Directors' remuneration policy
The current Directors’ remuneration policy was approved by the shareholders of Schroders plc at the 2023 AGM, on 27 April 2023, and is expected to apply for three years from that date. It is set out on pages 92 to 98 of our 2022 Annual Report and Accounts.
Prior to the approval of the new policy at the 2023 AGM, we continued to manage remuneration in line with the Directors’ remuneration policy as detailed in the 2022 Directors Remuneration Report on pages 76 to 107 of our 2022 Annual Report and Accounts. This included the executive Directors’ annual bonus awards in respect of 2022 performance and the LTIP awards granted to them in March 2023.The previous policy in full is available on pages 82 to 92 of our 2019 Annual Report and Accounts.
Remuneration principles
The overall remuneration policy is designed to promote the long-term, sustainable success of the Group.
The Committee has developed the remuneration policy with the following principles in mind:
Aligned with shareholders
A significant proportion of variable remuneration is granted in the form of deferred awards over Schroders shares, thereby aligning the interests of employees and shareholders. Executive Directors and other members of the GMC are required, over time, to acquire and retain a significant holding of Schroders shares or rights to shares. On stepping down, the executive Directors are required to maintain a level of shareholding for two years.
Aligned with clients
A significant proportion of higher-earning employees’ and material risk takers’ variable remuneration is granted as fund awards, which are notional investments in funds managed by the Group, thereby aligning the interests of employees and clients. This includes the executive Directors, other members of the Group Management Committee and other key employees such as senior fund managers.
Aligned with financial performance
We target a 65% ratio of total costs to net income through the market cycle. Within that, total variable remuneration is managed as a percentage of pre-bonus profit before tax and exceptional items, the profit share ratio, and the total spend on remuneration is managed as a percentage of net income, the total compensation ratio. These ratios are determined by the Committee and recommended to the Board. This approach aligns remuneration with financial performance.
Competitive
Employees receive a competitive remuneration package, which is reviewed annually and benchmarked by reference to the external market. This allows us to attract and retain highly talented people, who know that good performance will be rewarded.
Designed to encourage retention
Deferred variable remuneration does not give rise to any immediate entitlement. Awards normally require the participant to be employed continuously by the Group until at least the third anniversary of grant in order to vest in full.