Paul Geddes’ package increased by 9% in 2013

The pay package of Direct Line Group’s chief executive Paul Geddes rose 9% last year to £2.4m.

Geddes was paid a £760,000 base salary last year, flat on last year. But he was also awarded a £835,000 bonus, up on £760,000 in 2012 .

The bulk of the rise was down to shares worth £622,000 from a long-term bonus scheme arranged by DLG’s former owner RBS in 2010 and 2011.  

UK employees were paid 4% more in 2013, the insurer’s annual report said.

Geddes’ performance-based bonus was 63% of the maximum he could have received. “We believe that this level of payout is appropriate and that it demonstrates that our remuneration policy effectively aligns pay with underlying performance,” said remuneration committee chair Priscilla Vacassin.

Chief financial officer John Reizenstein’s total package increased from £893,000 to £1.1m last year, and included a £415,000 bonus.

Vacassin said having a high proportion of remuneration dependent on the achievement of executives allowed to company to make sure pay reflected individual and group performance and to manage costs.

Pre-empting questions about how the insurer can justify paying bonuses while making redundancies, Vacassin said job cuts were sometimes needed to keep make the businesses sustainable in the long run and to remain competitive. “Where possible, we are managing redundancy decisions through redeployment and support. Our aim is to treat respectfully and fairly all those affected,” she said.

“In this context, the [remuneration] committee aims to ensure that employees, including executive directors, are continuously engaged to deliver against our plan and are provided with fair pay for the job, which takes into account the context of pay in the wider market as well as their individual performance. It is also vital to ensure that we continue to pay competitively, at all levels.”

Direct Line’s share price has risen steadily from 171p to 248p since its stock exchange debut in October 2012.

Its operating profit from continuing operations rose 14.2% to £526.5m last year.