Aviva 2009 Annual Report Download - page 110

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Aviva plc Directors’ remuneration report continued
Annual Report and Accounts 2009
OATTV Plan
The OATTV Plan aligns senior executives with the Group Chief Executive’s clear strategic aim of doubling EPS by the end of 2012.
The plan matches 100% of the deferred ABP shares for the Group Chief Executive (75% for other EDs). For the grant made in
2009 the vesting of these matched shares is dependent on the average annual growth in EPS during the three year performance
period, thus:
— Less than 12.5% growth pa Nil
— 12.5% growth pa 0.1 for 1
— 41.5% growth pa 2 for 1
Matching is on a straight-line basis for performance between 12.5% and 41.5%. The maximum match of two shares for each
deferred share is paid for delivering a doubling of EPS by the end of 2010. The threshold matching of 0.1 of a share for each share
deferred is equivalent to doubling EPS by 2014. The Committee reviews the performance conditions of this plan annually.
LTIP – Target Setting
The LTIP vests subject to the degree of achievement of two equally weighted performance measures, chosen to reflect
shareholders’ long-term interest, in absolute ROCE and relative TSR performance.
ROCE targets
ROCE targets are set annually within the context of the Company’s three-year business plan and are set on a Market Consistent
Embedded Value basis. Vesting depends upon performance over the three-year period against a target return. The Company’s
external auditor provides a formal opinion on the ROCE vesting calculation. The 2009 LTIP award ROCE targets are set out in
Table 7 below:
Table 7: 2009 LTIP ROCE Targets
ROCE over the three-year performance period Percentage of shares in award that vests based on achievement of ROCE targets
Less than 31.5% 0%
31.5% 15%
Between 31.5% and 37.5% Pro rata between 15% and 50% on a straight line basis
37.5% and above 50%
TSR Targets
Relative TSR determines the vesting of the other 50% of any LTIP award. The comparator group for the assessment of relative TSR
performance at the time of the 2009 grant comprised Aegon, Allianz, Axa, Fortis, Friends Provident, Generali, ING, Legal and
General, Lloyds Banking Group, Prudential, Royal Bank of Scotland, Royal and Sun Alliance, Standard Life and Zurich. HBOS had
been delisted by the time the 2009 grant was made and so was not included in the comparator group. Friends Provident was
delisted in November 2009.
TSR vesting operates as set out in Table 8 below:
Table 8: TSR vesting schedule for the 2009 award
TSR position over the three-year performance period Percentage of shares in award that vests based on achievement of TSR targets
Below Median 0%
Median 15%
Between median and upper quintile Pro rata between 15% and 50% on a straight line basis
Upper quintile and above 50%