Governance and financials

Remuneration Report

Executive directors' remuneration during 2010

The Committee reviews the structure of the executive directors' remuneration packages annually to satisfy itself that the balance between fixed and variable remuneration and short-term and long-term incentives and rewards remains appropriate. The overall make-up of the remuneration packages for the executive directors in 2010 was as follows:

Julian Roberts, Group Chief Executive

Element	Quantum	Additional information
Basic salary	£830,000	Paid monthly in cash. Reviewed with effect from 1 January each year, taking into account market benchmarks.
Benefit allowance	£280,640	Paid monthly in cash - 35% of basic salary less pension contributions.
Pension contribution	£9,860	Paid in lieu of a monthly cash payment under the benefit allowance (now ceased).
Short-term incentive	£1,220,100	147% of a maximum of 150% of basic salary, to be paid half in cash and half deferred for three years under the Old Mutual plc Share Reward Plan. The short-term incentive for 2010 was based on achievement of Group financial targets, as well as delivery of individually agreed objectives.
Long-term incentive	£1,660,000	Annualised expected value of the 2010 award after discounting by 40% for the impact of performance targets, as described in the section of this report titled 'Performance targets applicable to share incentives'. This includes the value of one third of the one-off award granted under the OMSIP in 2010.
Other benefits	£1,933	Life cover of £1,000,000 and disability cover capped at £140,000 a year.
Restricted share release	£110,473, based on the market value of the shares at date of release	On 30 March 2010, Julian Roberts received a release of 90,812 shares held under the deferred short-term incentive restricted share award originally granted in 2007. He retained all of the shares, paying the associated income tax and employee's National Insurance costs.

Element

Quantum

Additional information

Basic salary

£830,000

Paid monthly in cash. Reviewed with effect from 1 January each year, taking into account market benchmarks.

Benefit allowance

£280,640

Paid monthly in cash - 35% of basic salary less pension contributions.

Pension contribution

£9,860

Paid in lieu of a monthly cash payment under the benefit allowance (now ceased).

Short-term incentive

£1,220,100

147% of a maximum of 150% of basic salary, to be paid half in cash and half deferred for three years under the Old Mutual plc Share Reward Plan. The short-term incentive for 2010 was based on achievement of Group financial targets, as well as delivery of individually agreed objectives.

Long-term incentive

£1,660,000

Annualised expected value of the 2010 award after discounting by 40% for the impact of performance targets, as described in the section of this report titled 'Performance targets applicable to share incentives'. This includes the value of one third of the one-off award granted under the OMSIP in 2010.

Other benefits

£1,933

Life cover of £1,000,000 and disability cover capped at £140,000 a year.

Restricted share release

£110,473, based on the market value of the shares at date of release

On 30 March 2010, Julian Roberts received a release of 90,812 shares held under the deferred short-term incentive restricted share award originally granted in 2007. He retained all of the shares, paying the associated income tax and employee's National Insurance costs.

Philip Broadley, Group Finance Director

Element	Quantum	Additional information
Basic salary	£550,000	Paid monthly in cash. Reviewed with effect from 1 January each year, taking into account market benchmarks.
Benefit allowance	£192,500	Paid monthly in cash - 35% of basic salary.
Short-term incentive	£775,500	141% of a maximum of 150% of basic salary to be paid half in cash and half deferred for three years under the Old Mutual plc Share Reward Plan. The short-term incentive for 2010 was based on achievement of Group financial targets, as well as delivery of individually agreed objectives.
Long-term incentive	£1,100,000	Annualised expected value of the 2010 award after discounting by 40% for the impact of performance targets, as described in the section of this report titled 'Performance targets applicable to share incentives'. This includes the value of one third of the one-off award granted under the OMSIP in 2010.
Other benefits	£1,933	Life cover of £1,000,000 and disability cover capped at £140,000 a year.

Element

Quantum

Additional information

Basic salary

£550,000

Paid monthly in cash. Reviewed with effect from 1 January each year, taking into account market benchmarks.

Benefit allowance

£192,500

Paid monthly in cash - 35% of basic salary.

Short-term incentive

£775,500

141% of a maximum of 150% of basic salary to be paid half in cash and half deferred for three years under the Old Mutual plc Share Reward Plan. The short-term incentive for 2010 was based on achievement of Group financial targets, as well as delivery of individually agreed objectives.

Long-term incentive

£1,100,000

Other benefits

£1,933

Life cover of £1,000,000 and disability cover capped at £140,000 a year.

The following diagrams show the breakdown of the executive directors' total remuneration arrangements during 2010 (excluding restricted share award releases):

Short-term incentive targets for performance year 2010

The payment of short-term incentives is subject to the achievement of pre-determined financial targets and personal objectives based on the key deliverables for each executive director, as reviewed and approved each year by the Committee. Details of the structure and outcomes of the metrics for Julian Roberts' and Philip Broadley's short-term incentives for 2010 are set out in the following table:

	Julian Roberts		Philip Broadley
	Potential	Achieved	Potential	Achieved
Group targets as % of salary	112.5	112.5	75	75
Personal targets as % of salary	37.5	34.5	75	66
Total (as % of salary)	150	147	150	141
£000 incentive for period	1,245	1,220	825	775
Achieved incentive as % of maximum		98		94

Performance targets applicable to share incentives

2008 - Share Options and Bonus-Matching Restricted Share Awards

Target 1	Target 2	Target 3
For bonus-matching restricted share awards and tier 1 of share option awards (up to 100% of base salary)	For tier 2 of share option awards (between 100% and 200% of base salary)	For tier 3 of share option awards (above 200% of base salary)
Growth in IFRS EPS must exceed growth in UK RPI by at least 9% over the three-year vesting period	Growth in IFRS EPS must exceed growth in UK RPI by at least 12% over the three-year vesting period	Growth in IFRS EPS must exceed growth in UK RPI by at least 15% over the three-year vesting period

Target 1

Target 2

Target 3

For bonus-matching restricted share awards and tier 1 of share option awards (up to 100% of base salary)

For tier 2 of share option awards (between 100% and 200% of base salary)

For tier 3 of share option awards (above 200% of base salary)

Growth in IFRS EPS must exceed growth in UK RPI by at least 9% over the three-year vesting period

Growth in IFRS EPS must exceed growth in UK RPI by at least 12% over the three-year vesting period

Growth in IFRS EPS must exceed growth in UK RPI by at least 15% over the three-year vesting period

The IFRS EPS-based targets attached to the share options and the bonus-matching restricted share awards granted in 2008 were not met and the options and restricted share awards therefore lapsed on 8 March 2011.

2009 - Bonus-Matching and Joining Restricted Share Awards

One third of each award vests on attainment of the Return on Average Equity (RoAE) and real growth in adjusted operating profit IFRS earnings per share (EPS) targets at each tier as set out below, with pro-rata vesting between tiers, after tier one has been attained. Targets are tested on a once-only basis after three years from the year prior to the grant and any award or part thereof that does not vest then lapses.

The targets are set out in the table below:

RoAE

	Tier 1	Tier 2	Tier 3
RoAE required	10%	11%	12%

EPS

	Growth Factor above UK RPI
Stock Market growth*	Tier 1	Tier 2	Tier 3
50% +	9%	12%	15%
0%	0%	3%	6%

* Growth will be calculated by the value of £100 invested as follows:

£33.33 in the FTSE100 index - average price over Q4 2008
£66.67 in the JSE ALSI index - average price over Q4 2008

against the value of that investment in £ calculated by reference to the average price (converted into £, in the case of the JSE ALSI component, by reference to the average daily exchange rates for the period) on the respective indices over Q4 2011. The choice of criteria was intended to reflect the principal stock markets with which the Group's results are substantially correlated.

2010 - OMSIP

OMSIP replaced the long-term incentive awards for the executive directors and certain other senior members of management in 2010, following its approval by shareholders at the 2010 AGM.

Accordingly, the 2010 OMSIP award was made in two parts. The first part is based on rationalising objectives and the second on key financial objectives in relation to the restructuring of the Group. The targets for these awards are set out below:

Rationalising Objectives

Component	Objective	Measurements
Significant rationalising initiatives	Rationalise the Group by achieving strategic initiatives in accordance with the Group's strategy statement to streamline the Group, unlock value and reduce debt	Based on Committee evaluation of the following three factors: 1. Total value released relative to available benchmark transactions 2. Quality of execution including risk, reputation and other non-financial impacts 3. Amount available to reduce debt from the proceeds of rationalisation

Component

Objective

Measurements

Significant rationalising initiatives

Rationalise the Group by achieving strategic initiatives in accordance with the Group's strategy statement to streamline the Group, unlock value and reduce debt

Based on Committee evaluation of the following three factors:
1. Total value released relative to available benchmark transactions
2. Quality of execution including risk, reputation and other non-financial impacts
3. Amount available to reduce debt from the proceeds of rationalisation

At the end of the three-year measurement period, the Committee will assess the sum of the evaluations of the individual initiatives when determining total achievement of this component and may exercise its discretion to reduce the vesting level of the award when factoring in total achievement toward debt reduction and any new information arising which suggests a different performance assessment.

The Committee believes that these measures provide a balanced approach to assessing the success of implementing the strategic plan, underlying financial performance of the future business, and delivery of shareholder value. The Committee also believes that these measures give it the time and discretion to judge performance with the benefit of additional information emerging during the whole of the performance period.

Following the sale of the US Life business, which is currently expected to take place shortly after the date of this report, the Committee will carry out a full review and calculation of the impact of that transaction for the purposes of the related OMSIP rationalising objective and details of its conclusions will be disclosed in next year's Remuneration Report.