This report sets out the remuneration policy Remuneration elements
Directors’ for the Group’s senior executives. This policy
is consistent with the overall reward approach
The elements of remuneration at Hiscox are:
fixed reward (base salary, benefits and retirement
remuneration across the Group. The sections in this report benefits) and variable reward annual cash
report entitled ‘Annual cash incentives’, ‘Share
incentive schemes’, ‘Remuneration of
incentives (bonuses and share incentive schemes).
Executive Directors’ and ‘Pensions’ have Fixed reward
been audited by KPMG. The remainder Fixed reward is made up of base salary, benefits
of the report is unaudited. and retirement benefits.
Remuneration and Nomination Committee Base salary
The Remuneration and Nomination Committee Base salaries are subject to an annual review.
generally meets three times a year. The members
of the Committee for 2012 were Andrea Rosen The Remuneration and Nomination Committee
(Chairman), Richard Gillingwater, Daniel Healy, takes into account inflation rate movements
Ernst Jansen, Dr James King, Bob McMillan by country, market data provided by its own
and Gunnar Stokholm. consultants, Towers Watson, and the competitive
position of Hiscox salaries (based on the Towers
The Committee’s role in remuneration Watson salary reports), in order to set the overall
is to determine: salary budget.
the overall remuneration strategy, policy
and cost for the Group; Individual salaries are set by taking into account
the levels and make-up of remuneration all of the above as well as individual performance
for the Executive Directors; and and skills.
the award of sizeable bonuses to individuals
other than the Executive Directors. When approving Executive Directors’ salaries,
the Remuneration and Nomination Committee
The Committee’s role in nomination is outlined takes into account the size and scope of a
on page 37. role, rates of salary increases elsewhere in the
Group, individual and Group performance, and
No member of the committee has any personal competitive positioning of salaries as informed
financial interest (other than as a shareholder) by Towers Watson data and other publicly
or conflicts of interest arising from cross available reports.
directorships or day-to-day involvement in running
the business. No Director plays any part in any In 2012 Executive Directors’ salaries increased
discussion about his or her own remuneration. by an average of 5%, which was broadly in line
with increases seen elsewhere in the Group.
The Committee is provided with data and Between 2009 and 2011 there were no salary
has access to advice from Towers Watson increases for any Executive Directors, compared
and Deloitte, independent remuneration with around 3% per annum for the Group. For
consultants. The Company also uses the Towers the two years prior to 2009 the CEO received
Watson compensation benchmarking reports base salary increases below the average for
and other publicly available reports. the Group. We believe that it is important to
note that, during this period from 2007 to 2012,
Remuneration policy the CEO had explicitly requested that his salary
The remuneration philosophy is to provide increases be eliminated or kept to a limited
rewards that are competitive in every country amount in order to set an example for the
in which Hiscox operates and that are consistent Company of compensation restraint. The
with our overall reward principles: Committee viewed this as an admirable stance
competitive base pay; and supported the CEO’s position. However,
benefits which encourage health and we now believe that the impact over time of this
security but are not excessive and are position has resulted in a meaningful disparity
applied at all levels of the organisation; between the CEO’s actual salary and the
bonus scheme which enables employees appropriate level of base pay for the role.
to earn attractive bonuses for generating
good levels of return on equity; A number of important changes will be made to
encourage share ownership at all levels of the senior executive roles in Hiscox in 2013. As already
organisation and require it at senior levels; and announced, Robert Hiscox will retire as Executive
contracts and notice periods that are in line Chairman and a new Non Executive Chairman will
with acceptable market practice but limit be formally appointed. These changes will have an
severance payments made on termination. impact on the role of the Executive Directors and
therefore the Remuneration Committee has taken
As a business Hiscox is focused on generating the opportunity to review the base salaries of the
strong returns on equity and long-term CEO and CFO in the context of the consequential
shareholder returns, therefore our reward expansion of their leadership responsibilities.
structure is aligned with this.
In addition to the role changes described
The Remuneration and Nomination Committee above, the Committee was also aware that
regularly reviews our remuneration approach. the size and complexity of the Hiscox Group
Directors’ remuneration report Hiscox Ltd Report and Accounts 2012 39