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Our Executive Directors’ remuneration at a glance

Our remuneration strategy and principles

During 2016, our remuneration strategy remained unchanged from that previously approved by shareholders:

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 delivery of the business plan can be sustained.

Our current remuneration architecture

    Key elements1,2   Key features of the 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. The Chief Executive, NABU also receives a 10% share of the Jackson bonus pool
  2. The Chief Executive, M&G retains separate bonus and long-term incentive arrangements
    Salary; Cash bonus; Deferred bonus; Prudential Long Term Incentive Plan (PLTIP); Share ownership guidelines  

Broadly aligned with pay budget for other employees

  Salary increases of 1% in 2016

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

   

The maximum opportunity is up to 200% of salary

40% of bonus is deferred into shares for three years

Award is subject to malus and clawback provisions

 

The Group Chief Executive has a maximum bonus opportunity of 200% of salary. For other Executive Directors the maximum is 180% of salary or less

2016 bonuses were paid based on performance measures related to profit, cash flow and capital adequacy as well as personal/functional objectives

 

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

TSR vesting schedule relative to insurance peers.

   

Maximum award under the Plan is 550% of salary.

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

  • Relative TSR; and
  • Group or business unit IFRS profit.

Measured over the three financial years from year of award

Award is subject to malus and clawback provisions

 

Awards in 2016 were below the Plan limits:

  • Group Chief Executive: 400% of salary;
  • CEO, NABU: 460% of salary;
  • CEO, M&G: 150% of salary; and
  • Other PLTIP awards were 250% of salary.

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

     

Significant share ownership guidelines for all Executive Directors as follows:

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

What performance means for Executive Directors’ pay

At Prudential, remuneration packages are designed to ensure a strong alignment between pay and performance. As you can see from the charts in the Annual statement from the Chairman of the Remuneration Committee, 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 2014 had stretching performance conditions attached to vesting and were denominated in shares or ADRs. The 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.

The value of these performance-related elements of remuneration are added to the fixed packages provided to Executive Directors to calculate the 2016 ‘single figure’ of total remuneration. The total 2016 ‘single figure’ for the Group Chief Executive is lower than the total 2015 ‘single figure’, despite continuing strong business performance. This is chiefly a result of a lower level of vesting of the 2014 PLTIP award. Mike Wells’s 2016 ‘single figure’ is 30 per cent less than his 2015 ‘single figure’, notwithstanding his exceptional leadership and personal performance. The values for the current Executive Directors who were Directors during the year are outlined in the table below:

Download as excel file

    Fixed pay Performance related  
Executive Director Role 2016 salary Pension and benefits 2016 bonus LTIP vesting Other payments   2016 single figure   2015 single figure

Notes

  1. John Foley was appointed to the Board on 19 January 2016. The remuneration above was paid in respect of his service as an Executive Director, other than the LTIP releases which related to his previous role.
  2. Anne Richards was appointed to the Board on 7 June 2016. The remuneration above was paid in respect of her service as an Executive Director.
  3. NABU is an abbreviation of North American Business Unit.
  4. PCA is an abbreviation of Prudential Corporation Asia.
John Foley1 Chief Executive, UK & Europe £714,000 £313,000 £1,271,000 £1,781,000   £4,079,000  
Penny James Group Chief Risk Officer £606,000 £235,000 £962,000 £347,000   £2,150,000   £958,000
Nic Nicandrou Chief Financial Officer £711,000 £539,000 £1,236,000 £1,518,000   £4,004,000   £4,278,000
Anne Richards2 Chief Executive, M&G £228,000 £139,000 £1,368,000 £2,140,000   £3,875,000  
Barry Stowe Chairman & CEO, NABU3 £820,000 £251,000 £5,229,000 £1,168,000   £7,468,000   £6,763,000
Mike Wells Group Chief Executive £1,081,000 £1,143,000 £2,151,000 £2,520,000   £6,895,000   £9,894,000
Tony Wilkey Chief Executive, PCA4 £845,000 £1,041,000 £1,440,000 £918,000   £4,244,000   £3,289,000

Aligning 2017 pay to performance

The Remuneration Committee awarded salary increases to the Executive Directors, other than the Chief Executive, M&G and the Group Chief Risk Officer, for 2017 of 2 per cent, which was below the salary increase budget for the wider workforce. The Chief Executive, M&G, was appointed during the year and therefore no increase in salary was proposed. The Remuneration Committee awarded a salary increase for 2017 of 5 per cent to the Group Chief Risk Officer to reflect her performance and contribution. When Penny was promoted to the Board in 2015 her salary was lower than that of her predecessor. No other changes have been made as we believe remuneration packages remain strongly aligned with performance over both the short and the long term.

The resultant remuneration packages for 2017 are set out in detail in the Annual report on remuneration and summarised below:

Download as excel file

      AIP  
Executive Director Role 2017 salary Maximum bonus
(% salary)
Bonus deferred LTI award
(% salary)

Notes

  1. The bonus opportunity for the Chief Executive, M&G remains the lower of 0.75 per cent of M&G’s IFRS profit or six times salary. The Committee determined that Anne Richards should receive a 2017 PLTIP award with a face value of 450% of base salary, consistent with the combined face value of her previous LTI awards under the PLTIP (150% of salary) and M&G Executive LTIP (300% of salary). All future awards will be made under the PLTIP.
  2. The Chairman & CEO, NABU will also continue to have a 10 per cent share of the Jackson bonus pool. 40 per cent of this is deferred in shares.
John Foley Chief Executive, UK & Europe £765,000 180% 40% 250%
Penny James Group Chief Risk Officer £637,000 160% 40% 250%
Anne Richards1 Chief Executive, M&G £400,000 600% 40% 450%
Nic Nicandrou Chief Financial Officer £726,000 175% 40% 250%
Barry Stowe2 Chairman & CEO, NABU US$1,134,000 160% 40% 460%
Mike Wells Group Chief Executive £1,103,000 200% 40% 400%
Tony Wilkey Chief Executive, PCA HK$9,070,000 180% 40% 250%

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