Aviva 2009 Annual Report Download - page 101

99
Performance review
Aviva plc
Corporate responsibility
Directors’ remuneration report
Annual Report and Accounts 2009
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
Highlights
— The Remuneration Committee (the Committee) approved the Executive Directors’ (EDs) request to freeze their basic salaries for
2009 and to take a 10% reduction on the personal element of their annual bonus. In 2010, the EDs requested that their basic
salaries should not be subject to annual review and the Committee has endorsed this proposal.
— The demanding financial and non-financial targets set for the 2009 annual bonus were met in part during the year. The
combination of financial outcomes, along with those targets relating to employees, customers, and personal objectives mean
that the Group Chief Executive received a 2009 bonus of 74% of his maximum opportunity
(2008: 54%) .
— The Committee entered the 2010 reward period conscious of the challenging economic background and widespread comment
on over generous executive remuneration. The Committee believes Aviva’s 2009 business results are strong and that Aviva’s
remuneration practices already closely link pay to performance and also align with current governance guidelines. The
Committee has, however, continued to ensure prudent and proportionate reward outcomes.
— Andrea Moneta, Chief Executive Officer, Aviva Europe, Middle East and Africa was appointed as ED of Aviva plc on
29 September 2009. Information on his remuneration therefore appears in this report for the first time.
— On 1 January 2010, Mark Hodges was appointed Chief Executive Officer of the whole of Aviva’s UK Insurance operations,
which brought together the Life and General Insurance businesses. As a result of this significant expansion of his managerial
responsibilities, his basic salary was increased.
— On 26 January 2010, Philip Scott retired from the Board. He continues to be employed by the Group and will retire on 31 July
2010. Details of his leaving arrangements are disclosed in this report.
— Patrick Regan joined Aviva as the new Chief Financial Officer on 22 February 2010. Details of his joining arrangements and
ongoing annual remuneration are disclosed in this report.
Introduction
This report sets out the details of the remuneration policy for the Company’s directors, describes its implementation and discloses
the amounts paid in 2009. In addition to meeting statutory requirements, particularly the Companies Act 2006, Schedules 5 and 8,
the Committee has aimed to comply with best practice guidelines, including guidance issued by the Association of British Insurers
and the National Association of Pension Funds, in producing this report. Relevant sections of this report have been audited in
accordance with corporate governance best practice and legislation.
This report covers the following:
— The Committee’s objectives, membership and main activities in 2009;
— A review of Aviva’s remuneration policy and practice;
— Commentary on the alignment between remuneration, risk and Aviva’s business strategy and objectives;
— Details of the terms of EDs’ service contracts;
— Aviva’s share ownership policy with respect to EDs;
— Aviva’s policy on external board appointments;
— Aviva’s UK all employee share plans and share incentive plans;
— Aviva’s position against dilution limits;
— Remuneration of the Non Executive Directors (NEDs), and;
— Tables summarising the 2009 position on:
– Directors’ remuneration
– EDs’ pension arrangements
– Share incentive plans
– Directors’ interests in shares
The Committee’s objectives
The Committee is a committee of the Board. Its terms of reference are available from the Group Company Secretary and can be
found on the Company’s website www.aviva.com/terms-of-reference. The Committee’s key objectives are to:
— Establish a competitive remuneration package to attract, retain and motivate high quality leaders;
— Promote the achievement of both the Company’s annual plans and its strategic objectives by providing a remuneration package
that contains appropriately motivating targets that are within the Group’s risk appetite; and
— Align senior executives’ remuneration with the interests of shareholders and other stakeholders, including customers and
employees.
The Committee’s main responsibilities are to:
— Recommend to the Board the Group’s remuneration policy for the EDs and members of senior management, covering basic
salary, bonus, long-term incentives, retirement provisions, long-term wealth creation and other benefits;
— Strike an appropriate balance between (i) the fixed and variable components and (ii) the cash, equity and equity related
components of the total remuneration package;
— Ensure the remuneration package is congruent with, and provides the incentives to realise, short and long term goals;
— Review and determine the terms of employment and remuneration of the individual EDs, including any specific recruitment or
severance terms;
— Assess and, within the broad policy from time to time approved by the Board, determine the remuneration terms of the
Chairman of the Board;
Governance