Setting new standards - Friends Life

DIRECTORS’ REPORT
CORPORATE GOVERNANCE REPORTS
Net gains made by executive directors on share options exercised during the year are set out below:-
Income Tax &
Gross proceeds NICs deductions Net proceeds
Ben Gunn ESOS 2003 £505,286 £245,973 £259,313
LTIP 2003 £364,977 £177,671 £187,306
Keith Satchell ESOS 2003 £850,192 £413,874 £436,318
LTIP 2003 £614,110 £298,948 £315,162
Philip Moore ESOS 2003 None exercised in 2006
LTIP 2003 £178,240 £86,768 £91,472
Directors’ shareholdings
Directors’ personal shareholdings that are not related to their
remuneration are disclosed in the Notes to the Accounts. The
executive directors are expected to build up their shareholding in
the Company over time. To support this, awards in and after 2005
under the LTIP have been made with the expectation that the
recipient will retain shares up to the value at exercise of 75% of
the net proceeds.
Pensions (audited)
All executive directors, except Alain Grisay and Jim Smart, are
members of the Pension Scheme. No element of executive
directors’ remuneration other than basic salary is pensionable.
The pensions simplification changes implemented by the
Government became effective in April 2006. These changes
involved the abolition of the HM Revenue & Customs earnings cap
on approved pension benefits. The Pension Scheme has been
amended to ensure the continuation of a scheme specific earnings
cap (the Pension Scheme Cap) to maintain the benefit at the
previous level and therefore control the costs of the Scheme.
Those members of the Pension Scheme who are subject to and
whose basic salary exceeds the Pension Scheme Cap are paid a
salary supplement amounting to, currently, 20% of the difference
between their basic salary and the Pension Scheme Cap.
The Pension Scheme also provides a spouse’s pension equal to
two-thirds of the member’s pension upon death after retirement.
On death in service, the Pension Scheme provides a spouse’s
pension equal to two-thirds of the member’s prospective pension
plus a lump sum death in service benefit. F&C contributes to a
money purchase arrangement for Alain Grisay. In January 2006,
F&C made a contribution of £2,000,000 equivalent to £666,666 per
annum for three years, into Alain Grisay’s pension fund. The
payment represented F&C’s commitment to Alain Grisay on
assuming the role of Chief Executive to provide him with an
appropriate pension at age 60. This commitment is contingent on
Alain Grisay serving as F&C’s Chief Executive for a minimum of
three years and not resigning or being dismissed for cause during
this three year period.
Friends Provident Annual Report & Accounts 2006 65