At a glance summary and governance

1. How we performed

The charts below provide an overview of Schroders’ performance. Chapter Strategy provide information on how our objectives are aligned with those of our clients and chapter Key performance indicators give more information on our key performance indicators. Chapter Annual report on remuneration outline the basis for determining annual bonus awards for the executive Directors and the vesting of LTIP awards granted in March 2013.

Performance of Schroders shares against the FTSE-100 Index and the relative spend on pay

The left-hand chart below compares the performance of Schroders shares with that of the FTSE-100 over eight years to 31 December 2016. Over this period the index has returned 117%, compared to a 334% return on Schroders ordinary shares. The right-hand chart shows how net income has been utilised over the same period, comparing remuneration costs before exceptional items and shareholder distributions to taxes arising and earnings retained. Distributions to shareholders in respect of 2016 formed a similar proportion of the total as for 2015.

Compare of performance of Schroders shares with that of the FTSE-100 over eight years (line chart)

Other key factors in assessing the performance of the Group (see chapter Annual report on remuneration)

The following key performance indicators were amongst those that formed part of the Committee’s determination of the executive Directors’ pay.

Three-year investment performance

Three-year investment performance (bar chart)

Net new business

Net new business (bar chart)

Assets under management and administration

Assets under management and administration (bar chart)

Total cost ratio*

Total cost ratio (bar chart)

Talent retention

Talent retention (bar chart)

Basic earnings per share*

Basic earnings per share (bar chart)

Determining the vesting of LTIP awards granted in March 2013 (see chapter Annual report on remuneration)

LTIP awards granted in March 2013 are expected to vest on 2 March 2017, based on two metrics as set out below.

Determining the vesting of LTIP awards granted in March 2013 (bar chart)

2. Executive Directors’ remuneration and shareholdings

The left-hand chart below compares the single total remuneration figures for 2016 and 2015 for each executive Director role. The right-hand chart compares each executive Director’s shareholdings with that required under the personal shareholding policy.

Executive Directors’ remuneration and shareholdings (bar chart)

1 Peter Harrison was appointed Group Chief Executive on 4 April 2016. The bar representing 2016 remuneration in the left-hand chart above reflects his full-year remuneration in respect of 2016, while the bar representing 2015 remuneration reflects his predecessor Michael Dobson’s remuneration as Chief Executive that year.
2 Philip Mallinckrodt’s shareholding in the right-hand chart above is his holding derived from employment. It does not include his other share interests, chapter Annual report on remuneration.
3 Massimo Tosato’s shareholding in the right-hand chart above is his holdings as at 31 December 2016, the final day of his employment with Schroders.
4 LTIP vesting represents the estimated value at vesting from awards granted under the LTIP on 27 March 2013, which are expected to vest on 2 March 2017 based on performance against the performance conditions over the four financial years ended 31 December 2016.

For more information on the single total remuneration figures and on the personal shareholding policy see chapter Annual report on remuneration.

3. Executive Directors’ remuneration policy overview

Components of executive Directors’ remuneration:

Component

New policy overview

Proposed policy changes for approval at the 2017 AGM

For more information on the policy see Directors’ remuneration policy summary. For more information on implementation of the policy during 2017 see Implementation of remuneration policy for 2017.

Base salary

  • Group Chief Executive: £500,000
  • Other executive Directors: £375,000

These rates were last increased on 1 March 2014.

No policy changes are proposed.

Benefits and allowances

Executive Directors receive benefits on the same basis as other UK employees.

No policy changes are proposed.

Retirement benefits

Executive Directors may participate in UK pension arrangements or receive cash in lieu of pension on the same basis as other employees, 16% of base salary up to a maximum pensionable salary of £250,000, plus a match on employee contributions up to a further 2% of pensionable salary.

No policy changes are proposed.

Annual bonus award

Awarded to incentivise the achievement of business priorities for the financial year, to align pay with performance and promote the long-term success of the Company. Approximately 60% is normally deferred to align Directors’ interests with those of clients and shareholders.

In the proposed new policy, the proportion of annual bonus awards to executive Directors that is deferred is increased from approximately 50% to approximately 60%. Also, any future payment to a departing Director in respect of their contribution in their final year will be subject to the same deferral as applies to annual bonus awards.

LTIP

To incentivise long-term performance and the achievement of strategic priorities to ensure the sustainable growth of the Group. The performance hurdles are highly demanding, based on earnings per share and net new business performance over a four-year period.

In the proposed new policy, a 12-month holding period applies from the date of vesting for future LTIP awards, during which they cannot be exercised and malus conditions continue to apply. The Committee will be able to reduce the extent to which awards vest if the Group has suffered a material failure of risk management or if the Committee considers that the outcome from the performance conditions does not appropriately reflect underlying performance.

Personal shareholding policy

To align their interests with those of shareholders, the executive Directors are required to acquire and retain a holding of Schroders shares or rights to shares† equivalent to 300% of base salary, or 500% of base salary for the Group Chief Executive. On stepping down as an executive Director, half that level of shareholding must be maintained for two years.

The proposal is to increase the shareholding requirement for the Group Chief Executive from 300% to 500% of salary, to create further alignment with shareholder interests. It is also proposed to require executive Directors on stepping down to maintain a level of shareholding for two years, to reflect better the period in which decisions made while serving as a Director might impact the Group.