Report of The Board in relation to remuneration policy and practice
7.1 Salary
Salary benchmarks are reviewed annually, taking account of information from independent sources on salary rates for comparable jobs in the finance sector and in other selected major listed companies. Actual salaries are normally reviewed annually in May but can be reviewed at any time. There is no automatic or guaranteed annual salary increase.
The benchmarking process is both extensive and rigorous. It is designed to ensure that actual salaries are managed up to broadly the median salary policy adopted by the Committee. Specifically, the Committee considers data sourced from Hay Group and New Bridge Street Consultants LLP; as well as data sourced from annual reports and accounts of other relevant companies. These include selected companies from the FTSE 30 – comprising an equal number of companies, by market capitalisation, bigger than and smaller than HBOS – together with other major banks, insurance companies and retailers.
The annual rate of base salaries of the Executive Directors after the most recent review with effect from 1 May 2007 and at 31 December 2007, were:
Peter Cummings £660,000, Jo Dawson £550,000 (1 May 2007) / £600,000 (1 September 2007), Andy Hornby £975,000, Phil Hodkinson £645,000, Colin Matthew £615,000. Until the date of his ceasing to be an Executive Director on 10 August 2007, Benny Higgins’ base salary was £655,000. With effect from their dates of appointment of 5 September 2007, 15 September 2007 and 25 September 2007, and at 31 December 2007, the base salaries of Dan Watkins, Philip Gore-Randall, and Mike Ellis were £500,000, £540,000 and £630,000, respectively.
At 31 December 2007, the average salary for those in Level 9 was £325,000; the upper quartile was £360,000 and the lower quartile was £280,000; and for those in Level 8 the average was £222,000; the upper quartile was £250,000 and the lower quartile was £185,000.