Directors' remuneration policy

 

Click here to download our Directors’ remuneration policy overview.

The Directors’ remuneration policy set out on pages 75 to 81 of our 2016 Annual Report and Accounts was approved by shareholders of Schroders plc at the 2017 AGM, on 27 April 2017, and is expected to apply for three years from that date.

In 2017, we made changes to our remuneration approach for employees deemed to be material risk takers (MRTs) under the UCITS Directive or AIFMD, increasing bonus deferral levels to create further alignment with clients, and to meet the requirements of those directives. As UCITS funds and funds subject to AIFMD represent a significant part of the Group, we included the executive Directors of Schroders plc as MRTs under these rules (UCITS/AIF MRTs). Our remuneration philosophy remains unchanged, supporting our long-term approach by deferring a significant part of annual variable remuneration into fund and share awards. This provides clear alignment with the long-term interests of clients and shareholders, alongside awards under the Long Term Incentive Plan (LTIP) and requiring executives to acquire and maintain significant shareholdings in the Group.

We are required to bring the Directors’ remuneration policy back to shareholders for approval no later than the 2020 AGM.

Remuneration principles

The overall remuneration policy is designed to promote the long-term success of the Group.

The Committee has developed the remuneration policy with the following principles in mind:

   
 

Aligned with clients

A significant proportion of higher-earning employees’ and MRTs’ 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 (GMC) and other key employees such as senior fund managers.

 

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 financial performance

Total variable remuneration is managed as a percentage of pre-bonus profit before tax and exceptional items, the profit share ratio. 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.