Report of The Board in relation to remuneration policy and practice
7.2 Incentive plan philosophy
The purpose of the incentive plans is to provide a direct link between each individual’s remuneration and three components of performance, namely their own, that of the business they work in and that of the total Group, over both the shorter and the longer term.
All Executive Directors and a substantial majority of other senior colleagues with HBOS-wide portfolios participate in incentive plans which are Group-wide. Performance targets and levels of participation differ in order to align overall individual remuneration with the Group’s policy objectives outlined earlier. Different, market specific, arrangements exist for a small number of senior colleagues within the Group.
Payment of incentives, for Executive Directors and certain other individuals, is subject to the approval of the Committee. Except in certain exceptional circumstances in respect of initial periods of employment, it is the Committee’s policy that no Executive Director should have a contractual right to an incentive.
Incentive arrangements to apply during 2008 and beyond are set out in sections 7.3 and 7.4.