Aviva 2009 Annual Report Download - page 105

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Performance review
Aviva plc Directors’ remuneration report continued
Corporate responsibility
Annual Report and Accounts 2009
Governance
Shareholder information
Financial statements IFRS
Financial statements MCEV
Other information
— OATTV Plan: This plan was introduced to emphasise the Group Chief Executive’s clear strategic aim for the Group to deliver
growth in EPS, with a target of doubling EPS in five years from a baseline at the end of December 2007. No other element of
executive remuneration was focused on EPS growth, and this bonus scheme directly aligns a portion of executive remuneration
to this key strategic goal.
— LTIP: The LTIP encourages a longer-term management focus on Return on Capital Employed (ROCE) and relative TSR. These
metrics measure how the Company is performing in both absolute and relative terms.
The Committee considers all these elements, plus pension and other benefits, as a whole. It looks to ensure that an appropriate
balance is maintained between them so that the need for both short-term success and long-term sustainable growth is recognised.
The Committee also ensures that the non-financial business measures and individual objectives reflect adequately the Company’s
environmental, social and governance responsibilities.
Constituent elements of reward as a percentage of total remuneration
Tables 3a and 3b below show how the Group’s remuneration policy translates in practice into the Group Chief Executive’s
remuneration package. The tables outline the contribution each element makes to overall compensation at both “Target” and
“Stretch” levels of performance. More than 50% of EDs’ total remuneration is performance related. For the remainder of EDs,
43% of total remuneration is paid in cash for on “Target” performance and 27% for “Stretch” performance (excluding ACAP
which EDs participate in to varied degrees, see Table 5).
Tables 3a and 3b: Breakdown of remuneration for the Group Chief Executive
Total remuneration elements Total remuneration elements
Target Target
Stretch Stretch
Salary
27%
Bonus
21%
OATTV
14%
LTIP
24%
ACAP
14%
Salary
15%
Bonus
22%
OATTV
30%
LTIP
26%
ACAP
7%
Cash Variable Shares
41% Cash 52%
7%
Cash Variable Shares
22% Cash 70%
8%
% 20 40 60 80 100 % 20 40 60 80 100
Table 3a shows the breakdown of the Group Chief Executive’s remuneration package into its main constituent elements. Table 3b
gives the proportions of fixed cash, variable cash and shares. For the purposes of Table 3b, fixed cash includes basic salary and the
discretionary ACAP payment. Variable cash is the one-third of bonus paid in cash annually. The share element includes the two-
thirds of the annual bonus deferred into shares, the OATTV Plan match and the LTIP.
— “Target” performance means a target ABP outcome (75% of basic salary), a 50% vesting of the LTIP (87.5% of basic salary)
and 1:1 match from the OATTV Plan (50% of basic salary).
— “Stretch” performance means a stretch ABP outcome (150% of basic salary), 100% vesting of the LTIP (175% of basic salary)
and a 2:1 match from the OATTV Plan (200% of basic salary).
The breakdown does not include any share price growth, the dividends on the ABP deferred shares or other benefits (eg cash car
allowance, value of Private Medical Insurance (PMI) and all employee share ownership plans).
Governance