Annual report on remuneration

The operation of the Committee

The members of the Committee during 2013, and the number of Remuneration Committee meetings they attended, are listed below. All are independent non-executive directors:

Download as excel file

Director Meetings attended
Lord Turnbull KCB CVO (Chairman) 5/5
Keki Dadiseth (until 1 May 2013) 0/2
Michael Garrett (until 31 August 2013) 3/3
Kai Nargolwala 5/5
Anthony Nightingale CMG SBS JB (from 1 June 2013) 3/3
Philip Remnant CBE ACA (from 1 January 2013) 5/5

In 2013, the Committee met five times. Key activities at each meeting are shown in the table below:

Meeting Key activities

Early March 2013

Approve the 2012 directors’ remuneration report; consider 2012 bonus awards for executive directors; consider vesting of the long-term incentive awards with a performance period ending on 31 December 2012; and approve 2013 long-term incentive awards, performance measures and Plan documentation.

Mid-March 2013

Confirm 2012 annual bonuses and the vesting of long-term incentive awards with a performance period ending on 31 December 2012, in light of audited financial results.

June 2013

Review the remuneration of the Group Leadership Team, senior risk staff and of employees with a remuneration opportunity over £1 million per annum; consider the cascade of the remuneration architecture to the senior management team; and review progress towards share ownership guidelines by the Chairman, executive directors and Group Executive Committee members.

September 2013

Monitor performance against long-term incentive targets, based on the half year results; review the dilution levels resulting from the Company’s share plans; consider the latest version of the external measures report; review total 2014 remuneration of executive directors for consultation with shareholders; and review draft remuneration policy report for consultation with shareholders.

December 2013

Review the level of participation in the Company’s all-employee share plans; approve executive directors’ 2014 salaries and incentive opportunities; consider the annual bonus and long-term incentive measures and targets to be used in 2014; review an initial draft of the 2013 directors’ remuneration report; review the Committee’s terms of reference; and approve the Committee’s 2014 work plan.

The Chairman and the Group Chief Executive attend meetings by invitation. The Committee also had the benefit of advice from:

Group Chief Risk Officer; Chief Financial Officer; Group Human Resources Director; and Director of Group Reward and Employee Relations. Individuals are never present when their own remuneration is discussed.

During 2013, Deloitte LLP were the independent advisor to the Committee. Deloitte were appointed by the Committee in 2011 following a competitive tender process. As part of this process, the Committee considered the services that Deloitte provided to Prudential and its competitors as well as other potential conflicts of interests. Deloitte is a member of the Remuneration Consultants’ Group and voluntarily operate under their code of conduct when providing advice on executive remuneration in the UK. Deloitte regularly meet with the Chairman of the Committee without management present. The Committee is comfortable that the Deloitte engagement partner and team, that provide remuneration advice to the Committee, do not have connections with Prudential that may impair their independence and objectivity. The total fees paid to Deloitte for the provision of independent advice to the Committee in 2013 were £72,000, charged on a time and materials basis. During 2013, Deloitte also gave Prudential management advice on remuneration, as well as providing guidance on Solvency II, taxation and other financial matters. In addition, management received external advice and data from a number of providers. This included market data and legal counsel. This is not considered to be material advice or services.

During the year, the Company has complied with the appropriate provisions of the UK Corporate Governance Code which are in force regarding directors’ remuneration.

Remuneration in respect of performance in 2013

Base salary

Executive directors’ salaries were reviewed in 2012, with changes effective from 1 January 2013. When the Committee took these decisions it considered the salary increases awarded to other employees, the performance and experience of each executive, and the relative size of each directors’ role, as well as the performance of the Group. Salary increases for the wider workforce vary across our business units, varying with local market conditions; in 2013 salary budgets increased between 3 per cent and 6 per cent for the wider workforce.

To provide context for this review, information was also drawn from the following market reference points:

Download as excel file

Director Role Benchmark(s) used to assess remuneration
Rob Devey Chief Executive, UK & Europe FTSE 40
International Insurance Companies
John Foley Chief Risk Officer FTSE 40
Michael McLintock Chief Executive, M&G McLagan UK Investment Management Survey
Nic Nicandrou Chief Financial Officer FTSE 40
International Insurance Companies
Barry Stowe Chief Executive, PCA Towers Watson Asian Insurance Survey
Tidjane Thiam Group Chief Executive FTSE 40
International Insurance Companies
Mike Wells President & CEO, JNL Towers Watson US Financial Services Survey
LOMA US Insurance Survey

After careful consideration the Committee decided to increase salaries by 3 per cent as set out below.

Download as excel file

Executive1 2012 salary 2013 salary (+3%)

Notes

  1. Jackie Hunt was appointed on 5 September 2013. Her salary on joining was £625,000.
Rob Devey £600,000 £618,000
John Foley £610,000 £628,300
Michael McLintock £360,000 £370,800
Nic Nicandrou £630,000 £648,900
Barry Stowe HK$ 8,000,000 HK$ 8,240,000
Tidjane Thiam £1,000,000 £1,030,000
Mike Wells US$1,050,000 US$1,081,500

Annual bonus

The directors’ remuneration policy section provides further details of the design of Prudential’s annual bonus plans.

2013 annual bonus opportunities

Executive directors’ bonus opportunities, the weighting of performance measures for 2013 and the proportion of annual bonuses deferred are set out below:

Download as excel file

      Weighting of measures
Financial measures  
Maximum AIP opportunity
(% of salary)
Deferral requirement
 
Group
 
Business unit
 
Personal objectives
 
Notes
  1. The maximum bonus opportunity shown for Rob Devey was his annual opportunity – this was pro-rated for the portion of 2013 for which he was employed by the Company (to 31 October). Please see the section on ‘Payment to past directors’ for details.
  2. Michael McLintock’s annual bonus opportunity in 2013 was the lower of 0.75 per cent of M&G’s IFRS profit and six times annual salary. M&G’s IFRS profit in 2013 was £395 million.
  3. In addition to the AIP, Mike Wells receives a 10 per cent share of the Jackson Senior Management Bonus Pool. This is determined by the financial performance of Jackson.
Rob Devey1 160% 40% of total bonus 20% 60% 20%
John Foley 160% 40% of total bonus 50% 50%
Jackie Hunt 160% 40% of total bonus 20% 60% 20%
Michael McLintock2 600% 40% of total bonus 20% 60% 20%
Nic Nicandrou 175% 40% of total bonus 80% 20%
Barry Stowe 160% 40% of total bonus 20% 60% 20%
Tidjane Thiam 200% 40% of total bonus 80% 20%
Mike Wells3 160% 40% of total bonus 80% 20%

2013 AIP performance measures and achievement

Financial performance

The financial performance measures set for 2013 are shown below. Prior to the start of the year the Committee set stretching performance ranges for each of these measures. The Committee reviewed the Group’s performance against these ranges at its meeting in February 2014; in all of our key performance metrics the Group’s 2013 results exceed those achieved in 2012. The Committee also reviewed a report from the Group Chief Risk Officer which assessed the achievement of these results in the context of adherence to the Group’s risk appetite and framework.

The performance measures, and the relative achievement compared to the performance range, is illustrated below. The Board believe that, due to the commercial sensitivity of these targets, disclosing them may damage the competitive position of the Group.

Measure Weighting1 Threshold
0% vesting
Midpoint
50% vesting
Maximum
100% vesting
Above maximum
100% vesting
  • Group: Red dot Group
  • PCA: Purple dot PCA
  • UKIO: Blue dot UKIO
  • M&G: Green dot M&G
Notes
  1. The weighting of each measure within the Group financial element of the bonus for all executives excluding the Chief Executive, M&G. Weightings for the business unit bonus element vary based on the strategy of each business.
  2. In addition, investment performance (measured over a one and three-year basis) forms 30 per cent of the Chief Executive, M&G’s annual bonus.
 
IFRS operating profit 30%     PCA: 94% UKIO: 101% M&G: 104% Group: 105%
IGD surplus 20%     Group: 99% PCA: 81% UKIO: 117%
Cash flow 15%     PCA: 95% UKIO: 80% Group: 120%
Net free surplus generated 15%       PCA: 101% Group: 120%
NBP EEV profit 10%     PCA: 99% Group: 105% UKIO: 110%
In-force EEV profit 10%     PCA: 95% UKIO: 92% Group: 115%
 
Personal performance

As set out in our remuneration policy, a proportion of the annual bonus for each executive director is based on the achievement of personal objectives. These objectives include the executive’s contribution to Group strategy as a member of the Board and specific goals related to their functional and/or business unit role. 2013 objectives were set for each executive prior to the start of the financial year, and performance against these objectives was assessed by the Committee at its meeting in February 2014.

2013 annual incentive plan payments

On the basis of the outstanding performance of the Group and business units, and the Committee’s assessment of each executive’s personal performance, the Committee determined the following 2013 AIP payments:

Download as excel file

Executive Role 2013 salary Maximum
2013 AIP
2013 AIP payment
(as a percentage
of maximum)
2013 AIP
payment
Notes
  1. Rob Devey received a bonus pro-rated for the portion of 2013 he was employed by the Company (to 31 October 2013). Please see the section on ‘Payments to past directors’ for details.
  2. Michael McLintock’s annual bonus opportunity in 2013 was the lower of 0.75 per cent of M&G’s IFRS profit and six times annual salary. M&G’s IFRS profit in 2013 was £395 million.
  3. In addition to the AIP Mike Wells also received 10 per cent of the JNL Senior Management Bonus Pool. His total bonus including his AIP and JNL Senior Management award is US$5,342,373.
Rob Devey1 Chief Executive, UK & Europe £618,000 160% 77.4% £637,776
John Foley Group Investment Director £628,300 160% 99.9% £1,004,023
Jackie Hunt Chief Executive, UK & Europe £625,000 160% 93.4% £934,375
Michael McLintock2 Chief Executive, M&G £370,800 600% 100.0% £2,224,800
Nic Nicandrou Chief Financial Officer £648,900 175% 99.0% £1,123,895
Barry Stowe Chief Executive, PCA HK$8,240,000 160% 95.4% HK$12,579,184
Tidjane Thiam Group Chief Executive £1,030,000 200% 99.8% £2,055,880
Mike Wells3 President & CEO, JNL US$1,081,500 160% 99.2% US$1,716,773

2013 Jackson bonus pool

In 2013 the Jackson bonus pool was determined by Jackson’s profitability, capital adequacy, remittances to Group, in-force experience and credit rating. Across all of these measures, Jackson delivered excellent performance and exceeded prior year performance. As a result of this performance, the Committee determined that Mike Wells’ share of the bonus pool would be US$3,625,600.

Long-term incentive plans with performance periods ending on 31 December 2013

Our long-term incentive plans have performance conditions which are based on the Group’s business priorities. When the Committee decided the proportion of these awards which should be released, actual financial results were reviewed against the performance targets set. The Committee also reviewed the underlying Company performance to ensure that these vesting levels were appropriate. The vesting levels are set out below.

The remuneration policy report contains further details of the design of Prudential’s long-term incentive plans. Information on long-term incentives awarded in 2013 is shown in the Annual report on remuneration.

Group Performance Share Plan (GPSP) and UK BUPP awards

In 2011, all executive directors were made awards under the GPSP. The line chart below compares Prudential’s TSR during the performance period (1 January 2011 to 31 December 2013) with that of the peer group index TSR. As a result of Prudential’s excellent TSR performance, which was in excess of 140 per cent of the index, these awards will be released in full:

Prudential TSR performance chart (vesting level 100%) - 219.5% at December 2013; Index x 120% (performance level required for awards to vest at 100%) - 188.0% at December 2013; Index x 110% (performance level required for awards to vest at 75%) - 172.3% at December 2013; Index (performance required for awards to vest at 25%) - 156.7% at December 2013
Note
  1. Companies in the peer group for the 2011 GPSP and UK BUPP awards are:
    Aegon, Allianz, Aviva, Axa, Generali, ING, Legal & General, Manulife, Old Mutual and Standard Life.

Asia BUPP

In 2011, Barry Stowe received an award under the Asia BUPP. This award vests based on the new business profit, IFRS profit and cash remittances of the Asia business. The chart below illustrates the achievement against performance ranges for the 2011 Asia award:

Measure Threshold Mid Maximum Overall 2013 vesting
 
1/3 cumulative new business profit       98.09%
1/3 cumulative IFRS profit      
1/3 cumulative cash remittances      
 

M&G Executive Long-Term Incentive Plan

The phantom share price at vesting for the 2011 M&G Executive Long-Term Incentive award is determined by the increase or decrease in M&G’s profitability over the three-year performance period, with adjustments for the investment performance of its funds. M&G performance and the resulting phantom share price for Michael McLintock is shown below:

Download as excel file

Award Three-year profit growth of M&G Three-year investment performance 2013 phantom share price
2011 M&G Executive LTIP 61% Second quartile £2.30

Jackson awards

In 2010, Mike Wells was granted awards under two legacy long-term incentive plans offered to senior staff in Jackson; these awards had a four-year performance period. In 2011, following his appointment to the Prudential Board, he received awards under the GPSP and Jackson BUPP. These awards had a three-year performance period. Mike Wells’ 2010 JNL awards (the JNL Long-Term Incentive Plan and 2010 JNL US Performance Share Plan) will be released in 2014, alongside his 2011 GPSP and BUPP awards. The vesting of these awards are set out below:

Jackson BUPP

Mike Wells’ 2011 Jackson BUPP award vests subject to Shareholder Capital Value (SCV) growth over the performance period. As a result of excellent SCV growth of 17.7 per cent per annum over the performance period this award will vest in full:

Percentage of award that vests 30% 75% 100% Actual performance
            17.7%
Compound annual growth in SCV over three years 0% 5% 8% 10% 12% 15%
Legacy below Board long-term incentive plans

On 31 December 2013, the performance periods for the 2010 awards under the JNL long-term incentive plans (which began on 1 January 2010) came to an end. Over the four-year period the shareholder value of the US business grew by 14.33 per cent per annum (on a compound basis) and by 70.848 per cent over the performance period. This resulted in vesting of 121.16 per cent of Mike Wells’ 2010 JNL US Performance Share Plan award and of 70.848 per cent of his 2010 cash-settled JNL Long-Term Incentive Plan award. These were the last awards which Mike Wells received under these plans.

Pension entitlements

Pension provisions in 2013 were:

Download as excel file

Executive 2013 pension arrangement Life assurance provision
Barry Stowe Pension supplement in lieu of pension of 25 per cent of salary and a HK$30,000 payment to the Hong Kong Mandatory Provident Fund. Four times salary.
Mike Wells

Matching contributions of 6 per cent of base salary capped at US$255,000.

An annual profit sharing contribution equivalent to 6 per cent of pensionable salary was made in 2013.

Two times salary.
John Foley Contributions into the defined contribution pension scheme and a cash supplement with a total value of 25 per cent of salary. Up to four times salary plus a dependants’ pension.
All other UK-based executives Pension supplement in lieu of pension of 25 per cent of salary. Up to four times salary plus a dependants’ pension.

Michael McLintock previously participated in a contributory defined benefit scheme which was open at the time he joined the Company. The scheme provided a target pension of two-thirds of final pensionable earnings on retirement for an employee with 30 years or more potential service who remains in service to normal retirement date. Mr McLintock is now a deferred member of the scheme. Mr McLintock’s normal retirement date under the scheme is age 60. Should Mr McLintock claim his deferred pension before this age it will be subject to an actuarial reduction. There are no additional benefits payable should Mr McLintock retire early.

At the end of 2013 the transfer value of this entitlement was £1,089,263. This equates to an annual pension of £57,378, which will increase broadly in line with inflation in the period before becoming due for payment on Mr McLintock’s retirement.

Prior to joining the Board, John Foley participated in a defined benefit scheme. There are no entitlements under this scheme in respect of his service as an executive director.

Table of 2013 executive director total remuneration ‘The Single Figure’

Download as excel file

          Of which:      
£000 2013 salary 2013 taxable benefits* 2013 pension benefits 2013 total bonus Amount paid in cash Amount deferred into Prudential shares 2013 LTIP releases Other payments§ Total 2013 remuneration ‘The Single Figure’
  • * Benefits include (where provided) the cost of providing the use of a car and driver, medical insurance, security arrangements and relocation/expatriate benefits.
  • 2013 pension benefits include cash supplements for pension purposes, and contributions into DC schemes as outlined above.
  • In line with the regulations, the estimated value of LTIP releases has been calculated based on the average share price over the last three months of 2013. The actual value of LTIPs, based on the share price on the date awards are released, will be shown in the 2014 report.
  • § Other payments comprises of pay in lieu of salary and pension supplement for Rob Devey over the period 1 November 2013 to 31 December 2013 and a cash payment to Jackie Hunt in respect of shares forfeited when leaving Standard Life, the net value of which was used to purchase Prudential shares. Further information is outlined below. There were no malus adjustments in 2013.
  • Each remuneration element is rounded to the nearest £1,000 and totals are the sum of these rounded figures. Total remuneration is calculated using the methodology prescribed by Schedule 8 of the Companies Act.

Notes

  1. Rob Devey left the Company on 31 October 2013.
  2. Jackie Hunt joined the Company on 5 September 2013. Her benefits included a one-off relocation payment of £188,679 to cover additional expenses such as stamp duty and estate agent fees.
  3. Barry Stowe’s benefits relate primarily to his expatriate status, including costs of £224,612 for housing, £35,230 for children’s education, £70,452 for home leave and a £252,142 Executive Director Location Allowance.
  4. Mike Wells’ bonus figure excludes a contribution of £9,779 from a profit sharing plan which has been made into a 401(k) retirement plan. This is included under 2013 pension benefits.
Rob Devey1 515 77 129 638 383 255 1,996 129 3,484
John Foley 628 118 157 1,004 602 402 2,114 4,021
Jackie Hunt2 199 224 50 935 561 374 1,343 801 3,552
Michael McLintock 371 92 93 2,225 1,335 890 3,704 6,485
Nic Nicandrou 649 92 162 1,124 674 450 2,114 4,141
Barry Stowe3 679 624 172 1,037 622 415 2,425 4,937
Tidjane Thiam 1,030 123 258 2,056 1,234 822 5,189 8,656
Mike Wells4 691 58 20 3,415 2,049 1,366 7,549 11,733
Total 4,762 1,408 1,041 12,434 7,460 4,974 26,434 930 47,009

Table of 2012 executive director total remuneration ‘The Single Figure’

Download as excel file

          Of which:      
£000 2012 salary 2012 benefits* 2012 pension benefits Total 2012 bonus Amount paid in cash Amount deferred into Prudential shares 2012 LTIP releases Other payments Total 2012 remuneration ‘The Single Figure’§
  • * The value of benefits is the cost to the Company of providing core and additional benefits. The value of some benefits included in the 2012 benefits calculation (for example life assurance) have not been included in 2013 taxable benefits information as they are not subject to UK tax. The 2012 number has not been restated from the 2012 report as the differences are not considered significant.
  • 2012 pension benefits includes amounts paid as cash supplements, employers contributions into DC schemes and the 2012 increase in transfer value in Michael McLintock’s DB pension, as set out in the 2012 directors’ remuneration report. In the 2012 report these amounts were shown in two columns: ‘Cash supplements for pension purposes’ and ‘2012 employers pension contributions.’
  • The long-term incentive values shown above are higher than those reported in the 2012 Annual Report. This is because there was significant share price growth between the final three months of 2012 (used to estimate the value of the awards, in line with the regulations) and the price on 15 March 2013 and 2 April 2013, when long-term awards were released. The estimated share price was £8.67 but the actual price on release was £11.54 (15 March 2013) and £10.83 (2 April 2013). Dividend equivalent shares were also added to GPSP and BUPP awards on release.
  • § Each remuneration element is rounded to the nearest £1,000 and totals are the sum of these rounded figures. Total remuneration is calculated using the methodology prescribed by Schedule 8 of the Companies Act.

Notes

  1. ‘The Single Figure’ for Michael McLintock for 2012 includes the increase in transfer value of his defined benefit pension. This is outlined in the 2012 directors’ remuneration report.
  2. Barry Stowe’s benefits relate primarily to his expatriate status, including costs of £217,567 for housing, £32,104 for children’s education, £69,289 for home leave and a £248,894 Executive Director Location Allowance.
  3. Mike Wells’ bonus figure excludes a contribution of US$15,000 from a profit sharing plan which has been made into a 401(k) retirement plan. This is included under employers pension contribution.
Rob Devey 600 114 150 710 426 284 2,510 4,084
John Foley 610 156 153 976 586 390 1,895
Michael McLintock1 360 124 311 1,308 904 404 3,414 5,517
Nic Nicandrou 630 99 158 1,092 655 437 2,510 4,489
Barry Stowe2 651 608 165 1,022 613 409 3,036 5,482
Tidjane Thiam 1,000 123 250 2,000 1,000 1,000 6,160 9,533
Mike Wells3 663 55 19 2,902 2,031 871 3,634 7,273
Total 4,514 1,279 1,206 10,010 6,215 3,795 21,264 38,273

Performance graph and table

The chart below illustrates the TSR performance of Prudential, the FTSE 100 and International Insurers over the past five years. The information in the table below shows the total remuneration for the Group Chief Executive over the period:

Chart showing Prudential TSR versus FTSE100 and International Insurers – total return over five years to December 2013

Download as excel file

£000 2009 2009 2010 2011 2012 2013

Note

  1. Mark Tucker left the Company on 30 September 2009. Tidjane Thiam became Group Chief Executive on 1 October 2009. The figures shown for Tidjane Thiam’s remuneration in 2009 relate only to his service as Group Chief Executive.
Group Chief Executive Mark Tucker Tidjane Thiam Tidjane Thiam Tidjane Thiam Tidjane Thiam Tidjane Thiam
Salary, pension and benefits 1,013 286 1,189 1,241 1,373 1,411
Annual bonus payment 841 354 1,570 1,570 2,000 2,056
(As % of maximum) (92%) (90%) (97%) (97%) (100%) (99.8%)
Long-term incentive vesting 1,575 2,534 2,528 6,160 5,189
(As % of maximum) (100%) (100%) (100%) (100%) (100%)
Other payments 308
Group Chief Executive Single Figure of total remuneration 3,737 640 5,293 5,339 9,533 8,656

Percentage change in remuneration

The table below sets out how the change in remuneration for the Group Chief Executive between 2012 and 2013 compares to a wider employee comparator group:

Download as excel file

  Salary Benefits Bonus
Group Chief Executive 3% 0% 2.8%
All UK employees 4.8% 5.3% 20.3%

The employee comparator group used for the purpose of this analysis is all UK employees. This includes employees in the UK Insurance Operations business, M&G and Group Head Office, and reflects the average change in pay for employees employed in both 2012 and 2013. The salary increase includes uplifts made through the annual salary review, as well as any additional changes in the year, for example promotions or role changes.

The UK work force has been chosen as the most appropriate comparator group as it reflects the economic environment for the location in which the Group Chief Executive is employed.

Relative importance of spend on pay

The table below sets out the amounts paid in respect of 2012 and 2013 on all employee pay and dividends:

Download as excel file

  2012 2013 Percentage change

Note

  1. All employee pay as taken from note B3.1 to the financial statements. The figure for 2012 includes an adjustment in respect of pension actuarial gains. Underlying employee pay excluding social security and pension costs increased by 13.6 per cent. Further information is set out in the financial statements.
All employee pay (£m)1 1,141 1,562 36.9%
Dividends (£m) 747 859 15.0%

Non-executive remuneration in 2013

Chairman’s fees

The annual fee paid to the Chairman, Paul Manduca, remained unchanged at £600,000.

Non-executive director fees

An increase of just under 3 per cent was made to the basic non-executive fee with effect from 1 July 2013. Increases were made to the additional fees paid to chairmen of the Remuneration Committee and Risk Committee, and a fee for membership of the Nomination Committee of £10,000 per annum was introduced. These changes reflect the increased time commitment involved in these roles. The revised fees are shown below:

Download as excel file

Annual Fees From
1 July 2012
£
From
1 July 2013
£
Note
  1. If, in a particular year, the number of meetings is materially greater than usual, the Company may determine that the provision of additional fees is fair and reasonable.
Basic fee 87,500 90,000
Additional fees:    
Audit Committee Chairman 70,000 70,000
Audit Committee member 25,000 25,000
Remuneration Committee Chairman 50,000 60,000
Remuneration Committee member 25,000 25,000
Risk Committee Chairman 60,000 65,000
Risk Committee member 25,000 25,000
Nomination Committee member 10,000
Senior Independent Director 50,000 50,000

The resulting fees paid to non-executives are:

Download as excel file

£000s 2013 fees 2012 fees 2013 taxable benefits* 2012 benefits Total 2013 remuneration: ‘The Single Figure’ Total 2012 remuneration: ‘The Single Figure’
  • * Benefits include the cost of providing the use of a car and driver, medical insurance and security arrangements. The value of some benefits included in the 2012 benefits calculation (for example life assurance) have not been included in 2013 taxable benefits information as they are not subject to UK tax. The 2012 number has not been restated from the 2012 report as the differences are not considered significant.
  • Each remuneration element is rounded to the nearest £1,000 and totals are the sum of these rounded figures. Total remuneration is calculated using the methodology prescribed by Schedule 8 of the Companies Act. The Chairman and non-executive directors are not entitled to participate in annual bonus plans or long-term incentive plans.
Notes
  1. Paul Manduca was appointed as Chairman on 2 July 2012. The figures for 2012 above include the fees he received as the Senior Independent Director prior to his appointment as Chairman.
  2. Keki Dadiseth retired from the Board on 1 May 2013. In 2013, he was paid an allowance of £2,999 in respect of his accommodation expenses in London while on Company business during the period he served as a non-executive director. In 2012 this totalled £8,997. This is included in the fees shown above.
  3. Michael Garrett retired from the Board on 31 August 2013.
  4. Anthony Nightingale, Philip Remnant and Alice Schroeder did not serve as non-executive directors during 2012.
Chairman            
Paul Manduca1 600 393 129 71 729 464
Non-executive directors            
Keki Dadiseth2 40 120 40 120
Howard Davies 181 171 181 171
Michael Garrett3 75 111 75 111
Ann Godbehere 189 181 189 181
Alistair Johnston 114 111 114 111
Kai Nargolwala 139 136 139 136
Anthony Nightingale4 67 n/a 67 n/a
Philip Remnant4 194 n/a 194 n/a
Alice Schroeder4 64 n/a 64 n/a
Lord Turnbull 174 161 174 161
Total 1,837 1,384 129 71 1,966 1,455

Long-term incentives awarded in 2013

2013 share-based long-term incentive awards

The table below shows the awards made to executive directors in 2013 under share-based long-term incentive plans and the performance conditions attached to these awards:

Download as excel file

Executive Role Face value of award
(% of salary)
Face value of award*
£s
Percentage of award released for achieving threshold targets End of performance period Weighting of performance conditions
Group TSR IFRS Profit
Group Asia US UK
  • * Awards for executive directors are calculated based on the average share price over the three dealing days prior to the awards being granted (22 May 2013).
  • The percentage of award released for achieving maximum targets is 100 per cent.
Notes
  1. Jackie Hunt’s award was granted on 7 October 2013. The number of shares awarded was calculated using the same share price as used for the other executive directors. Jackie Hunt was also made awards to replace long-term incentives forfeited when she left Standard Life. These are outlined under ‘Recruitment arrangements’.
  2. The awards made under the PLTIP to the Chief Executive, M&G are subject only to the TSR performance condition. The IFRS profit of M&G is a performance condition under the M&G Executive LTIP.
  3. Rob Devey also received a long-term incentive award in 2013. Please see the section on ‘Payments to past directors’ for details of the award and the performance conditions attached to it.
John Foley Group Investment Director 250% 1,570,745 25% 31 Dec 15 50% 50%      
Jackie Hunt1 Chief Executive, UK & Europe 225% 1,406,282 25% 31 Dec 15 50%       50%
Michael McLintock2 Chief Executive, M&G 150% 556,196 25% 31 Dec 15 100%        
Nic Nicandrou Chief Financial Officer 225% 1,460,023 25% 31 Dec 15 50% 50%      
Barry Stowe Chief Executive, PCA 225% 1,563,811 25% 31 Dec 15 50%   50%    
Tidjane Thiam Group Chief Executive 400% 4,119,988 25% 31 Dec 15 50% 50%      
Mike Wells President & CEO, JNL 460% 3,257,930 25% 31 Dec 15 50%     50%  

Group TSR performance will be measured on a ranked basis. 25 per cent of the award will vest for TSR at the median of the peer group increasing to full vesting for performance at the upper quartile. The peer group for 2013 awards is:

Aegon Aflac AIA AIG
Allianz Aviva AXA Generali
Legal & General Manulife MetLife Munich Re
Old Mutual Prudential Financial Standard Life Sun Life Financial
Swiss Re Zurich Insurance Group    

Performance ranges for IFRS operating profit measured on a cumulative basis over three years are set at the start of the performance period. Due to commercial sensitivities these are not published in advance but will be disclosed for Group, when awards vest.

2013 cash long-term incentive awards

In addition to his PLTIP award, Michael McLintock receives an annual award under the M&G Executive LTIP. In 2013 he received the following award:

Download as excel file

Executive Role Face value of award
(% of salary)
Face value of award
£s
Percentage of award released for achieving threshold targets End of performance period
Note
  1. The value of the award on vesting will be based on the profitability and investment performance of M&G over the performance period, as described in the Directors’ remuneration policy.
Michael McLintock Chief Executive, M&G 300% 1,112,400 See note 31 Dec 15

Statement of directors’ shareholdings

The shareholding requirements and share ownership guidelines are outlined below:

Download as excel file

  Articles of Association   Share ownership guideline
Number of shares Period to meet the requirement1 Where applicable, requirement met? Number of shares as a percentage of salary/fee Period to meet the guideline2 Where applicable, requirement met?

Notes

  1. Holding requirement of the Articles of Association (2,500 ordinary shares) must be obtained within one year of appointment to the Board.
  2. The increased guidelines for executive directors were introduced with effect from 1 January 2013. Executive directors have five years from this date (or date of joining if later) to reach the enhanced guideline. The guideline for non-executive directors was introduced on 1 July 2011. Non-executive directors have three years from this date (or date of joining if later) to reach the guideline.
Group Chief Executive 2,500 1 year Yes   350% 5 years Yes
Other executive directors 2,500 1 year Yes   200% 5 years Yes
Chairman 2,500 1 year Yes   100% 5 years On course
Non-executive directors 2,500 1 year Yes   100% 3 years Yes

The interests of directors in ordinary shares of the Company are set out below. ‘Beneficial interest’ includes shares acquired under the Share Incentive Plan (detailed in Supplementary information), deferred annual incentive awards and interests in shares awarded on appointment (detailed in the ‘other share awards’ table in Supplementary information). It is only these shares that count towards the share ownership guidelines.

Download as excel file

  1 Jan 2013   31 Dec 2013   11 Mar 2014
Total beneficial interest (number of shares) Total beneficial interest (number of shares) Beneficial interest as a percentage of salary/ basic fee* Number of shares subject to performance conditions Total interest in shares Total beneficial interest (number of shares)

Notes

  1. Jackie Hunt was appointed to the Board on 5 September 2013.
  2. For the 1 January 2013 figure part of Barry Stowe’s beneficial interest in shares is made up of 207,963 ADRs (representing 415,926 ordinary shares) and 95,305 ordinary shares (8,513.73 of these ADRs are held within an investment account which secures premium financing for a life assurance policy). For the 31 December 2013 figure the beneficial interest in shares is made up of 200,570 ADRs (representing 401,140 ordinary shares).
  3. For the 1 January 2013 figure Mike Wells’ beneficial interest in shares is made up of 295,904 ADRs (representing 591,808 ordinary shares). For the 31 December 2013 figure his beneficial interest in shares is made up of 202,922 ADRs (representing 405,844 ordinary shares). In the table above, the figure for shares subject to performance conditions includes the maximum number of shares (150 per cent of the original number awarded) which may be released to Mike Wells under the JNL Performance Share Plan. This maximum number of shares may be released if stretch performance targets are achieved.
  4. Rob Devey left the Board on 5 September 2013.
  5. Anthony Nightingale was appointed to the Board on 1 June 2013.
  6. Philip Remnant was appointed to the Board on 1 January 2013.
  7. Alice Schroeder was appointed to the Board on 10 June 2013. For the 31 December 2013 figure her beneficial interest in shares is made up of 1,000 ADRs (representing 2,000 ordinary shares).
  8. Keki Dadiseth retired from the Board on 1 May 2013.
  9. Michael Garrett retired from the Board on 31 August 2013.
Chairman                
Paul Manduca 2,500   42,500 95% 42,500   42,500
Executive directors                
John Foley 323,235   240,047 512% 483,765 723,812   240,047
Jackie Hunt1   36,360 78% 320,430 356,790   36,395
Michael McLintock 682,733   453,820 1,640% 142,283 596,103   453,820
Nic Nicandrou 350,858   302,885 625% 460,412 763,297   302,921
Barry Stowe2 511,231   401,140 792% 499,090 900,230   401,140
Tidjane Thiam 923,839   892,684 1,161% 1,243,213 2,135,897   892,684
Mike Wells3 591,808   405,844 787% 1,208,278 1,614,122   405,844
Rob Devey4 275,443   n/a n/a n/a n/a   n/a
Non-executive directors                
Howard Davies 3,192   8,316 124% 8,316   8,316
Ann Godbehere 15,914   15,914 237% 15,914   15,914
Alistair Johnston 5,000   10,000 149% 10,000   10,000
Kaikhushru Nargolwala 16,000   50,000 744% 50,000   50,000
Anthony Nightingale5   15,000 223% 15,000   15,000
Philip Remnant6   4,709 70% 4,709   4,709
Alice Schroeder7   2,000 30% 2,000   2,000
Lord Turnbull 16,624   16,624 248% 16,624   16,624
Keki Dadiseth8 32,196   n/a n/a n/a   n/a
Michael Garrett9 39,233   n/a n/a n/a   n/a

Outstanding share options

The following table sets out the share options held by the directors in the UK Savings-Related Share Option Scheme (SAYE) as at the end of the period. No other directors participated in any other option scheme.

Download as excel file

  Date of
grant
Exercise
price
Market
price at
31 Dec
2013
Exercise period   Number of options
Beginning End Beginning of period Granted Exercised Cancelled Forfeited Lapsed End of period
Notes
  1. A gain of £16,418.68 was made by directors in 2013 on the exercise of SAYE options.
  2. No price was paid for the award of any option.
  3. The highest and lowest closing share prices during 2013 were 1,340 pence and 901.5 pence respectively.
  4. All exercise prices are shown to the nearest pence.
John Foley 25 Apr 08 551 1,340 1 Jun 13 29 Nov 13   2,953 2,953
John Foley 20 Sep 13 901 1,340 1 Dec 16 31 May 17   998 998
Tidjane Thiam 16 Sep 11 466 1,340 1 Dec 14 29 May 15   965 965
Tidjane Thiam 20 Sep 13 901 1,340 1 Dec 16 31 May 17   499 499
Nic Nicandrou 16 Sep 11 466 1,340 1 Dec 16 31 May 17   3,268 3,268

Directors’ terms of employment

Executive directors’ service contracts

The remuneration policy report contains further details of the terms included in executive director service contracts. Details of the service contracts of each executive director are outlined below:

Download as excel file

Executive director Date of contract Notice period to the Company Notice period from the Company
Notes
  1. Rob Devey left the Company on 31 October 2013.
  2. The contract for Mike Wells is a renewable one-year fixed-term contract. The contract is renewable automatically upon the same terms and conditions, unless the Company or the director gives at least 90 days’ notice prior to the end of the relevant term.
Rob Devey1 1 July 2009 12 months 12 months
John Foley 8 December 2010 12 months 12 months
Jackie Hunt 25 April 2013 12 months 12 months
Michael McLintock 21 November 2001 6 months 12 months
Nic Nicandrou 26 April 2009 12 months 12 months
Barry Stowe 18 October 2006 12 months 12 months
Tidjane Thiam 20 September 2007 12 months 12 months
Mike Wells2 15 October 2010 12 months 12 months

Chairman’s letter of appointment

Paul Manduca was appointed as a non-executive director on 15 October 2010 and became Senior Independent Director on 1 January 2011. On 2 July 2012 he was appointed Chairman. A contractual notice period of 12 months by either party applies.

Non-executive directors’ letters of appointment

The remuneration policy report contains further details on non-executive directors’ letters of appointment. Details of their individual appointments are outlined below:

Download as excel file

Non-executive director Appointment by the Board Initial election by shareholders at AGM Notice period Expiration of current term of appointment
Notes
  1. Keki Dadiseth retired from the Board on 1 May 2013.
  2. Michael Garrett retired from the Board on 31 August 2013.
  3. For Anthony Nightingale and Alice Schroeder the table assumes initial election by shareholders at the 2014 AGM.
Keki Dadiseth1 1 April 2005 AGM 2005 6 months n/a
Howard Davies 15 October 2010 AGM 2011 6 months AGM 2014
Michael Garrett2 1 September 2004 AGM 2005 6 months n/a
Ann Godbehere 2 August 2007 AGM 2008 6 months AGM 2014
Alistair Johnston 1 January 2012 AGM 2012 6 months AGM 2015
Kaikhushru Nargolwala 1 January 2012 AGM 2012 6 months AGM 2015
Anthony Nightingale3 1 June 2013 AGM 2014 6 months AGM 2014
Philip Remnant 1 January 2013 AGM 2013 6 months AGM 2016
Alice Schroeder3 10 June 2013 AGM 2014 6 months AGM 2014
Lord Turnbull 18 May 2006 AGM 2006 6 months AGM 2015

External appointments

Subject to the Group Chief Executive’s or the Chairman’s approval, executive directors are able to accept external appointments as non-executive directors of other organisations. Any fees paid may be retained by the executive director. During 2013, Michael McLintock received £65,000 as a trustee and non-executive director of another organisation. Jackie Hunt received £45,000 as a non-executive director for another organisation. Other directors served on the boards of educational, development, charitable and cultural organisations without receiving a fee for such services.

Recruitment arrangements

Jackie Hunt

On 26 April 2013, it was announced that Jackie Hunt would join Prudential as Chief Executive for UK & Europe. The Remuneration Committee determined that long-term awards forfeited by Ms Hunt as a consequence of joining Prudential would be replaced on a like-for-like basis, and are subject to Prudential performance criteria.

Ms Hunt was compensated for the loss of her outstanding Standard Life long-term incentive awards with equivalent awards under the Prudential Long Term Incentive Plan as outlined below:

Download as excel file

Standard Life award being replaced Face value of award*
£s
Performance condition attached to award Percentage of award released for achieving threshold targets End of performance period
  • * The face value of awards was calculated using Standard Life’s three days average share price on the date Jackie Hunt joined the Company (September 2013) of £3.389.
  • The performance conditions attached to the awards are the same TSR conditions as other GPSP and UK BUPP awards made in the relevant year.
  • The percentage of award released for achieving maximum targets is 100 per cent.
2011 Group LTIP 1,185,536 Relative TSR 25% 31 Dec 2013
2012 Group LTIP 1,060,994 Relative TSR 25% 31 Dec 2014

Ms Hunt was not compensated for forfeiting her 2013 Standard Life Group LTIP. Instead, a 2013 long-term incentive award was granted to her. Full details of this award are set out in the ‘Long-term incentives awarded in 2013’ section of this report.

Ms Hunt forfeited Standard Life deferred bonus awards with a value of £801,210. The Company arranged for these to be replaced with Prudential shares on a like-for-like basis. A cash payment was made to Ms Hunt in respect of these awards, the net value of which was used to purchase 36,337 shares which will be held in a nominee arrangement on her behalf and released to her in March 2014 and March 2015 (in line with the release dates of the original Standard Life awards).

In order for Ms Hunt to take up the position with Prudential she was required to relocate. To facilitate this, the Committee approved the reimbursement of reasonable removal charges for the transport of household items and of legal fees for the sale and purchase of properties. A one-off payment of £188,679 was made to cover additional expenses, such as stamp duty and estate agent fees.

Payments to past directors

Rob Devey

On 26 April 2013 it was announced that Rob Devey would leave Prudential at the end of October 2013. In line with his contractual entitlements, Mr Devey will receive a payment in lieu of salary and pension allowance for the period 1 November 2013 to 25 April 2014. This is paid in instalments and is subject to mitigation. The total amount paid will be £378,000. Medical and life assurance cover will be provided until 25 April 2014. The amounts paid in 2013 are included in the table of 2013 total remuneration.

In 2013 Rob Devey was granted an award under the Prudential Long Term Incentive Plan as follows. At vesting, the award will be pro-rated for time employed. It remains subject to the original vesting schedule and to potential future reduction depending on the achievement of performance conditions:

Download as excel file

Executive Face value of award
(% of salary)
Face value of award*
£s
Percentage of award released for achieving threshold targets End of performance period
  • * The Award is calculated based on the average share price over the three dealing days prior to the award being granted (22 May 2013).
  • The percentage of award released for achieving maximum targets is 100 per cent (which will then be pro-rated for time employed). 50 per cent of the award will vest subject to relative TSR and 50 per cent subject to the achievement of UK IFRS profit targets. Further details of the performance conditions are outlined in the ‘Long-term incentives awarded in 2013’ section.
Rob Devey 225% 1,390,497 25% 31 Dec 15

The Remuneration Committee used their discretion to determine that outstanding variable awards of pay would be treated in the following ways:

  • A 2013 bonus pro-rated for the amount of time Mr Devey was employed by Prudential during the 2013 financial year (to 31 October 2013). A 2013 bonus of £637,776 was awarded;
  • 60 per cent of this award was paid in cash and 40 per cent was deferred into Prudential shares and will be released in 2016;
  • Outstanding long-term incentive awards were prorated based on the time Mr Devey was employed by Prudential as a proportion of the relevant performance periods. Awards will continue to be subject to the original performance conditions and released on the original timescales.

As set out in the section on ‘Remuneration in respect of performance in 2013’, the performance conditions attached to Rob Devey’s 2011 GPSP and UK BUPP awards were met in full and 100 per cent of the proportion of these awards that were outstanding (34 months out of 36) will be released in 2014.

Clark Manning

Clark Manning stepped down from his role as President and Chief Executive of Jackson and as an executive director on 31 December 2010. Clark Manning remained Chairman of Jackson until 30 April 2011 and acted in an advisory role until 31 December 2011. The 2010 directors’ remuneration report provided full details of the remuneration arrangements that would apply to Clark Manning after his resignation. These arrangements were implemented as intended by the Committee.

The performance conditions attached to the 2010 GPSP and BUPP awards were met in full and awards to Clark Manning were released during 2013 on a pro-rata basis, as disclosed in last year’s report. There are no further outstanding awards.

Other directors

A number of former directors receive retiree medical benefits for themselves and their partner (where applicable). This is consistent with other senior members of staff employed at the same time. A de minimis threshold of £10,000 has been set by the Committee; any payments, or benefits provided to a past director under this amount will not be reported.

Statement of voting at general meeting

At the 2013 Annual General Meeting, shareholders were asked to vote on the 2012 directors’ remuneration report, the adoption of the Prudential Long Term Incentive Plan and the adoption of the rules of the Prudential 2013 Savings-Related Share Option Scheme (‘Prudential SAYE’). Each of these resolutions received a significant vote in favour by shareholders; the Committee is grateful for this support and endorsement by our shareholders. The votes received were:

Download as excel file

Resolution Votes for %
of votes cast
Votes
against
%
of votes cast
Total
votes cast
Votes
withheld
The Directors’ remuneration report 1,680,696,983 88.40% 220,534,791 11.60% 1,901,231,774 36,594,496
Prudential SAYE 1,870,467,975 96.63% 65,332,272 3.37% 1,935,800,247 2,036,940
Prudential Long Term Incentive Plan 1,649,705,967 87.11% 244,056,797 12.89% 1,893,762,764 44,065,902

Statement of implementation in 2014

Executive directors’ salaries were reviewed in 2013 with changes effective from 1 January 2014. When the Committee took these decisions, it considered the salary increases awarded to other employees in 2013 and the expected increases in 2014. The Committee also took account of the performance and experience of each executive, and the relative size of each directors’ role, as well as the performance of the Group. The external markets used to provide context to Committee were those used for 2013 salaries, with for the Chief Executive, M&G, an additional benchmark of Asset Management within International Insurance Companies.

  • The 2014 salary increase for the Chief Financial Officer was 5 per cent, all other executive directors received a 3 per cent increase. These uplifts are in line with 2014 salary increase budgets for other employees across our business units (3 per cent to 6 per cent). 2014 salaries are set out in the ‘Our executive remuneration at a glance’ section.
  • No changes will be made to executive directors’ maximum opportunities under the annual bonus and long-term incentive awards other than for the Chief Financial Officer. The Chief Financial Officer’s 2014 long-term incentive award increased to 250 per cent of salary.
  • The Chief Financial Officer’s total remuneration opportunity for 2014 has increased by 10 per cent. This reflects the increasing complexity and responsibilities of the role, together with the incumbent’s considerable performance and contribution to the Group. In making this adjustment the Remuneration Committee were mindful of ensuring that the majority of this be provided through long-term incentive awards, so that the full value is only realised over the long term and subject to the achievement of stretching performance conditions. Major shareholders were consulted on this change prior to implementation.
  • The performance measures attached to 2014 bonuses and long-term incentive awards remain unchanged from those set out in the ‘Remuneration in respect of 2013’ section of this report.
Return to top

Reporting tools

Save pages of the report
to download, print or email

View your pages

Feedback

Your comments and ideas
help us to shape future reports
to suit your needs

Tell us your views