EX-4.3 3 tm2412225d1_ex4-3.htm EXHIBIT 4.3

 

Exhibit 4.3

 

 

NatWest Group plc

 

Adopted by the Board and approved by shareholders on 25 June 2014 (incorporating amendments made on and before 15 April 2016, 10 May 2018 14 September 2018 and 22 July 2020 )

 

 

 

 

NatWest Group plc 2014 Employee Share Plan

 

Contents

 

1. Introduction 5
     
2. Operation of the Plan 5
     
  2.1 Timing of operation 5
     
  2.2 Selection of Participants 5
     
3. Grant of Awards 5
     
  3.1 Determination of Awards 5
     
  3.2 Terms of Awards 5
     
  3.3 Performance Conditions and additional conditions 6
     
  3.4 Award statement 6
     
  3.5 Rights attaching to Award Assets 6
     
  3.6 Individual limit 6
     
  3.7 Dilution limits 7
     
  3.8 Listing Rules 8
     
  3.9 Currency exchange 8
     
4. Malus and Clawback 8
     
  4.1 General 8
     
  4.2 Reduction in Awards to give effect to provisions in other plans 9
     
  4.3 Compliance with legal or regulatory provisions 9
     
5. Vesting of Awards 9
     
  5.1 General 9
     
  5.2 Timing of Vesting 9
     
  5.3 Delayed Vesting 10
     
  5.4 Consequences of Vesting 10
     
  5.5 Dividend equivalents and notional interest 10
     
  5.6 Alternative settlement 11
     
  5.7 Retention Period 11

 

Document classification - Internal1

 

 

6. Leaver provisions 11
     
  6.1 General rule on cessation of employment 11
     
  6.2 Leaving in exceptional circumstances 12
     
  6.3 Vesting 12
     
  6.4 Death 13
     
  6.5 Amendment of rule 6 13
     
7. Corporate events 13
     
  7.1 Change of Control 13
     
  7.2 Rights issues, demergers and other corporate events 13
     
  7.3 Committee 14
     
  7.4 Exchange of Awards 14
     
8. General terms 14
     
  8.1 Transfer of Awards 14
     
  8.2 Company documents 15
     
  8.3 Withholding 15
     
  8.4 Discretionary nature of the Plan 15
     
  8.5 Committee’s decisions final and binding 16
     
  8.6 Administrative regulations 16
     
  8.7 Awards non-pensionable 16
     
  8.8 Employee trust 16
     
  8.9 Consents 16
     
  8.10 Notices 16
     
  8.11 Share rights 17
     
  8.12 Data protection 17
     
  8.13 Amendment 17
     
  8.14 Severability 18
     
  8.15 Termination of the Plan 18
     
  8.16 Governing law and jurisdiction 18

 

Document classification - Internal2

 

 

9. Definitions 18
     
  Schedule 1 – Allowances  
     
  1 Introduction 22
     
  2 Operation of the Schedule 22
     
    2.1 Timing of operation 22
     
    2.2 Selection of Participants 22
     
  3 Award of Allowances 22
     
    3.1 Terms of Allowances 22
     
    3.2 Currency exchange 23
     
    3.3 Statement of entitlement 23
     
  4 Allowance Instalment Payments 23
     
    4.1 Calculation and payment 23
     
    4.2 Alternative settlement 23
     
    4.3 Change of Control 23
     
  5 Ceasing to perform a Role 23
     
    5.1 General rule 23
     
    5.2 Amendment 24
     
  6 Rights of Participants during and following the Retention Period 24
     
    6.1 Restrictions on disposal and transfer 24
     
    6.2 Dividends and other rights 24
     
    6.3 Death of a Participant 24
     
  7 Dilution limits 24
     
    7.1 Base calculations 24
     
    7.2 General 25
     
  8 Listing Rule 25
     
  9 General terms 25
     
    9.1 Transfer of Allowances 25
     
    9.2 Company documents 26
     
    9.3 Withholding 26
     
    9.4 Miscellaneous 26

 

Document classification - Internal3

 

 

    9.5 Committee's decisions final and binding 27
     
    9.6 Administrative regulations 27
     
    9.7 Allowances non-pensionable 27
     
    9.8 Employee trust 27
     
    9.9 Consents 27
     
    9.10 Notices 27
     
    9.11 Share rights 28
     
    9.12 Data protection 28
     
    9.13 Amendment 28
     
    9.14 Severability 29
     
    9.15 Termination of the Schedule 29
     
    9.16 Governing law and jurisdiction 29
     
10 Definitions 29
     
Schedule 2 – Cash Awards and Allowances 32
     
Schedule 3 – Phantom Awards and Allowances 34
     
Schedule 4 – Awards and Allowances over other assets 38
     
Schedule 5 – Australia 39
     
Schedule 6 – Canada 41
     
Schedule 7 – USA 42
     
Schedule 8 – Poland 46

 

Document classification - Internal4

 

 

1.Introduction

 

The definitions used in this Plan are set out at rule 9. Expressions in italics and headings are for guidance only and do not form part of the Plan.

 

2.Operation of the Plan

 

2.1Timing of operation

 

2.1.1The Committee may operate the Plan at any time after its adoption and before its termination under rule 8.15. Other than as set out in rule 2.1.2, Awards may only be granted within 42 days starting on any of the following:

 

(1)the date of shareholder approval;

 

(2)the day after the announcement of the Company’s results for any period;

 

(3)any day on which the Committee resolves that exceptional circumstances exist which justify the grant of Awards;

 

(4)any day on which changes to the legislation or regulations affecting share plans are announced, effected or made; or

 

(5)the lifting of Dealing Restrictions which prevented the granting of Awards during any period specified above.

 

2.1.2Awards may be granted after an Eligible Employee joins any Member of the Group where they are granted as a replacement for an incentive that would otherwise have been provided by that Eligible Employee’s previous employer. As far as reasonably practicable, this will take place within 42 days of the date of joining.

 

2.2Selection of Participants

 

2.2.1Whenever the Committee decides to operate the Plan it may select any Eligible Employee to participate.

 

2.2.2However, a selected Eligible Employee will not receive an Award if he ceases to be employed by a Member of the Group (in accordance with rule 6.1.2) before the Award Date and the Committee determines that he will not receive an Award.

 

3.Grant of Awards

 

3.1Determination of Awards

 

The Committee may grant an Award to such Eligible Employee or Eligible Employees as it considers appropriate.

 

3.2Terms of Awards

 

3.2.1Whenever the Committee decides to operate the Plan, it must determine in respect of each selected Eligible Employee:

 

(1)whether his Award will take the form of a Conditional Award, Forfeitable Award or Option;

 

(2)the type of Award Assets in respect of which the Award will be granted;

 

(3)the number or value of such Award Assets;

 

(4)the Vest date(s) for the Award;

 

(5)whether any Performance Conditions will apply to the Award; and

 

(6)whether any Retention Period will apply to the Award.

 

Document classification - Internal5

 

 

3.2.2Awards will be granted in accordance with the rules of the Plan and such terms as the Committee may determine. The Committee may specify additional terms and conditions which will apply to Awards in accordance with rule 3.3.2.

 

3.2.3Awards may be granted by deed or any other method determined by the Company. In addition, the Company may require Participants to accept the grant of an Award and to enter into other agreements or elections, or to sign other documentation.

 

3.2.4Participants who are granted a Forfeitable Award will be required to enter into a Forfeiture Agreement with the Company specifying that if and to the extent that the Forfeitable Award lapses, the Award Assets will be forfeited and transferred, for no or nominal consideration, to any person specified by the Company. Participants will also be required to enter into agreements or elections, or sign documentation, as required by the Committee.

 

3.3Performance Conditions and additional conditions

 

3.3.1When granting an Award, the Committee may make its Vesting conditional on the satisfaction of one or more Performance Conditions. The Committee may waive or change any such condition in accordance with its terms if anything happens which causes the Committee reasonably to consider it appropriate.

 

3.3.2The Committee may also impose additional conditions on Vesting of an Award (whether at grant or otherwise) which do not relate to performance. The Committee may change any such condition in accordance with its terms if anything happens which causes the Committee reasonably to consider it appropriate.

 

3.3.3Any condition imposed under this rule 3.3 must be objective and may provide that an Award will lapse, in full or in part, if it is not satisfied.

 

3.4Award statement

 

Each Participant may be sent a statement setting out the terms of the Award. This may be sent by e-mail, made available on a website, or sent by some other electronic means of communication.

 

3.5Rights attaching to Award Assets

 

3.5.1Unless the Forfeiture Agreement provides otherwise, a Participant who has been granted a Forfeitable Award will be entitled to vote, to receive dividends and benefit from any other rights available to him as the holder of the Award Assets in respect of his Forfeitable Award.

 

3.5.2Subject to rule 5.5, a Participant who has been granted a Conditional Award or Option will not be entitled to receive dividends, coupons, interest or to have any other rights of a holder of the relevant Award Assets until these are issued or transferred to the Participant on Vesting or exercise.

 

3.5.3If an Award lapses under the Plan, a Participant has no rights in respect of it, including in relation to any of the relevant Award Assets.

 

3.6Individual limit

 

3.6.1General limit: Subject to rules 3.6.2 and 3.6.4, an Award must not be granted to an Eligible Employee if it would, at the proposed Award Date, cause the Market Value of the Award Assets in respect of which Awards have been granted to that Eligible Employee in that financial year to exceed four times his annual basic salary from Members of the Group.

 

Document classification - Internal6

 

 

3.6.2Exceptions to General limit: The general limit under rule 3.6.1 will not apply:

 

(1)where the Award is being granted in mandatory substitution for any Bonus, in which case, the Market Value of such Award, together with any other awards granted in mandatory substitution of such Bonus (whether under the Plan or any other employee share plan or bonus plan operated by any Member of the Group) must not exceed the value of the corresponding Bonus; or

 

(2)where the Award is being granted as a replacement for an incentive that was or would have been provided by the Eligible Employee’s previous employer, in which case, the value of such Award must not exceed the value of that corresponding incentive; or

 

(3)where the Committee determines that exceptional circumstances make it desirable to grant an Award in excess of such limit.

 

3.6.3Allowances: For the avoidance of doubt, any Allowance payable to a Participant will not be taken into account for the purposes of calculating the general limit under rule 3.6.1.

 

3.6.4Overriding limit: The general limit under rule 3.6.1 will apply, subject to any overriding limit imposed under the Remuneration Code or any other applicable legislation or regulation that applies from time to time to Awards.

 

3.7Dilution limits

 

3.7.110% limit: An Award must not be granted if the number of Shares committed to be issued under that Award exceeds 10 per cent of the ordinary share capital of the Company in issue immediately before the proposed grant, including any B Shares in issue, when added to the number of Shares which have been issued, or committed to be issued, to satisfy:

 

(1)Awards granted under the Plan;

 

(2)Allowance Instalment Payments; and

 

(3)options and awards granted under any other employee share plan operated by the Company,

 

in the previous 10 years.

 

3.7.25% limit: An Award which is granted otherwise than in mandatory substitution for any Bonus must not be granted if the number of Shares committed to be issued under that Award exceeds 5 per cent of the ordinary share capital of the Company in issue immediately before the proposed grant, including any B Shares in issue, when added to the number of Shares which have been issued, or committed to be issued, to satisfy:

 

(1)Awards granted otherwise than in mandatory substitution of Bonus under the Plan;

 

(2)Allowance Instalment Payments; and

 

(3)options and awards granted (otherwise than in mandatory substitution of Bonus) under any discretionary employee share plan operated by the Company,

 

in the previous 10 years.

 

3.7.3Ignore releases/lapses: Where an award or option granted over Shares under the Plan, any of the Schedules, or any other employee share plan operated by a Member of the Group, is released or lapses or is settled otherwise than in Shares, or is subject to reduction under a malus provision, any Shares which are the subject of such release, lapse, alternative settlement or malus reduction are ignored when calculating the limits in this rule 3.7.

 

3.7.4Net settlement: For the purposes of rule 3.7, if the Committee determines that the number of Shares over which an Award is held will be reduced in order to discharge any liability under rule 8.3.1, the number of Shares committed to be issued under that Award will be based on the net number to be issued on Vesting.

 

Document classification - Internal7

 

 

3.7.5Treasury Shares – ABI: As long as required by the Association of British Insurers, Shares transferred from treasury are counted as part of the ordinary share capital of the Company, and as Shares issued by the Company.

 

3.7.6Existing Shares ignored: For the avoidance of doubt, existing Shares transferred, or committed to be transferred, to satisfy Awards, Allowance Instalment Payments, or any other option or award will be ignored when calculating the limits in rule 3.7 (other than Shares transferred from treasury, where rule 3.7.5 applies).

 

3.8Listing Rules

 

No Shares will be issued under the Plan if it would cause Listing Rule 6.1.19 (Shares in public hands) to be breached.

 

3.9Currency exchange

 

Where an amount or value for the purposes of these rules is expressed in a currency other than pounds sterling, the amount or value will be treated as being an amount expressed in pounds sterling by applying such rate or method of exchange as the Committee considers appropriate.

 

4.Malus and Clawback

 

4.1General

 

4.1.1The Committee may decide at any time before an Award Vests, or for such period after an Award Vests that the Committee determines is appropriate, that any Participant will be subject to Malus and/or Clawback in the light of:

 

(1)the performance of the Company, any Member of the Group and any business area or team, and the conduct, capability or performance of the Participant; and/or

 

(2)any legal or regulatory requirement on the Company or any Member of the Group to apply Malus and/or Clawback in relation to the Company, any Member of the Group, any business area or team, or the Participant; and/or

 

(3)non-compliance with any legal or regulatory requirement relating to the Company, any Member of the Group, any business area or team, or the Participant; and/or

 

(4)any other matter which the Committee considers relevant.

 

4.1.2To give effect to Malus and/or Clawback in respect of a Participant the Committee may take any action, including but not limited to:

 

(1)reducing (if appropriate, to zero) the amount of any Bonus which would otherwise be payable; and/or

 

(2)reducing (if appropriate, to zero):

 

(a)the number or amount of Award Assets in respect of an Award (including any Vested but unexercised Option); and/or

 

(b)the number or amount of any assets relating to any awards (including vested but unexercised options) which have been granted to the Participant under any other employee share plan or incentive plan (other than a Tax-favoured Plan) operated by any Member of the Group; and/or

 

(c)the extent to which any Award held by the Participant Vests or becomes exercisable; and/or

 

Document classification - Internal8

 

 

(d)the extent to which any award granted to the Participant under any other employee share plan or incentive plan (other than any Tax-favoured Plan) operated by any Member of the Group vests or becomes exercisable,

 

in each case notwithstanding the extent to which any conditions (including performance conditions) imposed on such Awards or awards may be or have been satisfied; and/or

 

(3)reducing (if appropriate, to zero) any amount otherwise payable under rule 5.5.

 

(4)requiring the Participant to pay or repay any Award Assets or amounts (which, without limitation, may be deducted from the Participant's salary or any other payment to be made to the Participant by any Member of the Group).

 

4.1.3Where Clawback is proposed to be operated, account will be taken of any tax or social security actually paid (or due to be paid) by the Participant in respect of the amount proposed to be subject to Clawback, unless and to the extent that the Participant can claim relief in respect of such tax or social security.

 

4.2Reduction in Awards to give effect to provisions in other plans

 

The Committee may decide to take any of the actions described in rule 4.1.2 to give effect to a malus and/or clawback provision contained in any other employee share plan, incentive plan or bonus plan operated by any Member of the Group. Such action will be taken in accordance with the terms of the relevant plan or, in the absence of any such terms, on such basis as the Committee decides is appropriate.

 

4.3Compliance with legal or regulatory provisions

 

The Company can alter or extend the range of circumstances in which Malus and/or Clawback may be operated if required by any legal or regulatory provision.

 

5.Vesting of Awards

 

5.1General

 

5.1.1Prior to Vesting of an Award the Committee will determine the extent to which an Award may Vest having regard to the extent any Performance Condition or other Vesting condition has been satisfied.

 

5.1.2An Award will not Vest if any legal or regulatory requirement on the Company or any Member of the Group would make Vesting unlawful, impossible or, in the opinion of the Committee, inappropriate or impractical.

 

5.2Timing of Vesting

 

Subject to rules 5.1, 5.3, 6 and 7, Awards will Vest:

 

5.2.1on the scheduled Vesting date or dates specified in the terms of the Award, or such earlier date or dates as the Committee may consider appropriate;

 

5.2.2if the Committee has not made its determination under rule 5.1 on the scheduled Vesting date or dates, such later date as the Committee will specify; or

 

5.2.3if on the scheduled Vesting date or dates specified in the terms of the Award, or any such revised date as determined under rule 5.2.2, a Dealing Restriction applies to a Participant and the Committee so determines, on the first date on which the Dealing Restriction no longer applies.

 

Document classification - Internal9

 

 

5.3Delayed Vesting

 

5.3.1Vesting is delayed in respect of a Participant’s Award or any part of it, if any of the following circumstances apply on the scheduled Vesting date:

 

(1)the Participant is subject to any Disciplinary Action;

 

(2)the Participant’s employment has terminated or is about to terminate in circumstances where it is not clear whether the Award should lapse under rule 6;

 

(3)a matter which may otherwise involve or affect that Participant has been referred to the Committee for review under rule 4; or

 

(4)the Committee considers that it is necessary or appropriate to delay Vesting.

 

5.3.2Where Vesting has been delayed, the Committee will determine the extent to which the Award should Vest and the revised Vesting date or dates. If the Committee determines that the Award should not Vest to any extent, it will lapse in full.

 

5.4Consequences of Vesting

 

Following the Vesting of an Award:

 

5.4.1Conditional Awards: subject to rules 4, 5.6, 8.3 and 8.9, the relevant Award Assets will be delivered, as soon as practicable, to the Participant or to a nominee for the Participant appointed by the Company.

 

5.4.2Forfeitable Awards: subject to rules 4, 8.3 and 8.9, the restrictions contained in the Forfeiture Agreement entered into between the Participant and the Company under rule 3.2.4 will no longer have effect.

 

5.4.3Options (exercise): subject to rule 5.4.4, a Participant may exercise the Option at any time during the Option Period by giving notice in the prescribed form to the Company or any person nominated by the Company and paying the Option price (if any). If the Option is exercised, as soon as is practicable after exercise and, subject to rules 4, 5.6, 8.3 and 8.9, the relevant Award Assets will be delivered to the Participant or a nominee for the Participant appointed by the Company.

 

5.4.4Options (lapse): an Option will lapse if unexercised at the end of the Option Period or, if earlier, on the first to occur of:

 

(1)if a Participant ceases to be employed by a Member of the Group (in accordance with rule 6.1.2) for any of the reasons set out in rule 6.2, the date 12 months after:

 

(a)the Vesting date (where the Option has not already Vested prior to cessation of employment); or

 

(b)the date the Participant ceases to be so employed (where the Option has already Vested prior to cessation of employment);

 

(2)the Participant ceasing to be employed by a Member of the Group (in accordance with rule 6.1.2) for any reason other than as set out in rule 6.2;

 

(3)subject to rule 7.2.1(4), the date 6 months after an event giving rise to Vesting under rule 7 (whether this is the Vesting of the Option or another Award);

 

(4)the date 6 weeks after the date on which a notice to acquire Shares under section 979 of the Companies Act 2006 is first served; or

 

(5)if the Participant dies, the earlier of the date 18 months from his death or the date 3 months after the Participant’s personal representatives notify the Company that they have obtained a valid grant of representation (or local equivalent to the satisfaction of the Committee).

 

5.5Dividend equivalents and notional interest

 

5.5.1The terms of an Award may include the right to receive an amount (which may be provided in any form of asset) equal in value to any dividends (excluding any special dividend, unless the Committee otherwise allows) or interest (calculated at such rate or rates as the Committee may determine) that may otherwise have been payable in respect of the relevant Award Assets had the Participant an unconditional right to them during the period from the Award Date to the date on which the Award Vests (or, in the case of Options and if the Committee so determines, the period from the Award Date to the date the Option is exercised).

 

Document classification - Internal10

 

 

5.5.2The right to receive an amount in accordance with rule 5.5.1 may be included in the terms of an Award at the time of grant or by the Committee at any later time in its discretion.

 

5.5.3Subject to rule 5.7, amounts or assets delivered to a Participant or to a nominee for the Participant appointed by the Company under this rule 5.5 will be delivered as soon as practicable after Vesting (or, in the case of Options and if the Committee so determines, as soon as practicable after exercise of the Option) and may be satisfied in such manner as the Committee considers appropriate.

 

5.6Alternative settlement

 

5.6.1Except in relation to Forfeitable Awards, on Vesting (or, in the case of Options, on or before exercise), the Committee may decide to satisfy an Award either by using different Award Assets to that over which the Award was originally granted or by paying cash.

 

5.6.2Such alternative form of Award Assets or payment of cash must be equivalent in Market Value to the original Award Assets which Vest (or in the case of Options, over which the Option has been exercised).

 

5.6.3For the purposes of this rule 5.6, the Market Value of the original Award Assets will be calculated as at the date on which the Award Vests (or the Option exercise date, as applicable and in the case of Options will be reduced by the amount of any Option price payable).

 

5.7Retention Period

 

5.7.1Restrictions on disposal and transfer: Subject to rule 5.7.3, where a Retention Period is imposed on an Award, the Participant must not dispose, or procure the disposal, of Retained Assets until the end of the Retention Period, except so far as is necessary to discharge any liability to tax under rule 8.3 or if the Committee determines that any of the Retained Assets will not be subject to the restrictions contained in this rule 5.7.1. The Company will arrange for the Retained Assets to be held on behalf of the Participant in a restricted nominee account or will make such other arrangements as it considers appropriate to ensure that the Participant does not dispose of such Retained Assets until the end of the Retention Period.

 

5.7.2Dividends and other rights: On receipt of a Retained Asset following Vesting or exercise of an Option (as applicable), a Participant will be entitled to vote and receive dividends and have the same rights and be treated in the same way as any other holder of such assets. The restrictions in rule 5.7.1 will apply to any dividends, shares, securities, cash or other assets received in respect of the relevant Retained Asset during the Retention Period, unless the Company decides otherwise.

 

5.7.3Death of a Participant: On the death of a Participant, any applicable Retention Period shall immediately be deemed to have come to an end.

 

6.Leaver provisions

 

6.1General rule on cessation of employment

 

6.1.1Unless rule 6.2 applies, an Award which has not Vested will lapse on the date the Participant ceases to be employed by a Member of the Group.

 

Document classification - Internal11

 

 

6.1.2Subject to rules 6.1.3 and 6.1.4 below, a Participant will be treated as having ceased to be employed by a Member of the Group for the purposes of this Rule 6 when he no longer holds any employment with any Member of the Group. However, such a Participant will not be treated as ceasing to be employed if he recommences employment with a Member of the Group within:

 

(1)such period of time as preserves his continuity of employment; or

 

(2)14 days of his so ceasing in the event that his continuity of employment would otherwise be preserved for a shorter period.

 

6.1.3The Committee may decide that a Participant will cease to be employed by a Member of the Group (in accordance with rule 6.1.2) on the date he gives or receives notice of termination of employment, whether or not such termination is lawful.

 

6.1.4A Participant who takes voluntary unpaid leave from employment with a Member of the Group may be treated as ceasing to be employed by a Member of the Group (in accordance with rule 6.1.2) on the date the leave commences, or if the Committee determines, the date notice of intention to take leave is given by the Participant, or on such later date as considered appropriate.

 

6.2Leaving in exceptional circumstances

 

6.2.1Subject to rule 6.2.2, if a Participant ceases to be employed by a Member of the Group (in accordance with rule 6.1.2) for any of the reasons set out below and has not engaged in Detrimental Activity, his Award will Vest as described in rule 6.3. The reasons are:

 

(1)ill-health, injury or disability, as established to the satisfaction of the Company;

 

(2)retirement as determined by the Committee with the agreement of the Participant’s employer;

 

(3)redundancy as determined by the Committee;

 

(4)the Participant’s employing company ceasing to be a Member of the Group;

 

(5)the business in which the Participant works being transferred to a person which is not a Member of the Group; or

 

(6)any other reason, if and to the extent the Committee so decides in any particular case.

 

If a Participant ceases to be employed by a Member of the Group (in accordance with rule 6.1.2) for any of the reasons set out above and has engaged in Detrimental Activity, his Award will lapse.

 

6.2.2Where cessation occurs as set out in rule 6.2.1(4) or 6.2.1(5) (or under rule 6.2.1(3) in circumstances where there is a transfer of the business in which the Participant works to a person which is not a Member of the Group), the Committee reserves the right to apply or to have previously applied any actions in accordance with rule 7.2 with the effect that Vesting will not take place under this rule 6.2.1.

 

6.2.3If the Committee does not exercise any discretion provided for in rule 6.2 within 60 days after cessation, the Award will be treated as having lapsed on the date of cessation. Any decision made under rule 6.1.3 will be ignored for the purposes of determining the date of cessation under this rule 6.2.3.

 

6.3Vesting

 

6.3.1Subject to rule 6.3.2, where rule 6.2.1 applies, an Award will Vest in accordance with the provisions of rule 5.

 

6.3.2In the case of an Award to which a Performance Condition is attached, and unless the Committee determines otherwise, a pro rata reduction will be applied to reflect the proportion of the Performance Period remaining after the Participant ceased to be employed by a Member of the Group (in accordance with rule 6.1.2).

 

Document classification - Internal12

 

 

6.4Death

 

If a Participant dies, his Award will not lapse but will Vest in full on the date of death. No Retention Period will be imposed and the following will apply:

 

6.4.1Conditional Awards: a cash amount equal to the Market Value of the relevant Award Assets on the date of death will be delivered to the Participant’s personal representatives, or a nominee for the Participant’s personal representatives appointed by the Company, as soon as practicable after production of a valid grant of probate (or local equivalent to the satisfaction of the Committee).

 

6.4.2Forfeitable Awards: the restrictions contained in any Forfeiture Agreement entered into under rule 3.2.4 will cease to have effect on the date of death and the relevant Award Assets will be transferred to the Participant’s personal representatives, or a nominee for the Participant’s personal representatives approved by the Company, as soon as practicable after production of a valid grant of probate (or local equivalent to the satisfaction of the Committee).

 

6.4.3Options: the Option may be exercised by the Participant’s personal representatives within the earlier of three months of the production of a valid grant of probate (or local equivalent), and 18 months of the date of death, and will lapse if not exercised within such period. A cash amount equal to the Market Value of the relevant Award Assets on the date of death (reduced by the amount of any Option price payable) will be delivered to the Participant’s personal representatives, or a nominee for the Participant’s personal representatives appointed by the Company, as soon as practicable after the exercise of the Option.

 

6.5Amendment of rule 6

 

The Committee reserves the right to amend the provisions of rule 6 if alternative leaver treatment becomes mandatory under the Remuneration Code or under any other legislation or regulation. The Committee’s power to amend under this rule 6.5 was approved in general meeting in 2014 and therefore the provisions of rule 8.13 do not apply to amendments authorised by rule 6.5.

 

7.Corporate events

 

7.1Change of Control

 

7.1.1On the occurrence of a Change of Control Awards will Vest, subject to:

 

(1)the satisfaction of any Performance Condition, Vesting condition and/or other condition applicable to the Award, as determined by the Committee in the manner specified in the relevant condition or in such a manner as it considers reasonable; and

 

(2)in the case of an Award to which a Performance Condition applies, a pro rata reduction to reflect the proportion of the period between the Award Date and the scheduled Vesting date remaining on the Change of Control,

 

provided that the Committee may exercise discretion to determine otherwise (which may include determining that Awards are required to be exchanged under rule 7.4)

 

7.2Rights issues, demergers and other corporate events

 

7.2.1If the Committee becomes aware that the Company is or is expected to be affected by:

 

(1)any variation in share capital, demerger, disposal of a business or Member of the Group, distribution (other than an ordinary dividend) or delisting;

 

(2)a flotation of some or all of the shares of a company which either: (a) is or was a Member of the Group; or (b) has been established to hold or operate one or more businesses which the Company or a Member of the Group has transferred to it in connection with such a flotation; or

 

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(3)any transaction which, in the opinion of the Committee, could affect the current or future value of Award Assets,

 

then Awards are not affected unless and to the extent that the Committee decides to:

 

(4)allow Awards to Vest, subject to any conditions the Committee may decide to impose including, in the case of Options, specifying a different Option Period;

 

(5)require Awards to be exchanged under or on a similar basis to rule 7.4;

 

(6)adjust the number or amount of Award Assets subject to an Award, and/or such other terms of the Award as appear appropriate; and/or

 

(7)take any other action the Committee considers appropriate.

 

7.2.2Subject to the Forfeiture Agreement, where the Award Assets of a Forfeitable Award are Shares, NWG Bonds or other securities, a Participant will have the same rights as any other holder of such assets where there is any event falling within rule 7.2.1. Any shares, securities or rights allotted to (or rights created for or bestowed on) a Participant as a result of such an event, will be:

 

(1)treated as if they were awarded to the Participant under the Plan in the same way and at the same time as the relevant Award Assets; and

 

(2)subject to the rules of the Plan and the terms of the Forfeiture Agreement.

 

7.3Committee

 

If this rule 7 applies on a Change of Control then except following an exchange under rule 7.4 “Committee” means those persons who were members of the Committee immediately before the Change of Control.

 

7.4Exchange of Awards

 

7.4.1Where the Committee determines that an Award is to be exchanged for a new award, the terms of the new award will:

 

(1)be subject to terms which are equivalent, as far as practicable, to the existing Award;

 

(2)be treated as having been acquired at the same time as the existing Award and, subject to rule 7.4.1(4) below, Vest in the same manner and at the same time;

 

(3)be in respect of assets which have at exchange, as far as practicable, an equivalent Market Value (but not necessarily form) to the relevant Award Assets;

 

(4)be governed by the Plan as if references to Award Assets were references to the assets over which the new award is to be granted and references to the Company were references to the company or body corporate in respect of which the exchange is to be effected.

 

7.4.2Where the Committee determines that a Forfeitable Award is to be exchanged for a new award, the Participant may be required to exchange some or all of his Award Assets for other assets or to sell or otherwise dispose of them and use the proceeds to acquire other assets on such terms as the Committee may determine and these rules will apply to those other assets as if they were the Award Assets subject to the original Forfeitable Award.

 

8.General terms

 

8.1Transfer of Awards

 

A Participant may not transfer, assign or otherwise dispose of an Award or any rights in respect of it. This rule 8.1 does not apply to the transmission of an Award on the death of a Participant to his personal representatives.

 

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8.2Company documents

 

8.2.1The Company is not required to send to any Participant a copy of any documents which it is required to send to its shareholders or bondholders, save in respect of:

 

(1)Award Assets relating to Forfeitable Awards; or

 

(2)Award Assets received following the Vesting of an Award (or exercise of an Option) which are subject to a Retention Period.

 

8.3Withholding

 

8.3.1Any Member of the Group, any former Member of the Group or the trustee of any employee benefit trust or nominee holding Award Assets in respect of a Participant may withhold any amounts or make such other arrangements as it considers necessary to meet any liability to taxation or social security contributions or other appropriate levies due in respect of Awards.

 

8.3.2Any Member of the Group, any former Member of the Group or trustee of any employee benefit trust or nominee operated by, or on behalf of, any Member of the Group may withhold or offset any amounts or make such arrangements as it considers necessary to repay any outstanding liability of any Participant.

 

8.3.3Any arrangements in this rule 8.3 may include a reduction in or disposal of a number, amount, or value of the Award Assets comprised in an Award.

 

8.3.4Where any Award Assets are withheld and sold as part of any arrangement under this rule 8.3, the Company may pay any residual sale amounts in excess of the liability due to its chosen charity or charities, on behalf of the relevant Participant.

 

8.4Discretionary nature of the Plan

 

8.4.1Nothing in this Plan or the operation of the Plan will form part of an individual’s contract of employment or other relationship with any Member of the Group.

 

8.4.2The fact that one or more Awards have been made to an individual does not create any right to, or expectation of, continued employment.

 

8.4.3No individual has an automatic entitlement to participate in, or be considered for participation in, the Plan at all or at a particular level. Participation in the Plan does not imply any right to participate, or to be considered for any future participation.

 

8.4.4The terms of the Plan do not entitle any individual to the exercise of any discretion in his favour.

 

8.4.5No individual will have any claim or right to compensation or damages or any other sum or benefit in respect of the Plan, including, without limitation, in relation to:

 

(1)his eligibility to participate, or ceasing to be eligible to participate, or ceasing to participate in the Plan;

 

(2)any exercise of a discretion or a decision taken in relation to the Plan or the Plan’s operation (whether or not this disadvantages the individual concerned) even if it is unreasonable, irrational or might otherwise be regarded as being in breach of the duty of trust and confidence (and/or any other implied duty) between the individual and his employer;

 

(3)any loss or reduction of any rights or expectations under the Plan in any circumstances or for any reason (including lawful or unlawful termination of employment or the employment relationship);

 

(4)any loss of tax or any other fiscal detriment suffered in relation to the reduction or forfeiture of an Award; and

 

(5)the operation, suspension, termination of or amendment to the Plan.

 

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8.4.6Participation in the Plan is permitted only on the basis that any rights that are not expressly set out in this Plan, or any applicable Schedule, are excluded. Each Participant will be deemed to have waived any such excluded rights in consideration for, and as a condition of, participating in the Plan.

 

8.4.7No third party will have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Plan. But this does not affect any other right or remedy of a third party which exists or is available.

 

8.4.8This rule applies throughout the employment of any individual, after the termination of his employment, and during any period when the individual has given or received notice to terminate his employment (whether such termination is lawful or unlawful).

 

8.4.9Participation in the Plan is permitted only on the basis that the Participant accepts all the provisions of the Rules.

 

8.5Committee’s decisions final and binding

 

The decision of the Committee in interpreting the rules of the Plan or in any dispute relating to any matter relating to the Plan will be final and conclusive.

 

8.6Administrative regulations

 

The Committee has power from time to time to make or vary regulations, operational policy or guidelines for the administration and operation of the Plan.

 

8.7Awards non-pensionable

 

Awards do not form part of a Participant’s remuneration for the purpose of determining entitlement to any benefit of employment including any pension or retirement benefit, life assurance, permanent health insurance or other similar benefit, whether existing or subsequently introduced.

 

8.8Employee trust

 

The Company and any Subsidiary may provide money to the trustee of any trust or any other person to enable them or him to acquire Shares or other assets to be held for the purposes of the Plan, or enter into any guarantee or indemnity for those purposes, to the extent permitted by the Companies Act 2006 as varied from time to time.

 

8.9Consents

 

All allotments, issues and transfers of Award Assets will be subject to any necessary consents under any relevant law or regulations for the time being in force in the United Kingdom or elsewhere, and it will be the Participant’s responsibility to comply with any requirements to be fulfilled in order to obtain or prevent the need for any such consent.

 

8.10Notices

 

8.10.1Any notice or other document to be given to a Participant may be delivered or sent to him at his last known home, or e-mail, address or fax number, or to such other address which the Company considers appropriate.

 

8.10.2Communications sent by post will be sent at the risk of the Participant concerned and neither the Company nor any of its Subsidiaries shall have any liability whatsoever to any person in respect of any notification, document or other communication so given, sent or made.

 

8.10.3Any notice or other document to be given to the Company or other duly appointed agent may be delivered or sent to its respective registered office, or such e-mail or fax number notified to the sender. The Committee may make other arrangements to receive notices as it determines.

 

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8.10.4Notices sent by post will be deemed to have been given on the second day after the date of posting. However, notices sent by or to a Participant who is working overseas will be deemed to have been given on the seventh day after the date of posting.

 

8.10.5Notices sent by e-mail or fax, in the absence of evidence to the contrary, will be deemed to have been received on the day after sending.

 

8.11Share rights

 

Shares issued to satisfy Awards under the Plan will rank equally in all respects with the Shares in issue on the date of allotment. They will not rank for any rights attaching to Shares by reference to a record date preceding the date of allotment. Where Shares are transferred to a Participant or to a nominee for the Participant appointed by the Company (including a transfer out of treasury), the Participant will be entitled to all rights attaching to the Shares by reference to a record date on or after the transfer. The Participant will not be entitled to rights before that date.

 

8.12Data protection

 

The Company will separately provide a Participant with information on the collection and processing of their personal data, including the grounds for processing.

 

8.13Amendment

 

8.13.1Except as described in the rest of this rule 8.13, the Committee may at any time change the Plan in any way including by way of schedules or otherwise.

 

8.13.2Except as described in rules 6.5, 8.13.3 and 8.13.4, the Company in general meeting must approve in advance by ordinary resolution any proposed change to the Plan to the advantage of present or future Participants, which relates to:

 

(1)the Participants;

 

(2)the limits on the number of Shares which may be issued under the Plan;

 

(3)the individual limit for each Participant under the Plan;

 

(4)the basis for determining a Participant's entitlement to, and the terms of, securities, cash or other benefit to be provided and for the adjustment thereof (if any) if there is a capitalisation issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital; or

 

(5)the terms of this rule 8.13.2.

 

8.13.3The Committee can change the Plan and need not obtain the approval of the Company in general meeting for any minor changes:

 

(1)to benefit the administration of the Plan;

 

(2)to comply with or take account of the provisions of any proposed or existing legislation;

 

(3)to take account of any changes to legislation; or

 

(4)to obtain or maintain favourable tax, exchange control or regulatory treatment of the Company, any Subsidiary or any present or future Participant.

 

8.13.4Rule 8.13.2 does not require the approval of the Company in general meeting for a change to establish further plans (by way of schedules or otherwise) based on the rules but modified to take account of local tax, exchange control or securities laws in non-UK territories. However, any Shares made available under such plans are treated as counting against any limits on individual or overall participation in the Plan under rules 3.6 and 3.7.

 

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8.14Severability

 

8.14.1By participating in the Plan, each Participant agrees and acknowledges that the restrictions contained in the Plan are reasonable and necessary to protect the business of any Member of the Group (including, but not limited to, its confidential information, customer relations and goodwill and its employees) and that the benefits each Participant receives under this Plan are sufficient compensation for these restrictions.

 

8.14.2Each of the obligations in the Plan is an entire, separate and independent restriction on each Participant, despite the fact that they may be contained in the same phrase and if any part is found to be invalid or unenforceable the remainder will remain valid and enforceable.

 

8.14.3While the restrictions are considered to be fair and reasonable in the circumstances, each Participant agrees that if any of them should be judged to be void or ineffective for any reason, but would be treated as valid and effective if modified, they will apply with such modifications as necessary to make them valid and effective.

 

8.15Termination of the Plan

 

The Plan will terminate on the tenth anniversary of the date it is adopted by the Board, but the Committee may terminate the Plan at any time before that date. The termination of the Plan will not affect existing Awards.

 

8.16Governing law and jurisdiction

 

The Plan is governed by and construed in accordance with English law. Any Member of the Group and all Participants will submit to the non-exclusive jurisdiction of the English Courts as regards any matter arising under the Plan.

 

9.Definitions

 

In these Rules:

 

“Allowance” has the meaning given in Schedule 1 to the Plan;

 

“Allowance Instalment Payments” has the meaning given in Schedule 1 to the Plan;

 

“Award” means an award made under the Plan which may be granted as a Conditional Award, Forfeitable Award and/or Option;

 

“Award Asset” means the Shares, NWG Bonds or other securities, debentures or debt (whether or not these are convertible) issued or to be issued by a Member of the Group and in respect of which an Award has been granted;

 

“Award Date” means the date on which an Award is deemed to have been granted under rule 3.2 (whether or not the Company requires the Participant to accept the grant of an Award under rule 3.2.3);

 

“Board” means the board of directors of the Company or a duly authorised committee of the Board or a duly authorised person;

 

“Bonus” means a bonus which might otherwise become payable under any bonus plan or arrangement operated by any Member of the Group;

 

“B Shares” means Class B shares of £0.01 each in the capital of the Company;

 

“Business Day” means any day on which the London Stock Exchange is open for the transaction of business;

 

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“Change of Control” means a change in the control of the Company, which will occur if, by one or a series of transactions or events, a person (including a person acting in concert with other persons) obtains control of the Company for the purposes of Section 995 of the Income Tax Act 2007 as varied from time to time;

 

“Clawback” means the obligation to repay amounts to a Member of the Group by an individual in accordance with rule 4 as the Committee considers appropriate;

 

“Committee” means any of the Group Performance & Remuneration Committee of the Company, the Board of the Company or any individual or group of persons authorised by the Group Performance & Remuneration Committee or the Board to exercise powers under the Plan;

 

“Company” means NatWest Group plc;

 

“Conditional Award” means an Award which is a right to acquire or be paid Award Assets granted in accordance with rule 3;

 

“Dealing Restriction” means restrictions imposed by statute, order, regulation or Government directive, including the model code on dealings by directors and certain employees as set out in the listing rules published by the UK Listing Authority, or any internal share dealing code of the Company;

 

“Detrimental Activity” means, as established to the satisfaction of the Committee, and without the prior written consent of the Company (which consent should not be unreasonably withheld):

 

1.using or communicating in a manner which is not authorised in writing by any Member of the Group or required by law, any secret, confidential or proprietary information which is not publicly available concerning any Member of the Group or their respective clients or customers;

 

2.directly or indirectly persuading or attempting to persuade any employee of any Member of the Group to breach any of the terms of their employment with any Member of the Group;

 

3.at any time on or during the 12 months after the Relevant Date, either on his own behalf or for or with any other person, whether directly or indirectly:

 

(a)soliciting or inducing or endeavouring to solicit or induce to cease working for or provide services to any Member of the Group, any person with whom the Participant has had material dealings during the period of 2 years ending on the Relevant Date, including through any third party including recruitment intermediary, whether or not such person would thereby commit a breach of contract;

 

(b)employing or otherwise engaging in any competitor any person with whom the Participant has had material dealings during the period of 2 years ending on the Relevant Date and who was during that period an employee of any Member of the Group;

 

(c)enticing away, interfering with, soliciting or canvassing or endeavouring to entice away, interfere with, solicit or canvas the custom of any customer or client, or prospective customer or client, of any Member of the Group with whom the Participant had, at any time in the 2 years before the Relevant Date, business dealings, negotiations or discussions during the course of his duties;

 

(d)having business dealings with any customer or client, or prospective customer or client, of any Member of the Group, or any business which has had a trading relationship with any Member of the Group, in relation to which business, by reason of the Participant’s dealings during the period of 2 years ending on the Relevant Date, the Participant is or may be able to influence the trading relationship between that business and any Member of the Group; or

 

(e)endeavouring to cause any person, firm, company, organisation or other entity who or which is an investor with or an exclusive supplier of services to any Member of the Group, to either cease investing in or doing business with, or materially alter the terms of its investment in or business with a Member of the Group in a manner detrimental to that company;

 

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4.engaging in any behaviour which in the reasonable opinion of the Committee is deliberately prejudicial to the good name of any Member of the Group; or

 

5.leaving or resigning without notice (or with insufficient notice) without the permission of the person’s employing entity, or engaging in any activity which in the reasonable opinion of the Committee is not consistent with providing an orderly handover of the person’s responsibilities;

 

“Disciplinary Action” for the purpose of rule 5.3, means any enquiry or investigation by any Member of the Group or any regulatory body into the conduct, capability or performance of a Participant that may potentially lead to disciplinary action being taken, or disciplinary procedure being instigated, against that Participant (whether in accordance with any relevant contractual obligation, policy or otherwise) by any Member of the Group;

 

“Eligible Employee” means any person who is an employee (whether full-time or part time), including an executive director, of the Company or its Subsidiaries from time to time or who was such an employee at any time during the period from 1 January of the calendar year before the Award Date to the Award Date;

 

“Forfeitable Award” means Award Assets held in the name of or for the benefit of a Participant subject to a Forfeiture Agreement and granted in accordance with rule 3;

 

“Forfeiture Agreement” means an agreement as referred to in rule 3.2.4;

 

“Malus” means the reduction of elements of an individual’s remuneration in accordance with rule 4 as the Committee considers appropriate;

 

“Market Value” on any day means such value as the Company determines will be the market value of an Award Asset and which in relation to a Share will mean:

 

1.the price for the immediately preceding Business Day;

 

2.if the Committee decides, the average price for the five immediately preceding Business Days; or

 

3.such other price as the Committee may decide.

 

The “price” is the middle market quotation taken from the Daily Official List of the London Stock Exchange or the price as reported by a reputable market data provider, as determined by the Committee;

 

“Member of the Group” means any of the following:

 

1.the Company and its Subsidiaries from time to time; and

 

2.any other company which the Committee determines should be treated as a Member of the Group for the purposes of the Rules;

 

“NWG Bonds” means debt issued or to be issued by any Member of the Group

 

Option” means a right to acquire or be paid Award Assets, granted in accordance with rule 3 and exercisable between Vesting and the Option Expiry Date (unless otherwise provided in the rules);

 

“Option Expiry Date” in relation to an Option, means the date on which an Option lapses and ceases to be exercisable, being the tenth anniversary of the Award Date, or such other date as may be specified under these Rules;

 

“Option Period” in relation to an Option, means a period starting on the grant of an Option and ending at the end of the day before the tenth anniversary of the Award Date, or such shorter period as may be specified under these Rules;

 

“Participant” means a person who has received an Award under rule 3 or, following the death of a Participant, his personal representatives;

 

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“Performance Condition” means any condition linked to performance imposed under rule 3;

 

“Performance Period” means the period in respect of which a Performance Condition is to be satisfied;

 

“Plan” means this plan known as “NatWest Group plc 2014 Employee Share Plan”, as varied from time to time;

 

;

 

“Relevant Date” means the date of termination of employment of a Participant or, if earlier, the date on which a Participant commenced garden leave;

 

“Remuneration Code” means the Remuneration Code published by the UK Prudential Regulation Authority as varied from time to time;

 

“Retained Assets” means any Award Assets (including, if applicable, where these have been received on exercise of an Option) or any amounts or assets delivered as a result of operation of rule 5.5, in respect of which a Retention Period is imposed under rule 5.7;

 

“Retention Period” means in respect of an Award, a period of time determined by the Committee during which a Participant must not dispose, or procure the disposal, of his Award Assets;

 

“Rules” means the rules of the Plan set out in this document as amended from time to time and “rule” refers to any one provision;

 

“Schedules” means schedules 1 to 8 of the Plan and such other schedules added to the Plan from time to time;

 

“Shares” means fully paid ordinary shares in the capital of the Company, and, where the context requires, includes American depository shares representing Shares;

 

“Subsidiary” means a company which is a subsidiary of the Company within the meaning of Section 1159 of the Companies Act 2006 as varied from time to time;

 

“Tax-favoured Plan” means any HM Revenue & Customs tax-favoured plan for the purposes of the Income Tax (Earnings and Pensions) Act 2003 as varied from time to time; and

 

“Vesting”, “Vest” and “Vested”, in relation to:

 

1.Conditional Awards means a Participant becoming entitled to have the Award Assets to which the Conditional Award relates, issued, transferred or paid to him subject to the Plan;

 

2.Forfeitable Awards, means the restrictions in the Forfeiture Agreement ceasing to have effect as described in rule 3.2.4;

 

3.an Option, means a Participant becoming entitled to exercise the Option,

 

without prejudice in all cases to the application of any restriction described in rule 5.7 (Retention Period) or any other condition imposed under rule 3.2.2.

 

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Schedule 1 – Allowances

 

The Company wishes to pay certain employees for their role using a role-based allowance. Allowances will entitle employees to payments which are earned during the period the allowance is in operation. These payments will be made in accordance with this Schedule.

 

1Introduction

 

This Schedule is made under and amends and supplements the rules of the NatWest Group 2014 Employee Share Plan (the “Plan”). The definitions used in this Schedule are set out at paragraph 10. Expressions in italics and headings are for guidance only and do not form part of the Schedule.

 

2Operation of the Schedule

 

2.1Timing of operation

 

The Committee may operate the Schedule at any time after its adoption and before it terminates under paragraph 9.15.

 

2.2Selection of Participants

 

Whenever the Committee decides to operate the Schedule, Eligible Employees will be selected to participate. For the avoidance of doubt, a selected Eligible Employee may not receive an Allowance if he ceases to perform the relevant Role before the relevant Allowance Effective Start Date.

 

3Award of Allowances

 

3.1Terms of Allowances

 

3.1.1Allowances will be provided in accordance with the paragraphs of this Schedule.

 

3.1.2The terms of the Allowance must include the following:

 

(1)the amount of the Allowance;

 

(2)the Allowance Effective Start Date;

 

(3)the Allowance Instalment Period(s);

 

(4)the Allowance Instalment Payment Date(s);

 

(5)the Allowance Instalment Payment(s);

 

(6)the Allowance Assets intended to be used to satisfy Allowance Instalment Payment(s); and

 

(7)any applicable Retention Period(s).

 

3.1.3The Allowance may be subject to any additional terms and conditions as the Committee may specify at or before the time that any Allowance is provided.

 

3.1.4The terms and conditions which apply to an Allowance must be such that in the opinion of the Company the Allowance comprises fixed remuneration for the purposes of the Remuneration Code.

 

3.1.5Allowances may be granted by deed or by any other method determined by the Company. In addition, the Company may require Participants to accept the grant of an Allowance and to enter into other agreements or elections, or to sign other documentation.

 

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3.2Currency exchange

 

Where an amount or value for the purposes of this Schedule is expressed in a currency other than pounds sterling, the amount or value will be treated as being an amount expressed in pounds sterling by applying such rate or method of exchange as the Committee considers appropriate.

 

3.3Statement of entitlement

 

Each Participant shall, in advance of any Allowance being paid, be sent a statement setting out the terms of the Allowance. This may be sent by e-mail, made available on a website or by some other electronic means of communication.

 

4Allowance Instalment Payments

 

4.1Calculation and payment

 

4.1.1Subject to the rest of this paragraph 4, on an Allowance Instalment Payment Date a Participant will receive an Allowance Instalment Payment.

 

4.1.2If, on the Allowance Instalment Payment Date, a Dealing Restriction applies to a Participant and the Committee so determines, the making of an Allowance Instalment Payment will be delayed until the first date on which the Dealing Restriction no longer applies.

 

4.1.3An Allowance Instalment Payment will be made through the delivery of Allowance Assets (or any combination of such assets) which have an aggregate Market Value, on the Allowance Instalment Payment Date, equal to the amount of the Allowance Instalment Payment. Such payment may be made to a trustee or nominee, as designated by the Company, to be held for the benefit of the Participant.

 

4.1.4The amount of the Allowance Instalment Payment payable under this paragraph 4 may be adjusted in the case of a Participant leaving a Role (under paragraph 3.2).

 

4.1.5An Allowance Instalment Payment will not be made if any legal or regulatory requirement on the Company or any Member of the Group would make this unlawful, impossible.

 

4.2Alternative settlement

 

Instead of the delivery of Allowance Assets, the Committee may decide to satisfy an Allowance Instalment Payment in cash.

 

4.3Change of Control

 

For the avoidance of doubt, in the event of a Change of Control or any other corporate event, Allowance Instalment Payments will continue to be paid in accordance with the terms of the Allowance, unless a Participant ceases to perform a Role on or after such an event, in which case paragraph 3.2 will apply.

 

5Ceasing to perform a Role

 

5.1General rule

 

5.1.1Subject to paragraph 5.1.2, if a Participant ceases to perform a Role at any point during an Allowance Instalment Period, the next Allowance Instalment Payment to occur will be reduced pro-rata to reflect the proportion of the relevant Allowance Instalment Period remaining on the cessation date. If after ceasing to perform a Role, a Participant also ceases to be employed by a Member of the Group (and will no longer hold any employment with any Member of the Group), the Committee may determine that the pro-rata reduction will be determined by reference to the date of cessation of employment (as opposed to cessation of Role). The pro-rated Allowance Instalment Payment due under this paragraph 5.1 will be paid on the next Allowance Instalment Payment Date (in the case of death, to the Participant's personal representatives, following production of a valid grant of probate or local equivalent to the satisfaction of the Committee). No further Allowance Instalment Payments will be made to the Participant in respect of the Role he has ceased to perform.

 

Document classification - Internal23

 

 

5.1.2If a Participant changes Role, the Committee will determine whether the Allowance payable in respect of the original Role should continue to be paid, adjusted or terminated, to reflect that the Participant is performing a new Role. If the Allowance is to be terminated, paragraph 5.1.1 will apply.

 

5.2Amendment

 

5.2.1The Committee reserves the right to amend the provisions of this paragraph 3.2 if an alternative method of treating Allowances held by Participants becomes mandatory under any legislation or regulation. For the avoidance of doubt, the application by the Committee of its rights under this paragraph 3.2 is carried out pursuant to the Schedule as so approved in general meeting in 2014 and paragraph 9.13 does not therefore apply to the application of this paragraph 3.2.

 

6Rights of Participants during and following the Retention Period

 

6.1Restrictions on disposal and transfer

 

Subject to paragraph 6.3, the Participant must not dispose, or procure the disposal, of Retained Assets until the end of any applicable Retention Period, except so far as is necessary to discharge any liability to tax under paragraph 9.3 or if the Committee determines that any of the Retained Assets will not be subject to the restrictions contained in this paragraph 6.1. The Company will arrange for the Retained Assets to be held on behalf of the Participant in a restricted nominee account or will make such other arrangements as it considers appropriate to ensure that the Participant does not dispose of such Retained Assets until the end of the Retention Period.

 

6.2Dividends and other rights

 

On receipt of a Retained Asset a Participant will be entitled to vote and receive dividends and have the same rights and be treated in the same way as any other holder of such assets. The restrictions in paragraph 6.1 will apply to any dividends, shares, securities, cash or other assets received in respect of the relevant Retained Assets unless the Company decides otherwise.

 

6.3Death of a Participant

 

On the death of a Participant, any applicable Retention Period will immediately be deemed to have come to an end.

 

7Dilution limits

 

7.1Base calculations

 

7.1.110% limit: An Allowance Instalment Payment must not be satisfied using Allowance Assets in the form of Shares to the extent the number of Shares proposed to be issued in respect of that Allowance Instalment Payment exceeds 10 per cent of the ordinary share capital of the Company in issue immediately before the proposed payment, including any B Shares in issue, when added to the number of Shares which have been issued, or committed to be issued, to satisfy:

 

(1)Allowance Instalment Payments made under the Schedule;

 

(2)Awards granted under the Plan; and

 

(3)options and awards granted under any other employee share plan operated by the Company,

 

in the previous 10 years.

 

Document classification - Internal24

 

 

7.1.25% limit: An Allowance Instalment Payment must not be satisfied using Allowance Assets in the form of Shares to the extent the number of Shares proposed to be issued in respect of that Allowance Instalment Payment exceeds 5 per cent of the ordinary share capital of the Company in issue immediately before the proposed payment, including any B Shares in issue, when added to the number of Shares which have been issued, or committed to be issued, to satisfy:

 

(1)Allowance Instalment Payments made under the Schedule;

 

(2)Awards granted (otherwise than in mandatory substitution of Bonus) under the Plan; and

 

(3)options and awards granted (otherwise than in mandatory substitution of Bonus) under any discretionary employee share plan operated by the Company,

 

in the previous 10 years.

 

7.2General

 

7.2.1Ignore releases/lapses: Where an option or award granted over Shares under the Schedule, the Plan, or any other employee share plan operated by a Member of the Group, is released or lapses or is settled otherwise than in Shares, or is subject to reduction under a malus provision, any Shares which are the subject of such release, lapse, alternative settlement or malus reduction are ignored when calculating the limits in this paragraph 7.1

 

7.2.2Net settlement: For the purposes of this paragraph 7, if the Committee determines that the number of Shares to be received in respect of an Allowance Instalment Payment will be reduced in order to discharge any liability under paragraph 9.3, the number of Shares committed to be issued under that Allowance Instalment Payment will be the net number to be issued on payment.

 

7.2.3Treasury Shares – Investment Association: As long as required by the Investment Association, Shares transferred from treasury are counted as part of the ordinary share capital of the Company, and as Shares issued by the Company.

 

7.2.4Existing Shares ignored: For the avoidance of doubt, existing Shares transferred, or committed to be transferred, to satisfy Awards, Allowance Instalment Payments, or any other option or award will be ignored when calculating the limits in this paragraph 7 (other than Shares transferred from treasury, where paragraph 7.2.3 applies).

 

8Listing Rule

 

No Shares will be issued under the Schedule if it would cause Listing Rule 6.1.19 (Shares in public hands) to be breached.

 

9General terms

 

9.1Transfer of Allowances

 

A Participant may not transfer, assign or otherwise dispose of an Allowance or any rights in respect of it. This paragraph 9.1 does not apply to the transmission of an Allowance on the death of a Participant to his personal representatives.

 

 

1 For the avoidance of doubt, a malus reduction shall not be possible in relation to any option or award granted under the Schedule. 

 

Document classification - Internal25

 

 

9.2Company documents

 

9.2.1The Company is not required to send to any Participant a copy of any documents which it is required to send to its shareholders or bondholders, save in respect of Allowance Assets received by a Participant which are subject to a Retention Period.

 

9.3Withholding

 

9.3.1Any Member of the Group, any former Member of the Group or the trustee of any employee benefit trust or nominee holding Allowance Assets in respect of a Participant may withhold any amounts or make such other arrangements as it considers necessary to meet any liability to taxation or social security contributions or other appropriate levies due in respect of Allowances.

 

9.3.2Any Member of the Group, any former Member of the Group or trustee of any employee benefit trust operated by any Member of the Group may withhold or offset any amounts or make such arrangements as it considers necessary to repay any outstanding liability of any Participant.

 

9.3.3Any arrangements in this paragraph 9.3 may include a reduction in or disposal of the number, amount, or value of the Allowance Assets used to satisfy an Allowance Instalment Payment.

 

9.3.4Where any Allowance Assets are withheld and sold as part of any arrangements under this paragraph 9.3, the Company may pay any residual sale amounts in excess of the liability due to its chosen charity or charities, on behalf of the relevant Participant.

 

9.4Miscellaneous

 

9.4.1Nothing in this Schedule or the operation of the Schedule will form part of an individual's contract of employment or other relationship with any Member of the Group.

 

9.4.2The fact that one or more Allowances have been made to an individual does not create any right to, or expectation of, continued employment.

 

9.4.3No individual has an automatic entitlement to participate in, or be considered for participation in, the Schedule at all or at a particular level. Participation is linked solely to the Role performed by a Participant. Participation in the Schedule does not imply any right to participate, or to be considered for any future participation.

 

9.4.4The terms of the Schedule do not entitle any individual to the exercise of any discretion in his favour.

 

9.4.5No individual will have any claim or right to compensation or damages or any other sum or benefit in respect of the Schedule, including, without limitation, in relation to:

 

(1)his eligibility to participate, or ceasing to be eligible to participate, or ceasing to participate in the Schedule;

 

(2)any exercise of a discretion or a decision taken in relation to the Schedule or the Schedule's operation (whether or not this disadvantages the individual concerned) even it if is unreasonable, irrational or might otherwise be regarded as being in breach of the duty of trust and confidence (and/or any other implied duty) between the individual and his employer;

 

(3)any loss or reduction of any rights or expectations under the Schedule in any circumstances or for any reason (including lawful or unlawful termination of employment or the employment relationship);

 

(4)any loss of tax or any other fiscal detriment suffered in relation to the reduction or forfeiture of an Allowance; and

 

(5)the operation, suspension, termination of or amendments to the Schedule.

 

Document classification - Internal26

 

 

9.4.6Participation in the Schedule is permitted only on the basis that any rights that are not expressly set out in this Schedule, or any other Schedule, are excluded. Each Participant will be deemed to have waived any such excluded rights in consideration for, and as a condition of, participating in the Schedule.

 

9.4.7Nothing in this Schedule confers any benefit, right or expectation on a person who is not an individual. No such third party will have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Schedule. But this does not affect any other right or remedy of a third party which exists or is available.

 

9.4.8This paragraph applies throughout the employment of any individual, after the termination of his employment, and during any period when the individual has given or received notice to terminate his employment (whether such termination is lawful or unlawful).

 

9.4.9Participation in the Schedule is permitted only on the basis that the Participant accepts all the provisions of the Schedule.

 

9.5Committee's decisions final and binding

 

The decision of the Committee in interpreting the paragraphs of the Schedule or in any dispute relating to any matter relating to the Schedule will be final and conclusive.

 

9.6Administrative regulations

 

The Committee has power from time to time to make or vary regulations, operational policy or guidelines for the administration and operation of the Schedule.

 

9.7Allowances non-pensionable

 

Allowances do not form part of a Participant's remuneration for the purpose of determining entitlement to any benefit of employment including any pension or retirement benefit, life assurance, permanent health insurance or other similar benefit, whether existing or subsequently introduced.

 

9.8Employee trust

 

The Company and any Subsidiary may provide money to the trustee of any trust or any other person to enable them or him to acquire Shares or other assets to be held for the purposes of the Schedule, or enter into any guarantee or indemnity for those purposes, to the extent permitted by the Companies Act 2006 as varied from time to time.

 

9.9Consents

 

All allotments, issues and transfers of Allowance Assets will be subject to any necessary consents under any relevant law or regulations for the time being in force in the United Kingdom or elsewhere, and it will be the individual's responsibility to comply with any requirements to be fulfilled in order to obtain or prevent the need for any such consent.

 

9.10Notices

 

9.10.1Any notice or other document to be given to a Participant may be delivered or sent to him at his last known home, or e-mail, address or fax number, or to such other address which the Company considers appropriate.

 

9.10.2Communications sent by post will be sent at the risk of the Participant concerned and neither the Company nor any of its Subsidiaries shall have any liability whatsoever to any person in respect of any notification, document or other communication so given, sent or made.

 

Document classification - Internal27

 

 

9.10.3Any notice or other document to be given to the Company or other duly appointed agent may be delivered or sent to its respective registered office, or such e-mail or fax number notified to the sender. The Committee may make other arrangements to receive notices as it determines.

 

9.10.4Notices sent by post will be deemed to have been given on the second day after the date of posting. However, notices sent by or to a Participant who is working overseas will be deemed to have been given on the seventh day after the date of posting.

 

9.10.5Notices sent by e-mail or fax, in the absence of evidence to the contrary, will be deemed to have been received on the day after sending.

 

9.11Share rights

 

Shares issued to satisfy Allowances under the Schedule will rank equally in all respects with the Shares in issue on the date of allotment. They will not rank for any rights attaching to Shares by reference to a record date preceding the date of allotment. Where Shares are transferred to a Participant or to a nominee for the Participant appointed by the Company (including a transfer out of treasury), the Participant will be entitled to all rights attaching to the Shares by reference to a record date on or after the transfer. The Participant will not be entitled to rights before that date.

 

9.12Data protection

 

The Company will separately provide a Participant with information on the collection and processing of their personal data, including the grounds for processing.

 

9.13Amendment

 

9.13.1Except as described in the rest of this paragraph 9.13, the Committee may at any time change the Schedule in any way.

 

9.13.2Except as described in paragraphs 5.1.2 and 9.13.3, the Company in general meeting must approve in advance by ordinary resolution any proposed change to the Schedule to the advantage of present or future Participants, which relates to:

 

(1)the Participants;

 

(2)the limits on the number of Shares which may be issued under the Schedule;

 

(3)the basis for determining a Participant's entitlement to, and the terms of, securities, cash or other benefit to be provided and for the adjustment thereof (if any) if there is a capitalisation issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital; or

 

(4)the terms of this paragraph 9.13.2.

 

9.13.3The Committee can change the Schedule and need not obtain the approval of the Company in general meeting for any minor changes:

 

(1)to benefit the administration of the Schedule;

 

(2)to comply with or take account of the provisions of any proposed or existing legislation;

 

(3)to take account of any changes to legislation; or

 

(4)to obtain or maintain favourable tax, exchange control or regulatory treatment of the Company, any Subsidiary or any present or future Participant.

 

9.13.4Except to take account of a change in Role or a change in relevant regulatory requirements, the Committee cannot amend the terms of any Allowance which it has awarded under the Schedule.

 

Document classification - Internal28

 

 

9.14Severability

 

9.14.1By participating in the Schedule, each Participant agrees and acknowledges that the restrictions contained in the Schedule are reasonable and necessary to protect the business of any Member of the Group (including, but not limited to, its confidential information, customer relations and goodwill and its employees) and that the benefits each Participant receives under this Schedule are sufficient compensation for these restrictions.

 

9.14.2Each of the obligations in the Schedule is an entire, separate and independent restriction on each Participant, despite the fact that they may be contained in the same phrase and if any part is found to be invalid or unenforceable the remainder will remain valid and enforceable.

 

9.14.3While the restrictions are considered to be fair and reasonable in the circumstances, each Participant agrees that if any of them should be judged to be void or ineffective for any reason, but would be treated as valid and effective if part of the wording was deleted or the period was reduced in scope, they will apply with such modifications as necessary to make them valid and effective.

 

9.15Termination of the Schedule

 

The Schedule will terminate on the tenth anniversary of the date it is adopted by the Board, but the Committee may terminate the Schedule at any time before that date. The termination of the Schedule will not affect existing Allowances.

 

9.16Governing law and jurisdiction

 

The Schedule is governed by and construed in accordance with English law. Any Member of the Group and all Participants will submit to the non-exclusive jurisdiction of the English Courts as regards any matter arising under the Schedule.

 

10Definitions

 

In this Schedule:

 

“Allowance” means a right to receive an amount in respect of performance of a Role, payable on one or more Allowance Instalment Payment Dates and satisfied by Allowance Assets with an equivalent aggregate Market Value;

 

“Allowance Asset” means Shares, NWG Bonds, or other securities, debentures or debt (whether or not these are convertible) issued or to be issued by a Member of the Group, which may be used to satisfy an Allowance Instalment Payment;

 

“Allowance Effective Start Date” means the first date of the period in respect of which the Committee has determined that an Allowance will be payable;

 

“Allowance Instalment Payment Date” means the date or dates on which an Allowance Instalment Payment is scheduled to be paid as set out in the terms of an Allowance, or such other date or dates determined by the Committee where it considers it necessary or appropriate to alter any original dates initially communicated to a Participant due to relevant regulatory requirements;

 

“Allowance Instalment Payment” means in relation to an Allowance, the proportion of the Allowance which will be paid on the Allowance Instalment Payment Date;

 

Document classification - Internal29

 

 

“Allowance Instalment Period” means the period, normally corresponding to the period during which the Participant performs the Role, in respect of which an Allowance Instalment Payment will be payable;

 

“B Shares” means Class B shares of £0.01 each in the capital of the Company;

 

“Bonus” means a bonus which might otherwise become payable under any bonus plan or arrangement operated by any Member of the Group;

 

“Business Day” means any day on which the London Stock Exchange is open for the transaction of business;

 

“Change of Control” means a change in the control of the Company, which will occur if, by one or a series of transactions or events, a person (including a person acting in concert with other persons) obtains control of the Company for the purposes of Section 995 of the Income Tax Act 2007 as varied from time to time;

 

“Committee” means the Group Performance & Remuneration Committee of the Company and any individual or group of persons authorised by the Group Performance & Remuneration Committee to exercise powers under the Schedule;

 

“Company” means NatWest Group plc;

 

“Dealing Restriction” means restrictions imposed by statute, order, regulation or Government directive, including the model code on dealings by directors and certain employees as set out in the listing rules published by the UK Listing Authority, or any internal share dealing code of the Company;

 

“Eligible Employee” means any person who is, or was, an employee (whether full-time or part-time), including an executive director, of the Company or its Subsidiaries from time to time and who is performing, is scheduled to perform, or has performed a Role during a period in respect of which the Committee has determined that an Allowance is payable;

 

“Market Value” on any day means such value as the Company determines will be the market value of an Allowance Asset and which in relation to a Share will mean:

 

1.the price for the immediately preceding Business Day;

 

2.if the Committee decides, the average price for the five immediately preceding Business Days; or

 

3.such other price as the Committee may decide

 

The “price” is the middle market quotation taken from the Daily Official List of the London Stock Exchange or the price as reported by a reputable market data provider, as determined by the Committee;

 

“Member of the Group” means any of the following:

 

1.the Company and its Subsidiaries from time to time; and

 

2.any other company which the Committee determines should be treated as a Member of the Group for the purposes of the Schedule;

 

“NWG Bonds” means debt issued or to be issued by any Member of the Group

 

“Participant” means a person who is to receive an Allowance under paragraph 3 or, following the death of a Participant, his personal representatives;

 

“paragraph” means a paragraph of this Schedule;

 

Document classification - Internal30

 

 

“Plan” has the meaning given in paragraph 1 of this Schedule;

 

;

 

“Remuneration Code” means the Remuneration Code published by the UK Prudential Regulation Authority as varied from time to time;

 

“Retained Assets” means any Allowance Assets in respect of which a Retention Period is imposed under paragraph 6;

 

“Retention Period” means in respect of an Allowance Instalment Payment, a period of time determined by the Committee during which a Participant must not dispose, or procure the disposal, of his Allowance Assets;

 

“Role” means the position or role in respect of which the Committee determines that an Allowance will be payable;

 

“Schedule” means this Schedule 1 to the Plan as amended from time to time;

 

“Shares” means fully paid ordinary shares in the capital of the Company, and, where the context requires, includes American depository shares representing Shares; and

 

“Subsidiary” means a company which is a subsidiary of the Company within the meaning of Section 1159 of the Companies Act 2006 as varied from time to time.

 

Document classification - Internal31

 

 

Schedule 2 – Cash Awards and Allowances

 

Part A

 

Except as noted in Part A to this Schedule 2, the Rules described in the NatWest Group 2014 Employee Share Plan (the “Plan”) apply to Awards granted under Part A to this Schedule 2. In the event of any conflict between the Rules and Part A to this Schedule 2, Part A to this Schedule 2 will prevail.

 

1Part A to this Schedule 2 is made under and amends and supplements the terms of the Plan for Awards made in any jurisdiction:

 

1.1which may be specified as a jurisdiction where it is not, or may not be, possible to make Awards in respect of a particular Award Asset which the Committee would otherwise have used; or

 

1.2where it is considered necessary or appropriate, at the absolute discretion of the Committee, for Awards to be granted in cash rather than over Award Assets.

 

2Where an Award is granted under Part A to this Schedule 2, the following amendments shall be read into the Plan:

 

2.1the definition of “Award Asset” will be deleted and replaced with the following wording:

 

“Award Asset” means a fixed cash amount over which or in respect of which an Award has been granted;

 

2.2the definition of “Market Value” will be deleted and replaced with the following wording:

 

“Market Value” on any date means the value of the relevant Award Assets;

 

2.3all references to “number or amount of Award Assets” will be replaced with: “amount of Award Assets”;

 

2.4all references to Award Assets being “issued”, “transferred” or “acquired” will be ignored and (if not already contained within the relevant provision) references shall instead be read in to Award Assets being “paid”;

 

2.5rule 3.2.1(2) is deleted;

 

2.6the wording in rule 3.2.1(3) is replaced with the following: “the value of the Award Assets in respect of which the Award will be granted”;

 

2.7the following wording is deleted from rule 3.5.2: “dividends, coupons,” and “issued or”

 

2.8rules 3.2.4, 3.5.1, 3.7, 3.8, 5.4.2, 5.6, 5.7, 6.4.2 and 7.2.2 are deleted; and

 

2.9the following wording is deleted from rule 8.9: “allotments, issues and”.

 

Document classification - Internal32

 

 

Part B

 

Except as noted in Part B to this Schedule 2, the provisions of Schedule 1 to the NatWest Group 2014 Employee Share Plan (the “Allowance Schedule”) apply to Awards granted under Part B to this Schedule 2. In the event of any conflict between the provisions of the Allowance Schedule and Part B to this Schedule 2, Part B to this Schedule 2 will prevail.

 

3Part B to this Schedule 2 is made under and amends and supplements the terms of the Allowance Schedule for Allowances made in any jurisdiction:

 

3.1which may be specified as a jurisdiction where it is not, or may not be, possible to make Allowances in respect of a particular Allowance Asset which the Committee would otherwise have used; or

 

3.2where it is considered necessary or appropriate, at the absolute discretion of the Committee, for Allowances to be granted in cash rather than over Allowance Assets.

 

4Where an Allowance is granted under Part B to this Schedule 2, the following amendments will be read into the Allowance Schedule:

 

4.1the definition of “Allowance” will be deleted and replaced with the following wording:

 

“Allowance” means a right to receive an amount, in respect of performance of a Role, which must be paid in cash on one or more Allowance Instalment Payment Dates;

 

4.2the definitions of “Allowance Asset”, “Market Value” and “Retention Period” will be deleted;

 

4.3all references to “Allowance Asset” will be replaced with references to “cash”;

 

4.4all references to “number or amount of Allowance Assets” will be replaced with: “amount of cash”;

 

4.5all references to Allowance Assets being “issued”, “transferred” or “acquired” will be ignored and (if not already contained within the relevant provision) references will instead be read in to cash being “paid”;

 

4.6the following wording is deleted from paragraph 4.1.3: “(or any combination of such assets) which have an aggregate Market Value, on the Allowance Instalment Payment Date,”;

 

4.7paragraphs 6 and 7 are deleted and all references to “Retention Period” will be disregarded;

 

4.8the following wording is deleted from paragraph 9.9: “allotments, issues and”.

 

Document classification - Internal33

 

 

Schedule 3 – Phantom Awards and Allowances

 

Part A

 

Except as noted in Part A to this Schedule 3, the Rules described in the NatWest Group 2014 Employee Share Plan (the “Plan”) apply to Awards granted under Part A to this Schedule 3. In the event of any conflict between the Rules and Part A to this Schedule 3, Part A to this Schedule 3 will prevail

 

1Part A to this Schedule 3 is made under and amends and supplements the terms of the Plan for Awards made in any jurisdiction:

 

1.1which may be specified as a jurisdiction where it is not, or may not be, possible to make Awards in respect of Award Assets in the form of Shares or other securities issued by a Member of the Group; or

 

1.2where it is considered necessary or appropriate, at the absolute discretion of the Committee, for Awards to be granted over or in respect of Award Assets in the form of notional shares or securities.

 

2Where an Award is granted under this Part A to Schedule 3, Participants will have no right to receive Shares or other securities issued by a Member of the Group and the following amendments will be read into the Plan:

 

2.1the definition of “Award” is deleted and replaced with: “Award” means a Conditional Award or Option;

 

2.2the definition of “Award Asset” is deleted and replaced with: “Award Asset” means a conditional right to a cash payment defined by reference to a number of notional shares or securities over or in respect of which an Award has been granted;

 

2.3the definition of “Vesting”, “Vest” and “Vested” is deleted and replaced with: “Vesting”, “Vest” and “Vested” means a Participant becoming entitled to receive, or becoming entitled to exercise an Option to receive, a cash payment under the Plan”;

 

2.4the terms of each Award specified under rule 3.2 must include the number and type of notional shares or securities used to determine the amount of the cash payment that the Participant is eligible to receive when the Award Vests (as calculated under paragraph 2.5 of Part A to this Schedule 3) and the currency in which the payment will be made;

 

2.5the amount payable on the Vesting of an Award will be determined in accordance with the following formula:

 

a x b + c

 

where:

 

  a = is the number of notional shares or securities determined by the Committee for the Award under rule 3.2
  b = is the Market Value of a Share or relevant security at the time the Award Vests less, where applicable, any Option price payable
  c = if the Committee has determined that the Award carries the right to receive amounts under rule 5.5, the aggregate of the entitlements which would have been delivered under rule 5.5.3 if the shares over which the Award has Vested had not been notional, or otherwise, zero

 

Document classification - Internal34

 

 

2.6rule 5.7 (Retention Period) is deleted and replaced with the following new rule 5.7;

 

If a Retention Period applies to an Award, the date on which payment is made to the Participant will be delayed until the end of the Retention Period without prejudice to the Vesting of the Award, except so far as is necessary to discharge any liability to tax under rule 8.3 or if the Committee determines that any of the restrictions contained in this rule 5.7 will not apply. The Participant will be entitled to receive a cash payment at the end of the Retention Period (or earlier if the Committee so determines), calculated under paragraph 2.5 of Part A to Schedule 3 on the basis that:

 

  b = is the Market value of a Share or relevant security at the end of the Retention Period (or such shorter period, as the Committee so determines) less, where applicable, any Option price payable
  c = is: a) any entitlements which would have been delivered under rule 5.5.3 if the shares over which the Award has Vested had not been notional; b) plus any entitlements which would have been delivered in respect of such notional shares or securities during the Retention Period (or such shorter period, as the Committee so determines) if they had not been notional, or, if neither a) nor b) are applicable, zero

 

2.7rule 6.4 is amended by deleting the words “but will Vest in full on the date of death. No Retention Period will be imposed and the following will apply:” and replacing them with:

 

“and the Participant will become entitled to receive a cash payment calculated under paragraph 2.5 of Part A to Schedule 3 on the basis that:

 

  b = is the Market Value of a Share or relevant security on the date of death less, where applicable, any Option price payable, and
  c = is any entitlement arising under rule 5.5 between the Award Date and the date of death.

 

Payment will be made as soon as practicable after production of a valid grant of probate (or local equivalent to the satisfaction of the Committee).”

 

2.8rules 6.4.1, 6.4.2 and 6.4.3 are deleted;

 

2.9where rule 7.2 applies, the Committee may adjust the number of notional shares or securities subject to an Award as well as any terms relating to the amount of the cash payment for an Award as appear appropriate. Any exchange of Awards under rule 7.4 or otherwise shall be an exchange for notional shares, and shall not confer any right to real shares; and

 

2.10arrangements in rule 8.3 may include a reduction to the amount of cash payable on the Vesting of an Award.

 

Document classification - Internal35

 

 

Part B

 

Except as noted in Part B to this Schedule 3, the provisions of Schedule 1 to the NatWest Group 2014 Employee Share Plan (the “Allowance Schedule”) apply to Awards granted under Part B to this Schedule 3. In the event of any conflict between the provisions of the Allowance Schedule and Part B to this Schedule 3, Part B to this Schedule 3 will prevail.

 

3Part B to this Schedule 3 is made under and amends and supplements the terms of the Allowance Schedule for Allowances made in any jurisdiction:

 

3.1which may be specified as a country where it is not, or may not be, possible to make Allowances in respect of Allowance Assets in the form of Shares or other securities issued by a Member of the Group; or

 

3.2where it is considered necessary or appropriate, at the absolute discretion of the Committee, for Allowances to be granted over or in respect of Allowance Assets in the form of notional shares or securities.

 

4Where an Allowance is made under this Part B to Schedule 3, the following amendments shall be read into the Allowance Schedule:

 

4.1the definition of “Allowance Asset” is deleted and replaced with: “Allowance Asset” means a conditional right to a cash payment defined by reference to a number of notional shares or securities in respect of which an Allowance has been made;

 

4.2the terms of each Allowance specified under paragraph 3.1.2 must include the number and type of notional shares or securities used to determine the amount of the cash payment that the Participant is eligible to receive when an Allowance Instalment Payment is made (as calculated under paragraph 2.3 of Part B to this Schedule 3) and the currency in which it will be made;

 

4.3the amount of an Allowance Instalment Payment will be determined in accordance with the following formula:

 

a x b

 

where:

 

  a = is the number of notional shares or securities determined by the Committee for the Allowance Instalment Payment under paragraph 3.1.2 of Schedule 1
  b = is the Market Value of a Share or relevant security at the time the Allowance Instalment Payment is made

 

Document classification - Internal36

 

 

4.4paragraph 6 is deleted and replaced with the following new paragraph 6:

 

If a Retention Period applies to an Allowance, the date on which an Allowance Instalment Payment is made to a Participant will be delayed until the end of the Retention Period except so far as is necessary to discharge any liability to tax under paragraph 9.3 or if the Committee determines that any of the restrictions contained in this paragraph 6 will not apply. The Participant will be entitled to receive a cash payment at the end of the Retention Period (or earlier if the Committee so determines), calculated in accordance with the following formula:

 

a x b + c

 

where:

 

  a = is the number of notional shares or securities determined by the Committee for the Allowance Instalment Payment under paragraph 3.1.2 of Schedule 1
  b = is the Market Value of a Share or relevant security at the end of the Retention Period (or such shorter period, as the Committee so determines)
  c = any entitlements which would have been delivered in respect of such notional shares or securities during the Retention Period (or such shorter period, as the Committee so determines) if they had not been notional, or, otherwise, zero

 

4.5arrangements in paragraph 9.3 may include a reduction to the amount which the Participant is eligible to receive when an Allowance Instalment Payment is made.

 

Document classification - Internal37

 

 

Schedule 4 – Awards and Allowances over other assets

 

Part A

 

Except as noted in Part A to this Schedule 4, the Rules described in the NatWest Group 2014 Employee Share Plan (the “Plan”) apply to Awards granted under Part A to this Schedule 4. In the event of any conflict between the Rules and Part A to this Schedule 4, Part A to this Schedule 4 will prevail.

 

1Part A to this Schedule 4 is made under and amends and supplements the terms of the Plan for Awards to be made over or in respect of assets which would not otherwise fall within the definition of “Award Assets”.

 

2Where Awards are made under this Part A to Schedule 4, the following amendments will be read into the Rules:

 

2.1the definition of “Award Assets” will be replaced with such wording as the Committee considers appropriate; and

 

2.2the Committee has the ability to make any such amendments to the Plan or its operation as it considers appropriate in the context of the particular asset being used.

 

Part B

 

Except as noted in Part B to this Schedule 4, the provisions of Schedule 1 to the NatWest Group 2014 Employee Share Plan (the “Allowance Schedule”) apply to Awards granted under Part B to this Schedule 4. In the event of any conflict between the provisions of the Allowance Schedule and Part B to this Schedule 4, Part B to this Schedule 4 will prevail.

 

3Part B to this Schedule 4 is made under and amends and supplements the terms of the Allowance Schedule for Allowances to be made over or in respect of assets which would not otherwise fall within the definition of “Allowance Assets”.

 

4Where Allowances are made under this Part B to Schedule 4, the following amendments will be read into the Allowance Schedule:

 

4.1the definition of “Allowance Assets” will be replaced with such wording as the Committee considers appropriate; and

 

4.2the Committee has the ability to make any such amendments to the Allowance Schedule or its operation as it considers appropriate in the context of the particular asset being used

 

Document classification - Internal38

 

 

Schedule 5 – Australia

 

Except as noted in this Schedule 5, the Rules described in the NatWest Group 2014 Employee Share Plan (the “Plan”) apply to Awards granted under this Schedule 5 to Eligible Employees in Australia. In the event of any conflict between the Rules and this Schedule 5, this Schedule 5 will prevail.

 

1Leaving the Group before Vesting

 

The Committee must not exercise its discretion under any rule of the Plan where the exercise of the discretion would result in a termination benefit being paid to a Participant in circumstances prohibited by Part 2D.2 of the Corporations Act 2001 (Cth) as varied from time to time.

 

2Death

 

For the purposes of rule 6.4, and subject to rule 5.6, the Committee has absolute discretion to determine whether to settle an Award following the death of a Participant in cash or another form of Award Asset. If the Committee decides to make a cash payment in these circumstances, as calculated in accordance with rule 6.4, it will be paid on the later of:

 

2.1.1the production of a valid grant of probate (or local equivalent subject to the satisfaction of the Committee); and

 

2.1.2if the Participant was, at the time and in the circumstances specified in paragraph 2 of this Schedule, prohibited by Part 2D.2 of the Corporations Act 2001 (Cth) as varied from time to time, from receiving such payment, the time when the Award would otherwise Vest had the Participant not died.

 

3Options

 

3.1The definitions of “Option Expiry Date” and “Option Period”in rule 9 are modified to substitute the word “sixth” for the word “tenth”.

 

3.2A new rule 3.10 is added:

 

3.10     Lapse of Option

 

A Participant may, in his absolute discretion, elect to have all or any of their Options lapse by providing a written notice to the Committee. If the Participant elects to have any of his Options lapse under this rule, the Options to lapse as specified in the written notice will lapse effectively from when the Committee receives the written notice.

 

3.3In relation to Options, rule 5.2 operates subject to rule 3.10.

 

3.4Rule 5.4.3 (exercise of Options) is deleted and replaced with the following:

 

5.4.3ASubject to rule 5.4.3B, in relation to an Option, to the extent it has Vested, a Participant may exercise the Option at any time during the Option Period following Vesting provided that the Market Value of Shares at the time the Participant seeks to exercise the Option equals or exceeds the Option price (if any).

 

5.4.3BIf an Option Vests under more than one provision of the rules of the Plan, the provision resulting in the shortest exercise period will prevail.

 

5.4.3CIf a Participant exercises an Option in accordance with rule 5.4.3A, then subject to rule 4, rule 5 (including, for the avoidance of doubt, rules 5.4.3D and 5.4.3E below), and rules 6, 8.3 and 8.9, the Committee will arrange for Shares to be transferred to or issued to the Participant, or to a nominee for the Participant appointed by the Company, within 30 days of the date on which the Option is exercised.

 

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5.4.3DA Participant must not sell, transfer or otherwise dispose of Shares provided in connection with the exercise of the Option until the end of 12 months after the time the Participant exercised the Option.

 

5.4.3EThe Committee may require that:

 

(i)share certificates or such other evidence of title to Shares acquired by Participant on exercise of an Option be held in escrow until the expiry of the period referred to in rule 5.4.3D; or

 

(ii)a Participant enter into such other arrangements as the Committee deems necessary to enforce or give effect to the restriction under rule 5.4.3D.

 

5.4.3FIf a Participant seeks to exercise an Option in circumstances that are not covered by rule 5.4.3A, the exercise will not be effective and the Committee will not be subject to any obligation to provide Shares to the Participant in connection with the Option until the Option is exercised in circumstances that are covered by rule 5.4.3A.

 

3.5Dividend equivalents and notional interest

 

Rule 5.5 (dividend equivalent and notional interest) does not apply.

 

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Schedule 6 – Canada

 

Except as noted in this Schedule 6, the Rules described in the NatWest Group 2014 Employee Share Plan (the “Plan”) apply to Awards granted under this Schedule 6 to Eligible Employees in Canada. In the event of any conflict between the Rules and this Schedule 6, this Schedule 6 will prevail.

 

Notwithstanding any provision of the Plan to the contrary:

 

1No Awards held by Participants employed or resident in Canada will be settled with Shares or other assets held in a trust described in rule 8.8.

 

2Awards granted under this Schedule 6 will be subject to one of the following provisions, with the Committee having an absolute discretion to determine the approach to be followed from time to time:

 

2.1Any Award comprising of Award Assets other than Shares will vest on the earlier of the Vesting date determined under rule 5, and the third anniversary of the end of the calendar year preceding that in which the Award was granted. Where such vesting takes place prior to the Vesting date determined under rule 5, the Committee shall have the ability to impose the same or similar restrictions to those referred to in rule 5.7.

 

2.2Awards having a Vesting period that extends beyond the third anniversary of the end of the calendar year preceding that in which the Award was granted shall comprise an Award over Shares.

 

3Rule 5.6 (Alternative settlement) does not apply to Awards of Shares vesting after the third anniversary of the calendar year for which the Award was made

 

4For the purposes of the Plan, a Participant's employment with the Company or a Subsidiary shall be considered to have terminated on (i) the day that the Participant gives or receives written notice of termination of employment with the Company or Subsidiary whether such notice of termination is effective immediately or at a future date or (ii) where the Company or its Subsidiary so determines, such later day as may be determined by the Company or its Subsidiary in its sole and absolute discretion. For the avoidance of doubt, no period of notice, if any, or payment in lieu of notice that is given or that ought to have been given under applicable law in respect of such termination of employment shall be utilized to extend the Participant's period of employment for the purposes of determining his or her entitlement under the Plan unless the Company or its Subsidiary determines otherwise.

 

Document classification - Internal41

 

 

Schedule 7 – USA

 

Except as noted in Parts A, B or C to this Schedule 7, the Rules described in the NatWest Group 2014 Employee Share Plan (the “Plan”) apply to Awards granted under the relevant Part to this Schedule 7 to Eligible Employees in the USA. In the event of any conflict between the Rules and the relevant Part to this Schedule 7, the relevant Part to this Schedule 7 will prevail.

 

Part A – Conditional Awards

 

1Operation of Part A of Schedule 7

 

Part A to this Schedule 7 is made under and amends and supplements the terms of the Plan in respect of Conditional Awards granted to Participants who are subject to U.S. taxation (“Part A Awards”), and is intended to be compliant with Section 409A of the Internal Revenue Code and the Treasury Regulations promulgated under that Section (together, the “Section 409A Rules”) or satisfy an exemption from the Section 409A Rules, as applicable.

 

2Timing of Vesting

 

2.1Rule 5.2.3 is amended by the insertion of the following words at the end of the rule:

 

“but in no case will Vesting be delayed later than the time permitted by the Section 409A Rules for payments that may involve violations of law (subject to the requirements of those Rules).”

 

2.2A new rule 5.2.4 is added with the following wording:

 

“No Award that Vests under any provision of the Plan will Vest prior to the date originally set for Vesting except to the extent such early Vesting and payment is in accordance with the Section 409A Rules. Any delayed Vesting under any provision of the Plan will be only as in accordance with the Section 409A Rules.”

 

3Delayed Vesting

 

Rule 5.3.2 is amended by the addition of the following sentences as the final sentences:

 

“The Committee's determination must be made before 1 December of the calendar year in which the date originally set for Vesting falls. Any Award Assets that the Committee determines will Vest in accordance with this rule 5.3.2 will be transferred to the Participant by 31 December of the calendar year in which the date originally set for Vesting falls.”

 

4Consequences of Vesting

 

Rule 5.4.1 is replaced with the following wording:

 

“Conditional Awards: the Award Assets will be delivered, as soon as practicable, to the Participant, or to a nominee for the Participant appointed by the Company after Vesting (but in no event later than 31 December of the year in which Vesting occurs). The Participant will receive the number of Award Assets in respect of which the Conditional Award has Vested, subject to any arrangements made to discharge any liability under rule 8.3, although nothing in rule 8.3 will permit the receipt of Award Assets after the later of: a) 31 December of the calendar year in which Vesting occurs; or b) a day falling after this date where such delay falls within the time permitted by the Section 409A Rules.”

 

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5Dividend equivalents and notional interest

 

Rule 5.5.3 is replaced with the following wording:

 

“Amounts or assets delivered to a Participant or to a nominee for the Participant appointed by the Company under this rule 5.5 will be delivered as soon as practicable after Vesting (but in no event later than 31 December of the year in which Vesting occurs), subject to rule 8.3, although nothing in rule 8.3 will permit the receipt of amounts or assets after the later of: a) 31 December of the calendar year in which Vesting occurs; or b) a day falling after this date where such delay falls within the time permitted by the Section 409A Rules.”

 

6Death

 

Rule 6.4.1 is replaced with the following wording:

 

“Conditional Awards: a cash amount equivalent to the Market Value of the Award Assets on the date of death will be delivered to the Participant's personal representatives as soon as practicable after production of a valid grant of probate (or local equivalent subject to the satisfaction of the Committee) but in no event after the later of: a) 31 December of the calendar year in which the date originally set for such payment falls; b) a day falling after this date where such delay falls within the time permitted by the Section 409A Rules.”

 

7Corporate events

 

7.1Rule 7.1 is disapplied.

 

7.2Rule 7.2.1 is replaced with the following wording:

 

“If the Committee becomes aware that the Company is or is expected to be affected by:

 

(1)a Change of Control;

 

(2)any variation in share capital, demerger, disposal of a business or Member of the Group, distribution (other than an ordinary dividend) or delisting;

 

(3)a flotation of some or all of the shares of a company which either: (a) is or was a Member of the Group; or (b) has been established to hold or operate one or more businesses which the Company or a Member of the Group has transferred to it in connection with such a flotation; or

 

(4)any transaction which, in the opinion of the Committee, could affect the current or future value of Award Assets,

 

then Awards are not affected unless and to the extent that the Committee decides to:

 

1)require Awards to be exchanged under or on a similar basis to rule 7.4; and/or

 

2)adjust the number of Award Assets comprised in a Part A Award, and such other terms of the Part A Award as appear appropriate, but only in accordance with the Section 409A Rules.

 

7.3Notwithstanding the provisions of rule 7.2 (as modified by the wording in paragraph 7.2 above), if an event falling within the provisions of rule 7.2.1 would constitute a permitted event for the purposes of terminating any Part A Awards and making distributions to the relevant Participants in accordance with the relevant provisions of the Section 409A Rules, the Committee may decide to take any steps in pursuance of this outcome.

 

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8Exchange of Awards

 

A new rule 7.4.3 is added with the following wording:

 

“Where the Committee decides to require Awards to be exchanged under or on a similar basis to rule 7.4 or where rule 7.4.1 applies, any exchange of Awards will be in accordance with the Section 409A Rules to the extent necessary to maintain compliance with the Section 409A Rules.”

 

9General terms

 

9.1Rule 8.3.4 is disapplied.

 

9.2Rule 8.6 is amended to include the following sentence:

 

“However, no such regulation will affect the timing of Vesting or payment as set forth in the Plan and this Schedule 7 to the extent it would cause the Plan to fail to meet the requirements of the Section 409A Rules.”

 

9.3Rule 8.9 is amended by the addition of the following sentence as the final sentence:

 

“Where any applicable consent is not received, if it becomes clear that the relevant allotment, issue or transfer of Award Assets cannot take place before the later of: a) 31 December of the calendar year in which the date originally set for such payment falls; or b) a day falling after this date where such delay falls within the time permitted by the Section 409A Rules for violations of law or for disputed payments (subject to the applicable requirements of those exceptions), the Award will be satisfied using a different form of Award Assets prior to the later of the time specified in (a) or (b).”

 

Part B – Allowances

 

10Part B to this Schedule 7 is made under and amends and supplements the terms of Schedule 1 of the Plan in respect of Allowances which are made to Participants who are subject to U.S. taxation (“Part B Allowances”) and is intended to be compliant with the Section 409A Rules or satisfy an exemption from the Section 409A Rules, as applicable.

 

11Allowance Instalment Payments

 

Paragraph 4.1.2 is amended by the insertion of the following words at the end of the rule:

 

“but in no case will the making of an Allowance Instalment Payment be delayed later than the time permitted by the Section 409A Rules for payments that may involve violations of law.”

 

12General terms

 

12.1Paragraph 9.3.4 is disapplied.

 

12.2Paragraph 9.6 is amended to include the following sentence:

 

“However, no such regulation will affect the timing of payment of an Allowance Instalment Payment to the extent it would cause the Plan (as amended by this Schedule 7) to fail to meet the requirements of the Section 409A Rules.”

 

12.3Paragraph 9.9 is amended by the addition of the following sentence as the final sentence:

 

“Where any applicable consent is not received, if the relevant allotment, issue or transfer of Allowances Assets does not take place before the later of: a) 31 December of the calendar year in which the date originally set for such payment falls; or b) a day falling after this date where such delay falls within the time permitted by the Section 409A Rules for violations of law or for disputed payments (subject to the applicable requirements of those exceptions), the Award will be satisfied using a different form of Allowance Assets.”

 

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Part C – Provisions applying to Parts A and B

 

13General

 

13.1No Participant who is subject to US taxation may be granted an Option or Forfeitable Award unless the terms of such Award are compliant with the Section 409A Rules or are exempt from the Section 409A Rules.

 

13.2The Plan and this Schedule 7 will be interpreted and administered in a manner that complies with the Section 409A Rules or that would cause the Award to be exempt from the Section 409A Rules, as applicable.

 

14Taxation

 

14.1An offset of outstanding liabilities in accordance with rule 8.3.3 in relation to a Part A Award or paragraph 9.3.3 in relation to a Part B Allowance may only be done at the point at which Award Assets or Allowance Assets (as appropriate) are received by a Participant.

 

14.2Notwithstanding the foregoing, any tax, interest or penalties arising under Sections 409A or 457A (or any other section) of the Internal Revenue Code are the sole responsibility of the Participant.

 

14.3Without limiting the generality of rule 9.3.3 in relation to a Part A Award, to the extent any taxes (e.g., Federal Insurance Contributions Act (FICA) taxes) are due with respect to an Award in any year(s) prior to the year(s) of Vesting, the Company may, to the extent permitted by law, in its discretion withhold any or all of the amount due in respect of such taxes (i) from any compensation (including salary; bonus and other incentive awards; or special payments) otherwise payable to the Participant during such year or (ii) by reducing the amount of any Award Assets subject to an Award by the amount of any such taxes.

 

14.4Neither the Company, the Committee nor any individual member of the Committee will be liable for: (i) any action or determination made with respect to the Plan; or (ii) any action or determination with respect to an Award or Awards that results in such Awards (individually or entirely) becoming subject to taxation under the Section 409A Rules.

 

15Amendment

 

15.1In relation to Part A Awards a new rule 8.13.5 is added with the following wording:

 

15.2“No amendment under this rule 8.13 will affect the timing of Vesting or payment as set forth in the Plan to the extent it would cause the Plan to fail to meet the requirements of the Section 409A Rules.”

 

15.3In relation to Part B Allowances a new paragraph 9.13.4 is added with the following wording:

 

15.4“No amendment under this paragraph 9.13 will affect the timing of Allowance Instalment Payments as set forth in the Plan and Schedule 1 to the extent it would cause the Plan to fail to meet the requirements of the Section 409A Rules.”

 

15.5Without limiting rules 8.6 and 8.13 of the Plan or paragraph 9.13 of Schedule 1, the Committee expressly reserves the right to amend, prospectively or retroactively, the Plan, Schedule 1, this Schedule 7 and any outstanding Awards, to the extent necessary to maintain compliance with the Section 409A Rules.

 

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Schedule 8 – Poland

 

Except as noted in this Schedule 8, the Rules described in the NatWest Group 2014 Employee Share Plan (the “Plan”) apply to Awards granted under this Schedule 8 to persons occupying Managerial Roles in Poland, within the meaning of the Polish Regulations (as defined below). In the event of any conflict between the Rules and this Schedule 8, this Schedule 8 will prevail.

 

1Definitions

 

1.1The definitions of the following terms in rule 9 are deleted and replaced with the following:

 

“Bonus” means “Discretionary Performance Award”; and

 

“Eligible Employee” means each person performing a “Managerial Role” with NWG Poland.

 

1.2The following definitions are added to rule 9:

 

“Assessment Period” shall have the meaning given to it in the Polish Regulations;

 

“Discretionary Performance Award” means the variable remuneration and benefits which may be granted to an Eligible Employee in respect of an Assessment Period, part of which is granted in the form of an Award, the value of which depends on the objectives achieved and the performance of the Eligible Employee and/or NWG Poland during such period. For the avoidance of doubt, this does not include base salary, one-off awards and benefits awarded under the generally applicable laws as well as other benefits acquired on a basis other than assessing the objectives and performance of the Eligible Employee and/or NWG Poland;

 

“Managerial Role” means a managerial position which has a material impact on NWG Poland's risk profile, within the meaning of the PFSA Resolution;

 

“Polish Regulations” means the Regulations on variable remuneration of Eligible Employees approved by the Supervisory Board on 31 July 2013, as required to be implemented in accordance with the PFSA Resolution;

 

“PFSA Resolution” means the resolution 258/2011 of the Polish Financial Supervision Authority on the detailed principles for the operation of the risk management system and the internal control system, and detailed conditions for estimating internal capital by banks and for reviewing the internal capital retention and estimation process and the principles for determining the policy of variable elements of the remuneration of persons holding managerial positions at banks;

 

“NWG Poland” mean RBS Bank (Polska) S.A. with its seat in Warsaw; and

 

“Supervisory Board” means the supervisory board of NWG Poland.

 

2Operation of the Plan

 

2.1The Plan constitutes an integral part of the Polish Regulations and operates on the basis of the approval of the Supervisory Board. The application of the Plan (as amended and supplemented by this Schedule) may be suspended and/or superseded by another plan pursuant to the resolution of the Supervisory Board.

 

3Selection of the Eligible Employees

 

3.1Rule 2.2 shall not apply. Only persons performing a Managerial Role at any point during the relevant Assessment Period may be selected to receive an Award subject to this Schedule.

 

Document classification - Internal46

 

 

3.2Notwithstanding, paragraph 3.1 above, persons employed with NWG Poland who do not perform Managerial Roles are still eligible to be selected to participate under the Plan under rule 2.2. Any Awards received by such persons will be governed by the standard provisions of the Plan unaffected by the amendments set out in this Schedule.

 

4Determination and terms of Awards

 

4.1When making any determination under rule 3.1, the Committee will act in accordance with the terms of the Polish Regulations, where necessary having regard to the Assessment Period.

 

4.2Each decision made by the Committee in accordance with rule 3 shall only become effective upon the approval of the Supervisory Board and will be subject to the terms of the Polish Regulations and the PFSA Resolution.

 

5Malus and Clawback

 

5.1In rule 4.1.1 the words “the Company, any Member of the Group and any business area or team” are replaced by “NWG Poland and the business unit in which the Participant worked and, where permissible under the Polish Regulations, or as otherwise agreed by the Polish Financial Services Authority, the Company, any Member of the Group and any business area or team”.

 

5.2A new rule 4.1.1(4) is added with the following wording and the existing rule 4.1.1(4) re-numbered rule 4.1.1(5):

 

“any of the following having occurred:

 

(i)a significant negative change to the Core Tier 1 capital ratio of NWG Poland;

 

(ii)a significant breach of internal risk management at NWG Poland;

 

(iii)a material misstatement or error made by the Participant; or

 

(iv)an Award having been granted to a Participant as a result of fraudulent conduct by the Participant

 

5.3A new rule 4.3 is inserted (and the current rule 4.3 re-numbered rule 4.4) as follows:

 

“Any decision made by the Committee under this rule 4 must be recommended to the Supervisory Board, which has sole discretion to determine whether rule 4 should apply having regard at all times to the terms of the Polish regulations. For the avoidance of doubt, the decision of the Supervisory Board is final and conclusive and it may act independently from any Committee recommendation received in respect of this rule 4.”

 

6Timing of Vesting

 

An Award granted in mandatory substitution of a Discretionary Performance Award will Vest in respect of the Participant in three parts, each part comprising up to a maximum of one-third of the deferred variable remuneration on the first, second, and third anniversary of the Award Date, in accordance with the Polish Regulations and subject to the review referred to in § 5.9 of the Polish Regulations and specified in rule 4 of the Plan and subject to a delay in Vesting as a result of any of the circumstances specified in rules 5.3.1(1) – 5.3.1(4) occurring.

 

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7Death and disability

 

Rule 6.4 shall be deleted and replaced with the following rule 6.4:

 

“If a Participant dies, or obtains a disability certificate (regardless of the disability degree), any Award which has not Vested will not lapse but will Vest in full and will be satisfied as follows:

 

6.3.1Conditional Awards: a cash amount equal to the Market Value of the relevant Award Assets on the date of death, or the date a valid disability certificate is produced. Payment will be made to the Participant's personal representatives, a nominee for the Participant's personal representatives appointed by the Company, or the Participant, as applicable, no later than one month after production of a valid death certificate or disability certificate. The payment of the cash amount will be treated as the Vesting of the award for the purposes of these rules.

 

6.3.2Forfeitable Awards: the restrictions referred to in rule 3.2.2 will cease to have effect on the date of death, or the date a valid disability certificate is produced. The relevant Award Assets will be transferred to the Participant's personal representatives, a nominee for the Participant's personal representatives appointed by the Company, or the Participant, as applicable, as soon as practicable after production of a valid death certificate or disability certificate. The payment of the cash amount will be treated as the Vesting of the award for the purposes of these rules.

 

6.3.3Options: the Option may be exercised by the Participant's personal representatives, or the Participant, within three months after production of a valid death certificate or disability certificate and will lapse if not exercised within 18 months after the date of death, or the date a valid disability certificate is produced. A cash amount equal to the Market Value of the relevant Award Assets on the date of death, or the date a valid disability certificate is produced, will be delivered to the Participant's personal representatives, a nominee for the Participant's personal representatives appointed by the Company, or the Participant, as applicable, as soon as practicable after the exercise of the Option. The payment of the cash amount will be treated as the Vesting of the award for the purposes of these rules.

 

8Corporate Events

 

Rule 7 shall not apply to Awards payable in cash.

 

9Discretionary nature of the Plan

 

Rule 8.4 shall be applied subject to paragraphs 2.2, 5.3 and 10 of this Schedule.

 

10Amendments

 

Any changes to the Schedule or the Plan which may affect (i) any person who performs a Managerial Role, or (ii) compliance with the Polish Regulations and/or the PFSA Resolution, will, without limitation, require the consent of the Supervisory Board.

 

11Personal hedging strategies

 

Participants are not permitted to use any personal hedging strategies or remuneration related insurance designed to lessen the impact of a reduction in value of their Discretionary Performance Awards.

 

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