REG - Phoenix Grp Hldgs - Phoenix Group Holdings - 2016 Annual Results <Origin Href="QuoteRef">PHNX.L</Origin> - Part 7
20/03/2017 07:07
- Part 7: For the preceding part double click ID:nRST8776Zf
Individual objectives 30%
TOTAL 100%
The changes made from 2016's Corporate performance measures for AIP can be summarised as follows: - In 2017, the sole financial metric will be operating companies' cash
generation which remains core to our business and is linked directly to Phoenix Life free surplus under Solvency II. The overall weighting for cash generation has
increased from 2016 (35% of incentive potential). At the same time, the profit-based metric (operating profit) has been removed.- Greater weighting has been given to
customer experience (2016: 17.5% of incentive potential), reflecting the focus of the Board as well as the general preference of our regulators. The 2017 customer
experience measures will combine a number of measures reflecting the customer experience. The measures, the specific targets and attainment levels will be disclosed in
the Directors' Remuneration Report for 2017.- Personal performance retains a 30% weighting. As for 2016, specific targets of employee engagement and expense management
are included as part of the objectives for the Personal performance element. In addition, and as previously stated in the Remuneration Policy, there are three potential
levels at which the performance measures and targets and related outcomes from AIP in 2017 may be moderated (downwards or upwards) by the Committee - more details are
provided in the Remuneration Policy table set out on pages 63 and 64.
Deferred Bonus Share Scheme ('DBSS') 40% of AIP outcomes for 2017 will be delivered as an award of deferred shares under the DBSS which will vest after a three-year deferral period. For DBSS awards made in 2017 (in respect of 2016's AIP outcome) and for DBSS awards to be made in subsequent years:- The DBSS award will be made automatically on the fourth dealing day following the announcement of the Company's 2016 annual results.- The number of shares for DBSS awards will be calculated using the average share price for the three dealing days before the grant of awards. - The three-year deferral period will run to the three-year anniversary of the making of the DBSS award. - Dividend entitlements for the DBSS shares will accrue over the three-year deferral period.
Long-Term Incentive Plan ('LTIP') From March 2017, awards under the LTIP will be made under a procedure similar to that described above for awards under the DBSS:- The LTIP award will be made automatically on the fourth dealing day following the announcement of the Company's annual results.- The number of shares for LTIP awards will be calculated using the average share price for the three dealing days before the grant of awards. - The initial three-year vesting period will run to the three-year anniversary of the making of the LTIP award. At this time, the performance conditions will be determined.- However, all annual LTIP awards made to Executive Directors under this process will also be subject to a holding period so that any LTIP awards for which the performance conditions are satisfied will not be released for a further two years from the third anniversary of the original award date. Dividend accrual for LTIP awards will continue until the end of the holding period.Award levels for Executive Directors for 2017 are unchanged at 200% of base salary.
The weightings of the LTIP performance measures for 2017 are summarised below:
Performance measure Weighting of performance measure
Cumulative cash generation 50%
TSR 50%
TOTAL 100%
These weightings are unchanged from the weightings for 2016 LTIP awards. The performance measures are measured over a period of three financial years, commencing with
financial year 2017.Additionally, all 2017 LTIP awards are subject to a further underpin measure relating to debt and risk management within the Group, consideration of
customer satisfaction and, to meet Solvency II requirements, in exceptional cases, personal performance. These measures and the relative weightings are considered to be
appropriate for 2017's LTIP awards.The relative TSR measure is calculated against the constituents of the FTSE 250 (excluding Investment Trusts), with vesting commencing
at median (25% of this part of the award vests) and full vesting at upper quintile levels, subject to an underpin regarding underlying financial performance. The
performance targets for the Cumulative cash generation measure are £1,372 million (25% of this part of the award vests) and £1,572 million (full vesting of this part of
the award).
All-Employee Share Plans Executive Directors have the opportunity to participate in HMRC tax advantaged Sharesave and Share Incentive Plans ('SIP') on the same basis as all other UK employees. To increase the potential benefit to be available to all staff under SIP, from 2017 the matching ratio will be increased to one free matching share for every three partnership shares purchased (the previous ratio was one free matching share for every six partnership shares purchased).
Shareholding requirements Requirement levels are 200% of base salary level for the Group Chief Executive Officer and the Group Finance Director.Where any performance vested LTIP awards are subject to a holding period requirement, the relevant LTIP award shares (discounted for anticipated tax liabilities) will count towards the shareholding requirements.
Chairman and Non-Executive Directors' fees Fee levels for the Chairman and the Non-Executive Directors are unchanged from 2016.The fee levels for 2017 are £325,000 for the Chairman, £105,000 for the role of Non-Executive Director with additional fees of: (i) £5,000 payable for the role of Senior Independent Director; and/or (ii) £10,000 payable where an individual also chairs the Audit, Remuneration or Risk Committee; and/or (iii) £20,000 payable where a Non-Executive Director also serves on the board of a subsidiary company; and/or (iv) £10,000 payable for service on the Solvency II Model Governance Committee.
Note: All incentive plans are subject to malus/clawback. See page 67 'Notes to the Remuneration Policy' for details.
distribution statement
The DRR regulations require each quoted company to provide a comparison between profits distributed by way of dividend and
overall expenditure on pay.
Relative Importance (£ millions)
Profit distributed by way of dividend (% change +33%)
2015 120
Group (excluding AXA businesses) 120
AXA businesses 0
2016 160
Group (excluding AXA businesses) 160
AXA businesses 0
Overall expenditure on pay (% change +22%)
2015 81
Group (excluding AXA businesses) 91
AXA businesses 8
2016 99
Group (excluding AXA businesses) 91
AXA businesses 8
Profit distributed by way of dividend has been taken as the dividend paid and proposed in respect of the relevant financial
year. For 2016 this is the interim dividend paid (£66 million) and the recommended final dividend of 23.9p per share
multiplied by the total share capital issued at the date of the Annual Report as set out in note D1 'Share capital' in the
notes to the consolidated financial statements. No share buy-backs were made in either year.
Overall expenditure on pay has been taken as the employee costs as set out in note C2 'Administrative expenses' in the
notes to the consolidated financial statements. The current year figure includes £8 million in respect of the acquired AXA
businesses. Expenditure on pay from existing businesses has increased by 12%, primarily due to increased staff payroll,
recruitment and training costs associated with the increased project activity within the Group during the year, increased
share-based payment costs (see note I2 for further details) and higher AIP costs due to higher year end accrual than
compared to the prior year.
performance graph and table
The graph below shows the value to 31 December 2016, on a TSR basis, of £100 invested in Phoenix Group Holdings on 5 July
2010 (the date of the Company's Premium Listing) compared with the value of £100 invested in the FTSE 250 Index (excluding
Investment Trusts).
The FTSE 250 Index (excluding Investment Trusts) is considered to be an appropriate comparator for this purpose as it is a
broad equity index of which the Company is a constituent.
The DRR regulations also require that a performance graph is supported by a table summarising aspects of the Group Chief
Executive Officer's remuneration for the period covered by the above graph (which will in due course be for a period of ten
years).
Group Chief Executive Officer Remuneration
Single figure Annual variable element award rates against maximum opportunity Long-term incentive vesting rates against maximum opportunity
of total remuneration ('AIP') ('LTIP')
(£000)
2016 Clive Bannister 2,794 84% 55%
2015 Clive Bannister 2,8671 82% 57%
2014 Clive Bannister 3,104 68% 57%2
2013 Clive Bannister 2,737 69% 67%2
2012 Clive Bannister 1,583 69% n/a3
2011 Clive Bannister4 1,333 73% n/a3
Jonathan Moss5 704 n/a n/a
2010 Jonathan Moss 2,307 88% 100%
1 The single figure of total remuneration for 2015 has been restated and now reflects the actual price of shares on
the day the 2013 LTIP vested (15 November 2016: 736.50p per share) rather than the three-month average share price to 31
December 2015 (873.4924p per share) which was required to be used last year for the single figure of total remuneration,
and also reflects the actual dividends accrued on the award until the date of vesting.
2 The long-term incentive vesting rate for 2013 is shown at 67% and for 2014 is shown as 57%. In both years the Group
Chief Executive Officer decided to waive voluntarily any entitlement in excess of two-thirds of the shares which would
otherwise have vested.
3 Long-term incentive vesting rates against maximum opportunity values are not applicable for 2011 and 2012 due to no
awards vesting in those financial years.
4 Jonathan Moss left the role of Group Chief Executive Officer on 7 February 2011 and left Phoenix Group on 29 March
2011. Clive Bannister joined Phoenix Group on 7 February 2011 and was appointed to the Board as a Director on 28 March
2011.
5 Jonathan Moss' 2011 single figure of total remuneration does not include compensation for loss of office.
PERCENTAGE CHANGE IN PAY OF THE GROUP CHIEF EXECUTIVE OFFICER 2015 TO 2016
In accordance with DRR regulations, the table below provides a comparison of the percentage change in the prescribed pay
elements of the Group Chief Executive Officer (salary, taxable benefits and annual incentive outcomes) between financial
years 2015 and 2016 and the equivalent percentage changes in the average of all staff (representing all permanent staff
during 2015 and 2016 on a matched basis). This group was selected as being representative of the wider workforce using the
same process as was used for this comparison in last year's accounts.
Year-on-year % change Salary Taxable Benefits Annual incentive Total
Group Chief Executive Officer 0.00 (0.40) 2.61 1.42
Staff 3.44 1.84 5.30 3.79
Overall the data shows minimal change in the level of remuneration for the Group Chief Executive; the small increase in
annual incentive being due to a higher outcome under the personal element of the AIP. Staff more generally have experienced
a small overall increase, due in part to higher outcomes under the personal element of annual incentive reflective of their
personal achievements over the year. The median salary increase for staff was 2.25%; this is lower than the figures above
which are based on averages.
VOTING OUTCOMES FROM THE 2016 AGM
The table below shows the votes cast to approve the Directors' Remuneration Report for the year ended 31 December 2015 at
the 2016 AGM held on 11 May 2016.
For Against
Number % of Number % of Abstain
votes cast votes cast Number
To approve the Directors' Remuneration Report 136,362,734 98.981 1,395,487 1.011 9,589,645
for the year ended 31 December 2015
1 The small balance to 100% was for Chairman's discretionary votes not voted.
A vote to approve the Remuneration Policy was passed at the 2014 AGM held on 30 April 2014. Details of the votes cast in
relation to this resolution were disclosed in the Company's Directors' Remuneration Report for 2014 which is available as
part of the Phoenix Group Holdings Annual Report and Accounts 2014.
IMPLEMENTATION REPORT - AUDITED INFORMATION
SINGLE FIGURE TABLE
Salary/fees¹ Benefits² Annual Incentive³ Long-term incentives Pension6 Total
£000 2016 2015 2016 2015 2016 2015 20164 20155(restated) 2016 2015 2016 20155(restated
Clive Bannister4 700 700 16 16 883 861 1,072 1,1675 123 123 2,794 2,867
James McConville 440 440 16 16 555 566 674 6675 77 77 1,762 1,766
1 The Executive Directors are entitled to adjust their salary/benefit combination under flexible benefits
arrangements and the figures shown are before individual elections.
2 Benefits for Clive Bannister comprise car allowance and private medical insurance totalling £16,111. Benefits for
James McConville comprise car allowance and private medical insurance totalling £15,889.
3 Annual incentive amounts are presented inclusive of any amounts which must be deferred into shares for three years
(i.e. one-third of the AIP award). In 2016 and 2015, £294,490 and £287,000 respectively of Clive Bannister's incentive
payment is subject to three-year deferral delivered in shares, and £185,108 and £188,650 of James McConville's incentive
payment is subject to a similar deferral. Details of the performance measures and targets applicable to the AIP for 2016
are set out below.
4 In accordance with the requirements of the DRR regulations, the 2016 value for long-term incentives is an estimate
of the vesting outcomes for LTIP awards granted in 2014 and which are due to vest on 26 March 2017 for Clive Bannister and
James McConville. These estimated vesting levels are at 55% reflecting outcomes against the embedded value growth (see page
77), Cumulative cash generation and TSR performance measures to 31 December 2016 and assumptions regarding dividends for
the period until vesting. This vesting outcome is then applied to the average share price between 1 October 2016 and 31
December 2016 (730.0761p) to produce the estimated long-term incentives figures shown for 2016 in the above table. These
assumptions will be trued up for actual share prices and dividends on vesting in the report for 2017. Details of the
performance measures and targets applicable to the 2014 LTIP are set out on page 77.
5 For 2013's LTIP awards which are reflected in the 2015 long-term incentives column above, the performance conditions
were met as to 57% of maximum. The 2015 long-term incentives values in the above table reflect the value of the Company's
shares on the date of vesting which was 15 November 2016 (736.5p per share) multiplied by the number of shares vesting,
whereas the equivalent figure within the published 2015 single figure table was an estimate which reflected the average
share price between 1 October 2015 and 31 December 2015 (873.4924p per share) and certain assumptions regarding the
cumulative value of dividends on the number of shares vesting. The number of shares vesting has been increased to take into
account the impact of the rights issue; this adjustment has been based on the Theoretical Ex-Rights Price ('TERP') and
approved by the Remuneration Committee.
6 Clive Bannister and James McConville are entitled to each receive a Company pension contribution of 20% of base
salary, which may at their own choice, be paid to their Group Personal Pension ('GPP') or received in cash. Pension
contributions paid as cash supplements are reduced for the effect of employers' National Insurance contributions. No
Director participated in a defined benefit pension arrangement in the year.
The aggregate remuneration of all Executive and Non-Executive Directors under salary, fees, benefits, cash supplements in
lieu of pensions and annual incentive was £4.041 million (2015: £3.937 million).
There were no payments made to former Directors and no payments for loss of office in the year.
AIP OUTCOMES FOR 2016
The Committee seeks to set suitable ranges for each measure in the context both of the Company's own internal budgets and
of external projections (whether through management guidance or consensus forecasts). As an entirely closed life business,
targets are significantly impacted by management actions and year-on-year growth is not an inherent objective. The ranges
are considered appropriate in that context.
As set out in the Remuneration Policy, the business of the Company is to engage in corporate activity and the Remuneration
Committee may adjust targets during the year to include such activity and ensure the targets continue to reflect
performance as originally intended. 2016 was an exceptional year in terms of corporate activity with respect to both the
AXA and Abbey Life acquisitions. As management was able to close the AXA acquisition in November 2016, the Committee
approved an increase in the original cash generation target range for the AIP of £20 million to be broadly consistent with
the original basis for setting the original target range. We believe that this increased target range provides a fair
measure of the actual achievement for both staff and shareholders. The range disclosed below is inclusive of this £20
million addition.
Against the specific Corporate measures, outturns were as follows:
Performance measure Threshold performance Target performance Maximum performance Performance % of 70% % achieved
level for level for level for level attained for 2016 AIP of incentive potential based on Performance Measure
2016 AIP 2016 AIP 2016 AIP
Operating companies' cash generation £370m £445m £520m £ 486m 50% 38.7%
Operating profit £200m £250m £300m £351m 25% 25.0%
Customer experience
Customer satisfaction1 4.6 rating 4.65 rating 4.75 rating 4.66 rating 10% 5.5%
Servicing complaints as a percentage 0.50% 0.40% 0.30% 0.32% 10% 9.0%
of transactions2
Customer Experience - subjective3 0% 2.5% 5% 4.5% 5% 4.5%
Total 82.7%
1 The rating is a score based on questions answered by customers in a satisfaction survey managed by Ipsos MORI.
Customers surveyed were asked to give a satisfaction rating of between 1 and 5 to a number of questions (with a rating of 3
or above regarded as satisfied). The 4.66 rating (out of 5) in 2016 is the average score of all questions answered.
2 The measure looks at servicing (i.e. not product or advice) complaints received as a percentage of customer
transactions. It is calculated in accordance with the FCA requirements for reporting the volume of complaints.
3 This element of customer experience is judged by the Committee as a broad assessment of the overall outcome for
Phoenix customers throughout 2016. It allows for consideration of subjective and qualitative matters for customer
experience which the Committee considers to be relevant and which may not be captured in the quantitative assessments which
are otherwise considered in this part of the AIP, thereby ensuring a holistic assessment.
Personal objectives (which were agreed by the PGH Board and shared with the Remuneration Committee at the start of the
year) are viewed across four quadrants:
- Customer/business
- Financial
- People
- Risk/Governance.
Whilst the Board regards a number of the personal objectives set as commercially sensitive (and accordingly, it is not
appropriate for such objectives to be disclosed), achievements by the Executive Directors which were considered by the
Remuneration Committee included:
- The successful acquisition of the Abbey Life and AXA businesses
- Embedding Solvency II reporting and related Pillar 3 reporting
- Ensuring that Treating Customers Fairly is embedded in our culture
- Delivery of financial KPIs, including in relation to expense management
- Maintaining staff engagement at, or more than, 78% (the outcome was 81%; the 78% objective representing an increase
from our target of 72% for 2015)
- Maintaining a satisfactory risk and control environment across the Group and the extent to which the Group has
operated within its risk appetite.
For the Personal (individual objectives) element of 2016 AIP, performance of both Executive Directors was discussed with
the Board, and the Remuneration Committee considered individual performance in light of their objectives, on the basis of a
5-point scale, separately assessing both 'what' was achieved and 'how' it was delivered, with equal weightings given to
each assessment.
Taking account of the attainment of objectives across the four quadrants, each of the Group Chief Executive Officer and the
Group Finance Director received an 87.5% payout for this element, consistent with their ratings for 2016.
The table below shows the actual outturn against the annual incentive maximum. For 2016 AIP, Corporate (financial and
strategic) measures applied to 70% of incentive opportunity and Personal (individual objectives) measures applied to 30% of
incentive opportunity.
Corporate Personal Total Maximum
Name As a % As a % As a % As a % As a % As a %
of maximum corporate element of salary of maximum of salary of salary of salary
personal element
Clive Bannister 82.70 86.83 87.50 39.38 126.21 150.00
James McConville 82.70 86.83 87.50 39.38 126.21 150.00
In addition, whilst the performance measures for the AIP for 2017 have been disclosed (see Implementation of Remuneration
Policy for 2017), the performance targets for these measures are regarded as commercially sensitive at the current time and
accordingly are not disclosed. However, the Company intends to disclose the performance targets for 2017's AIP
retrospectively in next year's Directors' remuneration report on a similar basis to the disclosures made above in respect
of 2016's AIP.
LTIP OUTCOMES FOR 2014 AWARDS
Performance measure and weighting Target range Performance achieved Vesting % achieved
outcome
Embedded Value growth1 (40%) Target range between Embedded value growth in excess of the risk-free rate by 4% per annum and Embedded value growth in excess of the risk-free rate by 6% per annum. 6.1% 100% 40%
Cumulative cash generation2 (40%) Target range between cumulative cash generation of £1.368 billion (previously £1.348 billion) and cumulative cash generation of £1.568 billion (previously £1.548 billion). £0.991bn 0% 0%
TSR (20%) Target range between median performance against the constituents of the FTSE 250 (excluding Investment Trusts) rising on a pro rata basis until full vesting for upper quintile performance. In addition, the Committee must consider whether the TSR performance is reflective of the underlying financial performance of the Company. 69th percentile 73% 15%
Total 55 %
1 As disclosed on page 68 of the 2015 Directors' remuneration report, with the introduction of Solvency II, Phoenix no
longer reports MCEV.
MCEV growth for the Company's LTIP is measured using a combination of the growth in balance sheet values plus the value of
dividends paid over a three-year performance period. As MCEV is no longer reported by Phoenix from 31 December 2015, for
the proportion of the 2014 LTIP awards (three-year performance period ends 31 December 2016) subject to an MCEV growth
measure, the Remuneration Committee considered it appropriate to measure the balance sheet element of MCEV growth using
growth in MCEV over the period of two financial years to 31 December 2015 as reported, and then deriving the growth rate
for the 2016 financial year by using the percentage growth in Solvency II own funds, which has been adjusted for Solvency
II specific items ('Adjusted Solvency II Own Funds). Adjusted Solvency II Own Funds is considered appropriate as it is the
economic value of an entity calculated on a Solvency II basis, and therefore is more conservative than MCEV and is based on
Phoenix's own funds as reported. With the addition of dividends paid over the period to 31 December 2016, the MCEV growth
achieved for the 2014 LTIP awards was 6.1%.
For the only other 'inflight' LTIP award subject to an MCEV growth measure (2015's LTIP award measured over three financial
years to 31 December 2017) a similar calculation will be followed, using MCEV in 2015 and then the growth in Solvency II
Own Funds in 2016 and 2017 for the balance sheet growth element of MCEV growth in this three-year period.
In making these amendments for the 2014 and 2015 LTIP awards, the Remuneration Committee has acted in line with the
Directors' Remuneration Policy by ensuring that the amended performance condition is not easier than the original
performance condition was intended to be, with Adjusted Solvency II Own Funds being viewed as the most appropriate proxy
for the balance sheet growth element within the LTIP measure of MCEV growth.
2 The Committee followed the same approach as reported above for the AIP in increasing the LTIP cash generation target
ranges so the figures below are £20 million higher than previously.
The above targets were all measured over the period of three financial years 1 January 2014 to 31 December 2016.
In addition to the above targets, the Committee confirmed that the underpin performance condition relating to debt levels
and associated interest costs, and management of debt, capital restructuring and risk management within the Group (as
described more fully on page 80 had been achieved in the performance period.
NON-EXECUTIVE FEES
The emoluments of the Non-Executive Directors for 2016 based on the current disclosure requirements were as follows:
Name Directors' salaries/fees 2016 Directors' Benefits12016 Benefits12015 Total Total
£000 salaries/fees £000 £000 2016 2015
2015 £000 £000
£000
Non-Executive Chairman
Howard Davies² - 217 - - - 217
Henry Staunton³ 325 108 - - 325 108
Non-Executive Directors
René-Pierre Azria4 96 100 - - 96 100
Alastair Barbour 145 130 6 7 151 137
Ian Cormack 140 125 - - 140 125
Tom Cross Brown5 46 120 - - 46 120
Isabel Hudson 105 100 - - 105 100
Wendy Mayall6 35 - - - 35 -
John Pollock7 35 - - - 35 -
Nicholas Shott8 35 - - - 35 -
Kory Sorenson 105 90 - - 105 90
David Woods 145 130 13 11 158 141
Total 1,212 1,120 19 18 1,231 1,138
1 The amounts within the benefits columns reflect the fact that the reimbursement of expenses to Non-Executive
Directors for travel and accommodation costs incurred in attending Phoenix Life Holdings Limited Board and associated
meetings represent a taxable benefit. This position has been clarified with HMRC and the amounts shown are for reimbursed
travel and accommodation expenses (and the related tax liability which is settled by the Group).
2 Howard Davies retired from the Board 31 August 2015.
3 Henry Staunton joined the Board 1 September 2015.
4 Rene-Pierre Azria retired from the Board 30 November 2016.
5 Tom-Cross Brown retired from the Board 11 May 2016.
6 Wendy Mayall joined the Board 1 September 2016.
7 John Pollock joined the Board 1 September 2016.
8 Nicholas Shott joined the Board 1 September 2016.
SHARE-BASED AWARDS
As at 31 December 2016, Directors' interests under long-term share-based arrangements were as follows:
LTIP
Date of grant Share price on grant No. of shares No. of shares granted Increase in shares followingrights issue1 No. of dividend shares acquired asat vesting2 No. of sharesexercised3 No. of shares notvested4 No of Vesting date6
as at in 2016 shares
1 Jan as at
2016 31 Dec
2016
Clive Bannister
LTIP3 15 Nov 2013 712.0p 196,629 - 34,619 46,716 (158,439) (119,525) - 15 Nov 2016
LTIP 26 Mar 2014 741.5p 188,806 - 33,242 - - - 222,048 26 Mar 2017
LTIP 28 Sept 2015 827.7p 169,150 - 29,781 - - - 198,931 28 Sept 2018
LTIP5 2 Jun 2016 877.5p - 159,544 28,090 - - - 187,634 2 Jun 2019
554,585 159,544 125,732 46,716 (158,439) (119,525) 608,613
James McConville
LTIP 15 Nov 2013 712.0p 112,359 - 19,782 26,694 - (68,300) 90,535 15 Nov 2016
LTIP 26 Mar 2014 741.5p 118,678 - 20,895 - - - 139,573 26 Mar 2017
LTIP 28 Sept 2015 827.7p 106,322 - 18,719 - - - 125,041 28 Sept 2018
LTIP5 2 Jun 2016 877.5p - 100,284 17,656 - - - 117,940 2 Jun 2019
337,359 100,284 77,052 26,694 - (68,300) 473,089
1 The number of shares for all outstanding LTIP awards have been increased to take into account the impact of the
rights issue. This adjustment has been based on the Theoretical Ex-Rights Price ('TERP') and approved by the Remuneration
Committee. The share price on grant shown is the actual price used at the date of the grant and has not been adjusted
following the Rights Issue.
2 In addition to the shares awarded under the LTIP presented above, participants receive an additional number of
shares (based on the number of LTIP awards which actually vest) to reflect the dividends paid during the vesting period
(and which for awards made from 2015, will include dividends paid during any applicable holding period).
3 Gains of Directors from share options exercised and vesting shares under the LTIP in 2016 were £1,121,682 (Clive
Bannister's gain was £1,121,682 arising from an LTIP award exercised on 1 December 2016 at a share price of £7.079588;
James McConville did not exercise any share options under the LTIP in the year) (2015: £3,037,992).
4 The 2013 LTIP award vested at 57%.
5 The face value of awards granted in 2016 represents the maximum vesting of awards (but before any credit for
dividends over the period to vesting) and is calculated using a share price of 877.50p being the average of the closing
middle market prices of Phoenix shares for the 3 dealing days preceding the award date, being £1,399,999 for Clive
Bannister and £879,992 for James McConville. The vesting percentage at threshold performance (2016 awards) for Clive
Bannister and James McConville is 25%.
6 As detailed earlier, for LTIP awards made from 2015 onwards, a holding period applies so that any LTIP awards for
which the performance vesting requirements are satisfied will not be released for a further two years from the third
anniversary of the original award date.
The performance conditions for the 2014, 2015 and 2016 awards are set out below including the adjustment to the cash
generation targets to reflect the impact of both the AXA and Abbey Life acquisitions to ensure that the acquisitions are
treated consistently with the underlying assets and are not, overall, more or less challenging to achieve:
Performance measure 2014 award 2015 award 2016 award
(40% Embedded value growth, 40% Cumulative cash generation and 20% TSR) (40% Embedded value growth, 40% Cumulative cash generation and 20% TSR) (50% Cumulative cash generation and 50% TSR)
Embedded value growth125% of this part vests at threshold performance rising on a pro rata basis until 100% vests.Measured over Target range between Embedded value growth in excess of the risk-free rate by 4% per annum and Embedded value growth in excess of the risk-free rate by 6% per annum.For this award, an additional £50 million was added to the base Embedded value figure to increase the level of challenge. Target range between Embedded value growth in excess of the risk-free rate by 3% per annum and Embedded value growth in excess of the risk-free rate by 5% per annum. Not applicable.
three financial years commencing with the year of award.
Cumulative cash generation25% of this part vests at threshold performance rising on a pro rata basis until 100% vests.Measured Target range of £1.348 billion to £1.548 billion.This was increased to £1.368 billion to £1.568 billion to reflect the AXA acquisition (£20 million increase to the range). Target range of £841 million to £991 million.This was increased to £1.032 billion to £1.182 billion to reflect the AXA and Abbey acquisitions (£191 million increase to the range). Target range of £949 million to £1.149 billion.This was increased to £1.311 billion to £1.511 billion to reflect the AXA and Abbey acquisitions (£362 million increase to the range).
over three financial years commencing with the year of award.
TSR25% of this part vests at threshold performance rising on a pro rata basis until 100% vests. In addition, the Committee must Target range between median performance against the constituents of the FTSE 250 (excluding Investment Trusts) rising on a pro rata basis until full vesting for upper quintile performance. Target range as for 2014. Target range as for 2014.
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