Our executive remuneration at a glance

Our remuneration strategy and principles

Our remuneration strategy remains unchanged from that approved by shareholders in last year’s directors’ remuneration report:

To attract and retain the high calibre executives required to lead and develop the Group

Reward must be:

  • Valued by executives; and
  • Competitive, to engage executives who are in demand in the global talent market, and, if required, support hiring the best external talent.

To reward executives for delivering our business plans and generating sustainable growth and returns for shareholders

Reward must be:

  • Determined by delivery of the Group’s annual and longer-term business objectives;
  • Aligned with shareholder value creation; and
  • Consistent with the Group’s risk appetite so that the delivery of the business plan can be sustained.

Our remuneration architecture

At our 2013 AGM, shareholders supported the implementation of a revised remuneration architecture as illustrated below.

No structural changes are being proposed in 2014:

    Key elements1   Key features of our policy   How we implemented the policy

Key

  • Red colour: Fixed pay
  • Maroon background: Short-term variable pay
  • Grey background: Long-term variable pay
  • Black background: Share ownership guidelines

Notes

  1. CEO, JNL also shares in the JNL bonus pool; and CEO, M&G retains separate arrangements.
  2. The Chief Financial Officer received an increase of 5%.
  3. Progress against the share ownership guidelines is detailed in the ‘Statement of directors’ shareholdings’ section of the annual report on remuneration.
    Salary 2014  

Broadly aligned with pay review budgets for other employees.

 

Salary increases are in line with budgets for all employees:

  • Salary increases of 3% in 2013.
  • Salary increases of 3% in 20142.

Financial and personal objectives set with reference to business plans approved by the Board

  Cash
bonus
2014  

The maximum opportunity is up to 200% of salary.

A significant proportion, currently 40%, of bonus is deferred into shares for three years.

Deferred award is subject to malus provisions.

 

The Group Chief Executive has a maximum AIP opportunity of 200% of salary, with the maximum for the CFO of 175%. For other executives the maximum is 160%.

2013 bonuses were paid based on performance measures related to profit, cash flow and capital adequacy, as well as personal objectives.

  Deferred
bonus
2017

Stretching IFRS profit ranges set with reference to business plans approved by the Board.

TSR vesting schedule relative to insurance peers

  Prudential
Long Term
Incentive Plan
(‘PLTIP’)
2016  

Maximum award under the Plan is 550% of salary.

Aligned with our long-term business strategy and delivery of shareholder value, vesting is currently subject to:

  • Relative TSR; and
  • Group IFRS Profit; or
  • Business unit IFRS profit.

Measured over the three financial years from year of award.

 

Awards in 2013 and 2014 are below plan limits:

  • Group Chief Executive: 400% of salary
  • CEO JNL: 460% of salary
  • Other PLTIP awards were 250% of salary, or less.

For business unit CEOs awards vest based on TSR and business unit IFRS profit. For other executives awards are subject to TSR and Group IFRS profit.

The Committee keeps the performance conditions under review to ensure that future awards remain aligned with strategy.

    Share
ownership
guidelines
2018  

We have significant share ownership guidelines for all executives3 as follows:

  • 350% of salary for the Group Chief Executive; and
  • 200% of salary for other executive directors.

What 2013 performance means for executive directors’ pay

At Prudential, the remuneration packages are designed to ensure a strong alignment between pay and performance. As you can see from the charts in the Remuneration report, sustained growth across all of our key performance metrics has delivered substantial value to our shareholders. This has been reflected in both the annual bonuses paid and the release of long-term incentive awards, as set out in the annual report on remuneration.

In particular, the long-term incentives awarded to executive directors in 2011 had stretching performance conditions attached to vesting and were denominated in shares. The significant value generated for shareholders through share price growth and dividends paid over the last three years is, therefore, reflected in the value of the LTIP releases, together with the achievement of performance conditions, as illustrated in the chart below.

Value of LTIP releases

Chart showing value of LTIP releases (detailed in following table)

The value of these performance related elements of remuneration are added to the fixed packages provided to executive directors in the table below to calculate the 2013 ‘single figure’ of total remuneration:

Download as excel file

    Fixed pay   Performance related      
Executive director Role 2013
salary
Pension &
benefits
  2013
bonus
LTIP
release
2013
‘Single Figure’
  2012
‘Single Figure’

Note

  1. Jackie Hunt received a payment of £801,000 in respect of awards forfeited when leaving Standard Life, included in the above ‘Single Figure’.
John Foley Group Investment Director 628 275   1,004 2,114 4,021   1,895
Jackie Hunt1 CEO, UK 199 274   935 1,343 3,552   n/a
Michael McLintock CEO, M&G 371 185   2,225 3,704 6,485   5,517
Nic Nicandrou Chief Financial Officer 649 254   1,124 2,114 4,141   4,489
Barry Stowe CEO, PCA 679 796   1,037 2,425 4,937   5,482
Tidjane Thiam Group Chief Executive 1,030 381   2,056 5,189 8,656   9,533
Mike Wells CEO, JNL 691 78   3,415 7,549 11,733   7,273

Aligning 2014 pay to performance

In 2014, the Remuneration Committee granted salary increases to all executive directors in line with the budget for the wider work force. As stated above, no changes have been made to the remuneration architecture approved by shareholders at the 2013 AGM. Remuneration packages remain strongly aligned with performance over both the short and the long term.

The resultant remuneration packages for 2014 are set out in detail in the annual report on remuneration and summarised in the table below:

Download as excel file

        Maximum AIP (% salary)  
Executive director Role 2014 salary
increase
2014 salary Maximum
bonus
Bonus
deferred
LTI award
(% salary)

Notes

  1. The bonus opportunity for the CEO, M&G remains at the lower of 0.75 per cent of M&G’s IFRS profit or six times salary. As with 2013, he will receive awards under the Prudential LTIP and the M&G Executive LTIP, which are both included in the above LTI award.
  2. The CEO, JNL will also continue to have a 10 per cent share of the Jackson Senior Management Bonus Pool. 40 per cent of this is deferred in shares.
John Foley Group Investment Director 3% £648,000 160% 40% 250%
Jackie Hunt CEO, UK 3% £644,000 160% 40% 225%
Michael McLintock CEO, M&G1 3% £382,000 600% 40% 450%
Nic Nicandrou Chief Financial Officer 5% £682,000 175% 40% 250%
Barry Stowe CEO, PCA 3% HK$ 8,490,000 160% 40% 225%
Tidjane Thiam Group Chief Executive 3% £1,061,000 200% 40% 400%
Mike Wells CEO, JNL2 3% US$ 1,114,000 160% 40% 460%
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