Remuneration code disclosure
The remuneration committee is responsible for setting remuneration policy for all partners, directors and employees within the group including individuals designated as Material Risk Takers under the Remuneration Code. Our remuneration policy is designed to be compliant with the Code and provides a framework to attract, retain, motivate and reward partners, directors and employees. The overall policy is designed to promote the long-term success of the group and to support prudent risk management, with particular attention to conduct risk.
The remuneration committee report contained in pages 46-49 of the Smith & Williamson Report and Financial Statements for the year ended 30 April 2020 (available http://smithandwilliamson.com/about-us/financial-reports) includes details on the remuneration policy. The remuneration committee comprises five non-executive directors and is governed by formal terms of reference, which are reviewed and agreed by the board. The committee met seven times during 2019-20.
The main principles of the remuneration policy are:
- to align remuneration with the strategy and performance of the business
- to ensure that remuneration is set at an appropriate and competitive level taking into account market rates and best practice
- to foster and support conduct and behaviours in line with our culture and values
- to maintain a sound risk management framework
- to ensure that the ratio between fixed and variable remuneration is appropriate and does not encourage excessive risk taking
- to comply with all relevant regulatory requirements
- to align incentive plans with business strategy and shareholder interests
The policy is designed to reward partners, directors and employees for delivery of both financial and non-financial objectives which are set in line with company strategy. As part of a “balanced scorecard” approach to variable remuneration, non-financial criteria, including, but not limited to, compliance and risk issues, client management, supervision, consideration of whether the investment process has been followed, leadership and teamwork, are considered alongside financial performance.
The remuneration policy also takes into account Regulation (EU) 2019/2088 for sustainability-related disclosures in the financial services sector. The policy is consistent with Smith & Williamson’s approach to the integration and management of sustainability risks in its investment process. Relevant feedback, including non-financial criteria, is provided to the remuneration committee for consideration in the assessment of variable remuneration. This includes whether the investment process has been followed with regard to matters such as asset allocation, security selection, responsible investment and investment risk management, including sustainability risks.
The committee reviews all partners and directors fixed and variable remuneration.
The remuneration of partners is made up of a fixed profit share, discretionary bonus profit share and non-discretionary bonus profit share. The remuneration of employees typically comprises of a salary, benefits and a discretionary bonus scheme.
When setting variable remuneration for the executive directors, the committee considers overall business profit for the group and divisions, achievement of both financial and non-financial objectives (including adherence to the principles of treating customers fairly, conduct risk, compliance and regulatory rules), personal performance and any other relevant policy of the board in respect of the year ended 30 April 2020.