduced in 2005 that the Group Chief Executive and any executive directors should build, over
a five year period, a shareholding in the Company equivalent to 175% of basic salary and 150% of basic salary
respectively. Shares held in compulsory bonus deferrals and performance shares held in unvested LTIPs are not taken
into account in applying this test.
As at 31 December 2007, based on that day’s closing share price of 673p, Mr Moss’s shareholding of 73,208 shares
represented 56% of his basic salary of £880,000 (his holding of 43,377 shares at 1 January 2007 representing 33.2%)
and Mr Scott’s shareholding of 291,106 shares represented 344% of his basic salary of £570,000 (his holding of
274,896 shares at 1 January 2007 representing 325%).
External Board appointments
Aviva recognises its senior executives can benefit from serving in a personal capacity as a non-executive director of
non-Aviva Group companies. Aviva therefore has a policy of allowing senior executives to serve as a non-executive
director of one external company, subject to approval by the Board, and to retain any board fees. Exceptionally,
a second non-executive directorship might be approved.
The only Executive Director who held such an appointment during 2007 was Philip Scott who was appointed to the
Board of Diageo plc on 17 October 2007.
All-employee share plans
Executive directors are eligible to participate in a number of HM Revenue & Customs (HMRC) approved all-employee
share plans on the same basis as other eligible employees.
These plans include a share element of the Aviva All-Employee Share Ownership Plan (AESOP). Under this plan, eligible
employees can receive up to a maximum of £3,000 per annum in shares based upon the profits of the Company’s UK
business. The shares are free of tax subject to a retention period. In addition, the partnership element of the AESOP,
which the Company also operates, allows participants to invest up to £125 per month out of their gross salary in the
Company’s shares. There is no matching to this investment by the Company.
The Aviva Savings Related Share Option Scheme allows eligible employees to acquire options over the Company’s shares
at a discount of up to 20% of their market value at the date of grant. In order to exercise these options, participants
must have saved through a three, five or seven-year HMRC approved savings contract, subject to a maximum savings
limit of £250 per month.
Details of holdings under these plans can be found on page 110.