Remuneration policy statement
Within the Royal London Group, there are a number of Investment Firms who are authorised and regulated by the Financial Conduct Authority (FCA) and need to comply with the requirements of the FCA Remuneration Code (the Code), and as required by the Capital Requirements Directive IV (CRDIV).
The following companies are subject to the Code:
- Royal London Asset Management Limited (FCA No 141665)
- Royal London Savings Limited (FCA No 191237)
- RL Marketing (CIS) Limited (FCA No 188391)
- Royal London Unit Trust Managers Limited (FCA No 144037)
- Investment Funds Direct Limited (FCA No 114432)
Royal London’s remuneration policy has three main aims:
- To align executives’ interest with those of our members and customers;
- To support the delivery of the Group strategy, whilst ensuring adherence to the Group’s risk appetite; and
- To ensure remuneration is competitive for our markets to help the Group to attract and retain talent.
Royal London has developed its remuneration policies, practices and procedures for these entities to comply with the requirements of the Code, CRDIV and all other applicable regulatory requirements.
Decision Making Process for Remuneration
Royal London Group has a Remuneration Committee made up of Non-executive Directors and advised by independent remuneration consultants. The Committee has overall responsibility for remuneration policy across the Group companies. The Committee’s primary role is to ensure that the Group’s pay structures are in line with the Key Remuneration Principles. The Committee’s Terms of Reference are available on the Royal London website .
Royal London Group has a Remuneration Committee made up of Non-executive Directors and advised by independent Remuneration Consultants. The Remuneration Committee has overall responsibility for remuneration policy across the Group and all of its subsidiaries.
The Remuneration Committee will receive regular updates from the Chief Risk Officer including an annual report that details how effective Royal London (and its subsidiaries) has been in managing risk within the Group’s stated risk profile.
As at 30 June 2015, 27 employees (2014: 30 employees) were designated Code Staff for the companies listed above. Code Staff are determined by reference to the Code and qualitative and quantitative criteria set out in the European Banking Authority (EBA) Regulatory Technical Standards on material risk takers. Royal London’s Code Staff include the Executive Directors, and members of Committees with oversight of the activities of these companies, senior management and control functions heads.
The Remuneration Committee approves the list of Code Staff, which is subject to an annual review to ensure that it remains within the risk profiles for each of the respective companies.
Pay for Performance
Royal London’s remuneration schemes are designed to reward employees for their performance and contribution to the success of their business unit and the Group.
In determining short-term incentive awards, there are three factors which impact the overall level awarded:
- Royal London Group Performance – how well the Group performs against the Group Customer Values Statement will determine the overall bonus pool which is available.
- Business Unit/Function Performance – how well the business unit or function performs against its individual scorecard will determine what share of the overall bonus pool the business unit or function receives.
- Personal Performance – each employee is awarded a performance rating which reflects their performance and overall contribution to the success of the business, and upon which individual bonus awards are determined.
In applying the principles of the Code, firms can apply proportionality based on the nature of its activity. All of the above mentioned Royal London firms are Level 3 firms, and this disclosure is made in line with the requirements for a Level 3 firm.
All employees are remunerated with an annual fixed salary and variable payments, which may be a greater proportion of total salary than fixed salary. All variable amounts are distributed as cash, apart from awards deferred under the Royal London Short Term Incentive Scheme and the Royal London Long Term Investment Plan Scheme where awards are converted into units whose value is based on the Royal London Group European Embedded Value (EEV). Arrangements are in place for elements of the cash awards to be deferred for a period of up to 3 years, or to be made on a three year rolling cycle for some Code Staff.
The structure of the remuneration packages for Code Staff is designed to be in line with the Group’s business strategy, take account of any conflicts of interest and the existing and future capital requirements of the business. Royal London’s incentive schemes are designed so that they do not encourage excessive risk taking. A full description of the remuneration schemes and the Group Remuneration Committee are contained in the Royal London Group Annual Report and Accounts, a copy of which is available in the Report and Accounts section.
Code Staff Remuneration
The aggregate annual 2014 remuneration of the 30 Code Staff is £14,226,183 in respect of the performance period ending 31 December 2014 (2013: £5,800,068; 16 Code Staff for performance period ended 31 December 2013). This is made up of basic salary, allowances, core benefits, employer pension contributions, and incentive pay. Incentive pay includes short term incentive and long term incentive awards.
-  As covered in the SYSC sourcebook of the FCA rules
-  Royal London Remuneration Committee Terms Of Reference 2013.pdf
-  Annual Report and Accounts 2014.pdf
-  The Royal London Long Term Incentive Scheme awards are valued at their initial grant value and Royal London Asset Management Long Term Incentive Plan awards are valued at their maximum value at the date of grant.