Directors’ Remuneration Report

I am very pleased to present the Directors’ Remuneration Report for the year to 31 December 2017. The report has been structured broadly in accordance with the remuneration disclosure regime that applies to Stock Exchange listed companies, to ensure that the Society’s remuneration policies and practices are presented in a clear and informative way.

The Board recognises the need to engage staff at all levels who are capable of delivering its strategy and thereby ensuring the long term prosperity of the Society. To this end it has developed remuneration principles clearly aligned with that strategy, which promote the appropriate behaviours and deliver rewards linked to the success of the Society and the personal performance of the individual.

The remuneration of the Executive Directors is based on the following principles:

Reward at The Exeter is a combination of base salary, variable pay and a market competitive benefits package. The Remuneration Policy is designed to support the Society’s values and business culture by balancing the need to recognise and reward high performance with the requirements to manage risk and ensure that it promotes employee behaviours which act in the best interests of its members. The Remuneration Committee considers the reward package of other Group employees when determining the Executive Directors’ remuneration for the year. This includes annual base salary reviews, benefits and bonus schemes.

Remuneration policy table


Type of Remuneration

Purpose and link to the strategy

How it operates

Maximum value potential

Performance metrics

Changes to policy in 2017

Executive Directors

 

Base salary

To recruit and retain individuals with skills and experience relevant to the role and appropriate to contribute to the success of the Society.

Base salaries take account of:

  • Skills and experience;
  • Salaries across the Society; and
  • By reference to the published information from comparable organisations in the financial services sector including data from the Towers Watson Financial Services Survey (excluding London).

    Salaries are usually reviewed annually with changes implemented from 1 April each year.

No specific cap on salaries.
In determining any increases, the rate of increase for other employees is considered.

Personal and corporate performance and the levels of increase throughout the Society are considered when deciding whether a salary increase should be awarded.

No changes.
Details of how the Society’s policy on base salaries has been implemented in 2017 are provided on page Executive Directors.

Benefits

To recruit and retain individuals with skills and experience relevant to the role and appropriate to contribute to the success of the Society.

The main benefit provided is the provision of Private Medical Insurance cover for Executive Directors and their immediate families.

No pre-determined maximum.

None.

No changes.

Annual Bonus (Executive Director Bonus Scheme)

Variable pay is designed to
enable managers and staff to share in the success of the Society and is payable upon achievement of a set of defined business and individual performance targets.

Corporate and individual performance targets are set by the Remuneration Committee at the start of each year and achievements reviewed after the year end.

The Committee can use its discretion to award or adjust bonuses and awards can be subject to claw-back if performance is misstated, in the event of misconduct or if there has been a major failure of management resulting in substantial damage to the business or reputation of the Exeter Friendly Society Group.

Reviewed and determined by the Committee annually.
The maximum bonus opportunity for Executive Directors is 200% of base salary.
40% of the annual bonus award for Executive Directors is deferred for two years post-award.

Performance is measured against key corporate performance indicators and individual performance.

No changes.
Sales bonus scheme implemented for 2017 based on the overall level of premium income against targets.
Details of how the Society’s variable pay policies have been implemented during 2017 are provided from page Executive Directors.

Pension

To recruit and retain individuals with skills and experience relevant to the role and appropriate to contribute to the success of the Society.

The Executive Directors are members of the Society’s defined contribution Group Personal Pension Plan, which is available to all employees.
Pension entitlements are not included as salary for the purpose of bonus calculations.

A maximum Society contribution of 15% of base salary for Executive Directors, except where they have contributed the maximum to their pension, in which case they were given the cash equivalent.

None.

No changes.
Details of the pension contributions made by the Society in 2017 are provided in the table on page Annual Report on remuneration.

Non-Executive Directors

 

Fees

To recruit and retain individuals with skills and experience relevant to the role and appropriate to contribute to the success of the Society without compromising their independence.

Annual fee for Chairman.

Annual fee for Non-Executive Directors. Additional fees paid to the Chairmen of the Board Committees.

Fees are reviewed periodically, with the Chairman’s fee reviewed by the Committee and the Non-Executive Directors’ fees reviewed by the Executive Directors to avoid any conflict.

No specific cap on fees. However, fee levels are benchmarked against market levels.

None.

No changes.
Details of the fees paid in 2017 are provided on page Annual Report on remuneration.