Remuneration Policy

This Policy has been prepared in accordance with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, as amended in 2013. The Policy has been developed taking into account a number of regulatory and governance principles, including:

  • The UK Corporate Governance Code 2016
  • The regulatory framework applying to the Financial Services Sector (including the Dual-regulated firms Remuneration Code and provisions of CRD IV)
  • The executive remuneration guidelines of the main institutional investors and their representative bodies.

Objectives of the Remuneration Policy

The overarching principles of the Remuneration Policy are to:

  • Promote the long-term success of the Company.
  • Attract, motivate and retain high-performing employees.
  • Adhere to and respond to the regulatory framework for the financial services sector and UK listed companies more generally.
  • Strike an appropriate balance between risk-taking and reward.
  • Encourage and support a strong sales and service culture to meet the needs of our customers.
  • Reward the achievement of the overall business objectives of the Group.
  • Align employees’ interests with those of shareholders and customers.
  • Be consistent with the Group’s risk policies and systems to guard against inappropriate risk-taking.

How the views of employees and shareholders are taken into account

The Committee does not formally consult directly with employees on executive pay but receives periodic updates in relation to salary and bonus reviews across the Company. As set out in the policy table overleaf, in setting remuneration for the Executive Directors, the Committee takes note of the overall approach to reward for employees in the Company and salary increases will ordinarily be in line (in percentage of salary terms) with those of the wider workforce. Thus, the Committee is satisfied that the decisions made in relation to Executive Directors’ pay are made with an appropriate understanding of the wider workforce. The Board has begun work to examine how it can engage more widely with stakeholders, including employees. As part of this initiative, the Committee will look into the best way to engage with employees on how executive pay aligns with the pay of the wider workforce.

The Committee will seek to engage with major shareholders and the main shareholder representative bodies and proxy advisory firms when it is proposed that any material changes are to be made to the Remuneration Policy or its implementation. In addition, we will consider any shareholder feedback received in relation to the AGM.

This, plus any additional feedback received from time to time, will be considered as part of the Committee’s annual review of the effectiveness of the Remuneration Policy.

The Remuneration Policy for Executive Directors

The table below and accompanying notes summarise the key aspects of the Company’s Remuneration Policy for Executive Directors.

Element Purpose and link to strategy Operation and performance conditions Maximum

To reward Executives for the role and duties required.

Recognises individual’s experience, responsibility and performance.

Paid monthly.
Base salaries are usually reviewed annually, with any changes usually effective from 1 April.

No performance conditions apply to the payment of salary. However, when setting salaries, account is taken of an individual’s specific role, duties, experience and contribution to the organisation.

As part of the salary review process, the Committee takes account of individual and corporate performance, increases provided to the wider workforce and the external market for UK listed companies both in the financial services sector and across all sectors.

Increases will generally be broadly in line with the average of the workforce. Higher increases may be awarded in exceptional circumstances such as a material increase in the scope of the role, following the appointment of a new executive (which could also include internal promotions) to bring an initially below-market package in line with market over time or in response to market factors.


To provide market competitive benefits to ensure the well-being of employees.

The Company currently provides:

  • car allowance
  • life assurance
  • income protection
  • private medical insurance, and
  • may pay other benefits as appropriate for the role.

There is no maximum cap on benefits, as the cost of benefits may vary according to the external market.


To provide retirement planning to employees.

Directors may participate in a defined contribution plan, or, if they are in excess of the HMRC annual or lifetime allowances for contributions, may elect to receive cash in lieu of all or some of such benefit.

Up to 13% of salary.


Annual bonus

To incentivise and reward individuals for the achievement of pre-defined, Committee approved, annual financial, operational and individual objectives which are closely linked to the corporate strategy.

The annual bonus targets will have a 90% weighting based on performance under an agreed balanced scorecard which includes an element of risk appraisal. Within the scorecard at least 50% of the bonus will be based on financial performance. 10% of bonus will be based on personal performance targets.

The objectives in the scorecard, and the weightings on each element will be set annually, and may be flexed according to role. Each element will be assessed independently, but with Committee discretion to flex the payout (including to zero) to ensure there is a strong link between payout and performance.

50% of any bonus earned will be deferred into an award over shares. These deferred shares will normally vest after three years provided that the executive remains in employment at the end of the three-year period.

Clawback/malus provisions apply, as described in note 1 below.

The maximum bonus opportunity is 150% of salary.

The threshold level for payment is up to 25% for any measure.

Performance Share Plan  

To incentivise and recognise execution of the business strategy over the longer term.

Rewards strong financial performance over a sustained period.


The Committee, usually following the announcement of full-year results.

Normally, awards will be based on a mixture of internal financial performance targets and relative TSR.

The performance targets will normally be measured over three years.

Any vesting will be subject to an underpin, whereby the Committee must be satisfied (i) that the vesting reflects the underlying performance of the Company, (ii) that the business has operated within the Board’s risk appetite framework and (iii) that individual conduct has been satisfactory.

Awards granted after 1 January 2018 will include a holding period whereby any shares earned at the end of the performance period may not be sold for a further two years, other than to pay tax.

Clawback and malus provisions apply as described in note 1 below.


The maximum PSP grant limit is 200% of salary in respect of any financial year.

The threshold level for payment is 25% for any measure.

For 2018, it is intended that awards of 150% of salary will be made to the CEO and CFO.

All-employee share incentive plan (Sharesave Plan)  

All employees including Executive Directors are encouraged to become shareholders through the operation of an allemployee share plan.

Tax favoured plan under which regular monthly savings may be made over a three or five-year period and can be used to fund the exercise of an option, where the exercise price is discounted by up to 20%.


Maximum permitted savings based on HMRC limits.

Share ownership guidelines To increase alignment between executives and shareholders.

 Executive Directors are expected to build and maintain a minimum holding of shares.

Executives must retain at least 50% of the shares acquired on vesting of any share awards (net of tax) until the required holding is attained.

At let 250% of salary for the CEO and at least 200% of salary for the CFO or such higher level as the Committee may determine from time to time.

1. Clawback and malus provisions apply to both the annual bonus, including amounts deferred into shares, and PSP. These provide for incentive recovery in the event of (i) the discovery of a material misstatement of results, (ii) an error which has resulted in higher incentive payouts than would have otherwise been earned, (iii) a significant failure of risk management, (iv) regulatory censure, (v) in instances of individual gross misconduct discovered within five years of the end of the performance period (vi) or any other exceptional circumstance as determined by the Board. A further two years may be applied following such a discovery, in order to allow for the investigation of any such event. In order to effect any such clawback, the Committee may use a variety of methods: withhold deferred bonus shares, future PSP awards or cash bonuses, or seek to recoup cash already paid.

Choice of performance measures for Executive Directors’ awards

The use of a balanced scorecard for the annual bonus reflects the balance of financial and non-financial business drivers across the Company. The combination of performance measures ties the bonus plan to both the delivery of corporate targets and strategic/personal objectives. This ensures there is an appropriate focus on the balance between financial and non-financial targets, with the scorecard composition being set by the Committee from year to year depending on the corporate plan.

The PSP is based on a mixture of financial measures and relative TSR, in line with our key objectives of sustained growth in earnings leading to the creation of shareholder value over the long term. TSR provides a close alignment between the relative returns experienced by our shareholders and the rewards to executives.

There is an underpin in place on the PSP to ensure that the payouts are aligned with underlying performance, financial and non-financial risk and individual conduct.

In line with HMRC regulations for such schemes, the Sharesave Plan does not operate performance conditions.

How the Remuneration Committee operates the variable pay policy

The Committee operates the share plans in accordance with their respective rules, the Listing Rules and HMRC requirements where relevant. The Committee, consistent with market practice, retains discretion over a number of areas relating to the operation and administration of certain plans, including:

    • Who participates in the plans
    • The form of the award (i.e. conditional share award or nil cost option)
    • When to make awards and payments, how to determine the size of an award, a payment, or when and how much of an award should vest
    • The testing of a performance condition over a shortened performance period
    • How to deal with a change of control or restructuring of the Group
    • Whether a participant is a good/bad leaver for incentive plan purposes, what proportion of an award vests at the original vesting date or whether and what proportion of an award may vest at the time of leaving
    • How and whether an award may be adjusted in certain circumstances (e.g. for a rights issue, a corporate restructuring or for special dividends)
    • What the weighting, measures and targets should be for the annual bonus plan and PSP from year to year.

The Committee also retains the discretion within the Policy to adjust existing targets and/or set different measures for the annual bonus and for the PSP if events happen that cause it to determine that the targets are no longer appropriate and amendment is required so they can achieve their original intended purpose and provided the new targets are not materially less difficult to satisfy.

Any use of the above discretions would, where relevant, be explained in the Annual Report on Remuneration and may, as appropriate, be the subject of consultation with the Company’s major shareholders.

OSB operates in a heavily regulated sector, the rules of which are subject to frequent evolution. The Committee therefore also retains the discretion to make adjustments to payments under this Policy as required by financial services regulations. For example, this may include increasing the proportion of bonus deferred or extending the time horizons for variable pay.

Awards granted prior to the effective date

Any commitments entered into with Directors prior to the effective date of this Policy will be honoured. Details of any such payments will be set out in the Annual Report on Remuneration as they arise.

Remuneration Policy for other employees

The Committee has regard to pay structures across the wider Group when setting the Remuneration Policy for Executive Directors and ensures that Policies at and below the executive level form a coherent whole. There are no significant differences in the overall remuneration philosophy, although pay is generally more variable and linked more to the long term for those at more senior levels. The Committee’s primary reference point for the salary reviews for the Executive Directors is the average salary increase for the broader workforce.

A highly collegiate approach is followed in the assessment of annual bonus, with our corporate scorecard being used to assess bonus outcomes throughout the organisation, with measures weighted according to role, where relevant.

Overall, the Remuneration Policy for the Executive Directors is more heavily weighted towards performance-related pay than for other employees. In particular, performance-related long-term incentives are not provided outside of the most senior executive population as they are reserved for those considered to have the greatest potential to influence overall levels of performance.

Although PSP is awarded only to the most senior managers in the Group, the Company is committed to widespread equity ownership. Accordingly, in 2014, our Sharesave Plan offer was launched for all employees. Executive Directors are eligible to participate in this plan on the same basis as other employees.

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