Standard Life Aberdeen plc operated a company-wide remuneration policy (the “Policy”) during 2020 which was approved by the Group Remuneration Committee. The sections on this page set out a summary of the Policy and describe our overarching principles and practice for remuneration.
All disclosures on this page meet the reporting requirements for all Standard Life Aberdeen’s regulated entities as well as our reporting requirements under Article 5 of the EU Sustainability related Disclosure Regulation (SFDR). The disclosures include the Directors’ Remuneration Policy, as originally set out in the 2019 Annual Report and Accounts and approved by shareholders at the AGM on 12 May 2020.
During 2021 we will be undertaking a review of the Policy for compliance against the forthcoming Investment Firms Directive (IFD)/ Investment Firms Prudential Regime (IFPR).
The Policy is subject to independent oversight and control by the Group Remuneration Committee (the “Committee”) for Standard Life Aberdeen plc (the “Company”), which is the ultimate parent company of the Standard Life Aberdeen group of companies (the “Group”).
During 2020 the Remuneration Committee comprised independent non-executive Directors: Jonathan Asquith (Chair), Brian McBride (from 1 May 2020), Jutta af Rosenberg, Cathleen Raffaeli and Cecelia Reyes. The role of the Committee is to consider and make recommendations to the Board in respect of remuneration policy across the Group, including:
During 2020, the Committee met 10 times. Details of the Committee’s meetings are provided in the Group’s 2020 Annual Report and Accounts. More information on the Committee’s terms of reference can be found in the Board Charter.
The remuneration for all Identified Staff (as defined in section 1.6 below) is approved by the Committee (with some approvals delegated, as appropriate, to the Group’s Compensation Committee, over which the Committee retains oversight).
Remuneration Committees are in place for Standard Life Savings Limited (SLSL) and Elevate Portfolio Services Limited (EPSL). The role of the SLSL and ESPL Remuneration Committees is to consider and make recommendations to the Committee in respect of remuneration policy and practice across SLSL and EPSL.
The Group ensures that the Policy is in line with business strategy, objectives, values and long-term interests by including representatives from independent third parties and other Group operating committees as advisors to the Committee where appropriate. Business unit heads may also be consulted if appropriate and provided that any such consultation adheres to the principles and guidelines of regulations that apply to the Group.
The Committee regularly reviews the Policy to ensure that it promotes sound and effective risk management and does not encourage risk taking in excess of the Group’s levels of tolerated risk. This ensures that arrangements and awards reflect risk awareness and compliance. In addition, awards are subject to Committee receipt of a report from the Risk and Capital Committee, as appropriate. Individual employee awards for heads of control functions and Identified Staff are subject to Committee review and supervision.
The Group appoints an independent remuneration consultant as advisor to the Committee on remuneration design and compliance with regulatory guidance. During the year, the Committee took advice from Deloitte LLP (a member of the Remuneration Consultants Group), who were appointed as external advisors to the Committee on 19 September 2017. The contractual terms for independent third parties are governed by the Group Procurement Policy.
The Policy is designed to avoid conflicts of interest between the Group and its clients and adheres to local legislation, regulations or other provisions.In circumstances or jurisdictions where there is any conflict between this Policy and local legislation, regulations or other provisions then the latter prevail. In such cases, any amendments and the scope of such amendments will be set out in an attached appendix to the Policy, with such amendments as are necessary adhering as closely as possible to the underlying principles of the Policy.
Where the Committee receives input from management on the remuneration arrangements in operation across the Group this never relates to their own remuneration.
Specific measures are in place to avoid conflicts of interest as regards control functions as set out in section 1.5 below.
The Group ensures that, as appropriate, senior employees engaged in a control function are independent from the business units they oversee and have appropriate authority to undertake their roles and duties.
Where scorecards are used to determine variable remuneration, control function employees have a meaningful portion of any such variable remuneration based on independent scorecards linked to performance of the respective functions and by reference to the achievement of their own functional objectives.
The Company identifies individuals who have a material impact on risk profile of:
The term ‘Identified Staff’ is used collectively in this disclosure to refer to staff identified under the various regulations impacting different entities within the Company, and will include, amongst others, staff classified as Material Risk Takers under one or more remuneration regulations. Relevant regulatory technical standards are taken into account in determining Identified Staff.
The Committee is responsible for undertaking a review of the Identified Staff population and the application of the principles under the relevant technical standards no less frequently than annually.
Policy is underpinned by principles which guide compensation-related decisions across the Group. Alignment of reward practices with the guiding principles underpinning our Policy is critical to ensuring the effectiveness of our remuneration approach. The principles which guide remuneration decision making, along with reward practices are set out in this section.
Throughout the Group the following overarching principles and practices are applied to our Policy:
Although the above principles apply throughout the Group, given the size of the Group and the scale of its operations, the way in which the Policy is implemented may vary by jurisdiction and seniority.
The Company’s compensation structure is designed to contribute to the achievement of short-term and long-term strategic objectives underpinned by the principles above and set out in section 2.2 below.
Employee remuneration is composed principally of fixed and variable elements of reward as follows:
(a) Fixed remuneration:
(b) Variable remuneration:
The Group ensures that the fixed component of remuneration is a sufficiently high proportion of total remuneration to allow the Group to operate a fully flexible policy on variable remuneration components. This includes having the ability to award no variable remuneration component in certain circumstances where either individual and/or business line and/or Group performance does not support such award.
|Purpose and link to strategy||To provide a core reward for undertaking the role, positioned at a level needed to recruit and retain the talent required to develop and deliver the business strategy.|
|Operation||Base salaries are set taking into account a range of factors including:
|Purpose and link to strategy||
To provide market competitive monetary and non-monetary benefits, in a cost effective manner, to assist employees in carrying out their duties efficiently.
Any retirement benefits are competitive and flexible and provided in a way that does not create an unacceptable level of financial risk or cost to the Group.
Benefits provided may be made up of core benefits and extra voluntary benefits (as appropriate).
|Purpose and link to strategy||To support the delivery of the Group’s business plan.
The focus is on the delivery of the financial, strategic, customer and people objectives.
|Operation of annual bonus plans across the Company – these arrangements are applicable to all bonus arrangements in place across the Group||Performance is measured against key financial metrics together with consideration of non-financial metrics which typically include: strategic, client, risk, conduct, and people indicators. A portion of the award is typically based on achievement against individual performance objectives.
Variable remuneration pools and, in respect of Identified Staff, individual awards are approved at the end of the performance period by the Committee (with some individual award approvals delegated, as appropriate, to the Group’s Compensation Committee, over which the Committee retains oversight) In carrying out these approvals, the Committee ensures that the outcome is fair in the context of overall Group performance measures. The Risk and Capital Committee and the Audit Committee formally advise the Committee as part of this process. The Committee has the discretion to amend variable remuneration pools, scorecard outcomes and individual awards if it does not consider that these reflect the performance of the Group.
Awards are determined at the end of the 12 month performance period. Performance is assessed against financial and non-financial metrics together with an assessment of personal performance.
Where appropriate, bonus awards (cash / deferred awards) are subject to malus / clawback arrangements. Malus applies during the deferral period. Clawback applies for a period of up to five years from the date of the payment or vesting of variable remuneration.
|Operation of the Executive Bonus plan||
The executive Directors of the Company participate in this plan. Further details can be found in the 2019 Directors’ Remuneration Report, within the Annual Report and Accounts, and as summarised in the 2020 Annual Report and Accounts.
Deferred awards will normally vest over a three year period. A retention period may be applied as required by regulation.
|Operation of the Variable Pay Plan||
The variable pay plan supports the delivery of the annual business plan. The variable remuneration pool will be set by the Committee based on the overall performance of the Company, taking in to account both financial and non-financial metrics. Individual performance is assessed based on achievement against individual performance objectives.
1. Where it is appropriate for some business functions/units/entities (including those that fall within the scope of AIFMD and UCITS V), business/function specific bonus plans may be in place. All bonus plans operate on the same underlying principles as the Group bonus plan but business function plans may include an element of reward for performance in line with the specific strategy, objectives, values, long term interests and risk position of that particular business unit.
Purpose and link to strategy
To align with our shareholders and promote sustainability by rewarding the delivery of long-term growth in shareholder value.
Operation of the Executive Long-Term Incentive Plan
The executive Directors of the Company participate in this plan, Further details can be found in the 2019 Directors’ Remuneration Report, within the Annual Report and Accounts, and as summarised in the 2020 Annual Report and Accounts.
Purpose and link to strategy
These arrangements are designed to reward performance of employees in roles where a carried interest plan is appropriate.
Selected employees are granted carried interest shares in private market funds established by the Group.
From time to time, the Committee may also consider for their approval other remuneration plans which operate instead of, or in addition to, the plan described in the sections above. Such plans would be operated under the overarching remuneration principles that apply across the Group. They would also be subject to the specific principles governing all incentives, which are compliant with the requirements of relevant regulatory standards.
Additional information for AIFMD and UCITS V: Regulated employees are subject to the Policy as regulated by the Financial Conduct Authority (FCA)
Where a Group company is an AIFM or UCITS V management company, it is acknowledged that the management company has specific obligations to act in the best interests of the AIF or the UCITS it manages and its investors. Accordingly, the performance and the interests of investors (including, where relevant, investment risk) are taken into account as appropriate.
The board of the AIFM or UCITS management company has responsibility for the risk management arrangements as they relate to the AIF and UCITS fund range. The investment processes are subject to the governance structure of Aberdeen Standard Investments and the board of the AIFM or UCITS management company monitors effectiveness in meeting strict criteria.
Retention arrangements are operated on incentive awards in accordance with regulatory requirements.
In line with good corporate governance guidelines, there is a requirement that executive Directors maintain a material long-term investment in the shares of the Company. This includes a requirement for executive Directors to hold shares up to the value of the share ownership guidelines for a two year period following departure from the Group.
All staff are expected to adhere to the Global Code of Conduct and underlying policies which reflect the behaviours and expectations set out in the PRA/FCA’s individual conduct standards. In addition to this, the reward for employees in senior management positions within the Company’s corporate governance framework (which includes Identified Staff for the Company and any of its subsidiaries) will be assessed annually through individual performance assessment to ensure the sound and prudent management of the organisation through adherence to the relevant frameworks, procedures, controls and policies.
The input of the Group’s risk and compliance functions is sought where appropriate in setting remuneration. The Chief Risk Officer will meet with the Committee Chair, Chief Human Resources Officer and Global Head of Reward to discuss any employees where there are concerns about their conduct or behaviour or the levels of risk of the business undertaken.
The Company integrates environmental, social and governance (ESG) considerations into its remuneration policy and practice.
The Policy promotes effective management through remuneration alignment with our strategic priorities including ESG considerations, which are an integral part of our Company decision making process.
In addition, the Company’s Global Code of Conduct describes the ethical conduct, behaviours and standards expected of its employees. All employees are required to have a conduct goal as one of their annual performance objectives. An employee’s performance against the requirements of this goal must be considered by the line manager in making any remuneration recommendation.
The Committee maintains discretion to reduce unvested variable remuneration (i.e. apply malus) and the discretion to clawback vested variable remuneration (clawback) in circumstances deemed appropriate by the Committee. Circumstances include, but are not limited to:
Quantitative disclosures for Standard Life Aberdeen regulated entities are included in the relevant publication in accordance with regulatory guidance:
The following entities under the control of Standard Life Aberdeen plc have been identified for the purposes of this disclosure (information as at 31 December 2020):
Standard Life Aberdeen plc is regulated by the FCA and is subject to CRD IV regulations. It is the parent company for the following regulated subsidiaries:
CRD IV regulated subsidiaries:
*AIFMS with additional MIFID Permissions
The Companies under the Collective Investment in Transferable Securities (‘UCITS V’) Directive are:
The companies under Solvency II are:
The companies impacted by the Markets in Financial Instruments Directive (MiFID) are:
The following entities are Article 3 MiFID exempt firms:
The following entities are identified as BIPRU firms:
The following entities are identified as significant IFPRU firms:
Note that Non-EMEA Regulatory Licenses/Exempt Regulations are not listed.
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