44 LV= Annual Report 2012
Directors’
Report on
Remuneration
Cath Keers
Chairman of the
Remuneration and Nomination Committee
Recent years have seen a marked change in Activities in 2012
remuneration practices across the financial services In 2012 the committee met four times. The matters
sector. External regulation has sought to strengthen addressed included:
the link between remuneration and the long-term
financial health and stability of firms in our industry. l Reviewing, and recommending to the board, the
Whilst detailed regulation on executive pay in the LTIP for the period 2012-14;
insurance sector has yet to emerge, the committee l Recommending the salary, bonus and LTIP
has sought to ensure that the way in which we awards for the group chief executive, the
reward the Society’s leadership is consistent with executive directors and certain key executives;
members’ interests and the long-term health of l Reviewing all incentive schemes in operation
the Society. across LV=, with particular reference to sales
incentives and ensuring the right behaviour
To that end, the Remuneration Committee carried towards customers at all times, including the
out a review during 2012 of our remuneration payments which may be earned under the
framework to ensure that it remains consistent 2010-12 LTIP;
with both members’ interests and our aspiration l Continuing to ensure that risk is properly
to be a “destination employer”. This included a assessed as part of the award of bonuses and
review of the structure of our variable pay schemes that adjustments are made to reflect any breach
in the context of evolving best practice among of agreed risk appetites;
FTSE 250 financial sector companies and others l Determining the impact of and associated
in the mutual sector. As a result, we have made actions required from relevant remuneration
changes to the Long Term Incentive Plan (LTIP) and regulation;
introduced a deferral mechanism into the annual l Reviewing LV=’s overall remuneration model
bonus for our most senior employees to ensure that to ensure that it continues to meet all of the
a sufficient portion of their pay is linked to longer- group’s employment objectives while taking
term performance. Details of these changes are account of changing external trends;
set out in this report. We also set priorities around l Assessing the impact of the upcoming changes
reviewing the levels of remuneration from the to the governance and reporting of executive pay
most junior to the most senior employees, and we in listed companies, and determining how the
continue to monitor this. Society will reflect these changes as a matter
of good practice in its own governance and
reporting; and
l Reviewing the effectiveness of the committee
and the continuing appropriateness of its terms
of reference.