Chief executive missed out on bigger bonus because of RSA’s financial performance
RSA group chief executive Stephen Hester was paid a total of £2.1m in 2014, his first year with the insurer.
He missed out on a bigger bonus because of RSA’s financial performance during the year. The company also revealed that base salary for executive directors will be frozen again in 2015.
Hester, who started the job on 5 February 2014, received a base salary of £864,000 and a bonus of £939,043 for the 11 months of 2014 that he worked at the company.
The bonus was 68% of the maximum he could have achieved, mainly because RSA missed three key financial targets in the year.
RSA was targeting a group return on tangible equity (ROTE) of 10.8%, an underlying profit before tax of £270m and a group combined operating ratio (COR) of 99% for 2014.
But the company delivered an ROTE of 9.7%, underlying profit before tax of £247m and a COR of 99.7% under the company’s old method of calculating the COR.
Financial targets make up 40% of Hester’s total bonus if targets are hit, but as they were missed, he only got 13% of his bonus from financial performance.
He also lost out in the business performance review scorecard element, which accounted for 25% of his bonus instead of the maximum possible 30%.
Hester was given full marks on his personal scorecard, earning the maximum 30% he could have from this portion.
Hester did not receive any payments from RSA’s long-term incentive plan in 2014, which rewards performance over three years with shares.
RSA’s outgoing chief financial officer Richard Houghton was paid £682,000 in 2014, up 18% on the £580,000 in 2013.
His base salary was virtually unchanged at £494,000 (2013: £491,000) but he received a £100,000 bonus in 2014 after getting no bonus in 2013.
RSA also revealed that executive directors’ pay would be frozen in 2015 for a second year running. Hester would have been paid a base salary of £950,000 if he had worked the full 2014 year, and so he will get that amount as base salary next year.