Our Remuneration Policy
Salary and Shorter Term Incentives
Salary Policy and Practice
Salary benchmarks are reviewed annually, taking account of information from independent sources on salary rates for comparable jobs in the finance sector and in other relevant major listed companies. Salaries are normally reviewed annually in May but can be reviewed at any time. There is no automatic or guaranteed annual salary increase.
The specific salaries in place at the end of 2007 for the Executive Directors were: Peter Cummings £660,000, Jo Dawson £600,000, Mike Ellis £630,000, Philip Gore-Randall £540,000, Phil Hodkinson £645,000, Andy Hornby £975,000, Colin Matthew £615,000 and Dan Watkins £500,000. The Chairman’s fee in force at the end of 2007 was £735,000.
Shorter Term Incentive Policy and Practice
In 2008 and 2008/09, there are two elements to the short term incentive plan.
The levels of payments under the core short term incentive plan are dependent on the extent to which participants achieve annual operating plan objectives. In 2008, for the Executive Directors, payment of target incentive requires the achievement of targets for Group operating expenses and EPS. The target and maximum incentive payments are, respectively, 90% and 135% of salary. The levels of payments under the extended short term incentive plan are dependent on the extent to which participants consistently achieve operating plan objectives. In 2008/09, for the Executive Directors, payment of target incentive requires the achievement of targets for Group operating expenses and EPS. The target and maximum incentive payments are, respectively, 45% and 67.5% of salary.
There are no core or extended short term incentive plans for the Chairman.
The core short term incentive plan outcomes for 2007 were dependent on delivering annual operating plans. Executive Directors received cash payments representing 46% of their basic salaries, this being lower than the target amount of 60% of their aggregate basic salaries. Each Executive Director has been given the opportunity to invest that cash in HBOS shares under the first of the long term incentive plans. An additional core short term incentive plan payment was made to Peter Cummings.
The extended short term incentive plan outcomes for 2006/07 were dependent on consistently delivering annual operating plans. Executive Directors received cash payments representing 26% of their basic salaries, this being slightly higher than the target amount of 25% of their aggregate basic salaries. Each Executive Director has been given the opportunity to invest that cash in HBOS shares under the first of the long term incentive plans.