Directors’ remuneration report

In this report, which will be submitted for approval at the Annual General Meeting on 30 July 2009, we describe how the executive directors are remunerated. Those parts of the Remuneration Report which are subject to audit by Ernst & Young are marked ‘audited’.

The Remuneration Committee

The role of the Remuneration Committee

The Remuneration Committee of the Board (the Committee) determines the remuneration and terms of employment of the Chairman of the Company, executive directors of NWG and NWL and a further seven senior managers, in accordance with a remuneration policy approved by the Board. The terms of reference for the Committee are published on our website at www.nwg.co.uk (in the ‘about us: corporate governance’ section) or a copy can be requested from the Company Secretary.

The Committee is always available to engage with major shareholders and their representatives to discuss remuneration matters, although no such approaches were received in 2008/09.

Remuneration Committee members

The Committee members are Martin Nègre (Chairman), Sir Patrick Brown, Alex Scott-Barrett, who are all considered by the Company to be independent, and Sir Derek Wanless. The membership of the Committee was, therefore, compliant with the Combined Code throughout the year. Martin Parker, the Company Secretary, is secretary to the Committee.

External advice

The Committee continued to receive advice during the year from Hewitt New Bridge Street (HNBS) and also from the Managing Director (although never about his own remuneration). HNBS was paid £15,825 for these services in 2008/09 and continues to assist the Committee in maintaining best practice in relation to remuneration. HNBS does not provide any other service to the Company.

The Committee’s work in 2008/09

The Committee met three times during the year with 100% attendance by all members, except Sir Derek Wanless who attended two meetings, to:

• agree bonus payments for 2007/08;
• agree salaries for 2009/10;
• determine the vesting percentage to be applied to the LTIP awards made on 9 December 2005, which vested on 9 December 2008;
• grant LTIP awards on 15 December 2008 (to vest on 15 December 2011); and
• set performance targets for executive directors and senior managers.

As the Committee works closely with NWL’s remuneration committee, Committee papers and minutes are circulated to all NWL and NWG non-executive directors, who can give their views direct to the Committee Chairman and can attend meetings if they wish.