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Alternative Investment Fund Managers Directive (AIFMD) Remuneration Disclosure Remuneration Policy Shires Income PLC (SIT) is managed by Aberdeen Fund Managers Limited (AFML), which is a wholly owned subsidiary of Aberdeen Asset Management PLC. The Remuneration Committee of Aberdeen Asset Management PLC has established an AIFM Remuneration Policy to ensure that the requirements of the Alternative Investment Fund Managers Directive (AIFMD) are fully adhered to by the Aberdeen Asset Management PLC group of companies (Aberdeen Group). This policy applies to AFML and the Alternative Investment Funds (AIFs) it manages. Remuneration philosophy and alignment with risk management Our remuneration philosophy is focused on pay for performance, tempered by an emphasis on ensuring that performance is not achieved by taking risks which fall outside the Board’s risk appetite or that of the AIFs we manage. Remuneration is comprised of fixed pay, variable pay (cash bonus and deferred awards), non-contributory defined contribution pension and benefits in kind. A proportion of variable pay is deferred into Aberdeen Asset Management PLC shares and/or a limited number of approved fund vehicles with clawback provisions applying where there is malus. The deferral threshold for AIFMD related remuneration is set annually by the Remuneration Committee and will not be less than 50%, rising to 60% in the case where variable remuneration compensation amounts to more than £500,000 (or currency equivalent). The Compensation Committee monitors the compensation process and ensures that proposals do not reward senior staff for excessive risk-taking. The high proportion of bonus deferral, vesting over 3 or 5 years, clawback arrangements, and risk controls incorporated in the Aberdeen Group’s team-based investment process, promote sound risk management and discourage risk taking that exceeds the firm’s level of tolerated risk or that of our client funds. Employee interests are closely aligned to the long-term interests of shareholders and investors. A copy of the Aberdeen Group remuneration policy (including AIFMD requirements) is available upon request. Financial and non-financial criteria Variable remuneration is based on a rounded assessment of Aberdeen Group, Divisional and individual performance. When assessing individual performance, financial as well as non-financial criteria are taken into account. Individual performance is based on the individual’s appraisal, which includes an employee’s compliance with controls and applicable company standards including the Aberdeen Group’s Code of Ethics, including Treating Customers Fairly and Conduct Risk. Conflicts of interest The Aberdeen Group’s remuneration policies and processes contain a number of measures to avoid conflicts of interest. • Compensation proposals are made by “Compensation Managers” who are usually Department Heads. No employee may determine their own remuneration. The Compensation Managers make proposals in accordance with guidelines which are set out in annual Compensation Manager Guidance approved by the Remuneration Committee. Employees engaged in control functions (e.g. Risk and Internal Audit) have functional line management structures outside of the business units they oversee, thus ensuring independence. Variable remuneration for control function employees is determined on the achievement of meeting their own functional objectives as set in their appraisal. The Aberdeen Group Remuneration Committee signs off the remuneration of senior staff, including those in the risk in control functions. Personal hedging strategies which may undermine the risk alignment of variable remuneration are not permissible (e.g. entering into an arrangement with a third party under which payments will be linked to the person's remuneration or deferred consideration). The Aberdeen Group has very strict Personal Account dealing policies which prohibit dealing on a personal basis or by any connected party without prior consent from Compliance. • • Employee remuneration disclosure The table below provides an overview of the following: Aggregate total remuneration paid by AFML to its entire staff; and Aggregate total remuneration paid by AFML to its ‘Identified Staff’ • • The ‘Identified Staff’ of AFML are those employees who are considered could have a material impact on the risk profile of AFML or the AIFs it manages (including SIT). This broadly includes senior management, risk takers and control functions. For the purposes of this disclosure, ‘Identified Staff’ does not include employees of entities to which activities have been delegated. Amounts shown reflect payments made during the financial reporting period to 30 September 2015. Headcount Aberdeen Fund Managers Limited staff 1 94 of which Fixed remuneration Variable remuneration Carried interest Aberdeen Fund Managers Limited ‘Identified 76 Staff’2 of which Senior Management3 25 Other ‘Identified Staff’ 51 1 2 3 4 Total Remuneration SIT proportion £000 £0004 141 12,932 8,521 4,411 Nil 93 48 3,462 38 816 2,646 9 29 As many of AFML’s functions are delegated within the Aberdeen Group, there are a number of individuals indirectly employed by AFML through those delegation arrangements, therefore the figure represents an apportioned amount of the Aberdeen Group’s total remuneration costs for fixed and variable pay, apportioned to SIT on an assets under management basis, plus any carried interest paid by SIT. The headcount figure provided reflects the number of beneficiaries calculated on a full time equivalent basis. The Identified Staff disclosure represents total compensation of those staff of the Aberdeen Group who are fully or partly involved in the activities of AFML, apportioned to the estimated time relevant to AFML. Across the ‘Identified Staff’, the average time allocation per individual based on work undertaken for AFML as an AIFM was 12%. Senior management are defined in this table as directors of AFML and members of the Aberdeen Group management board. This figure represents an apportioned amount of the total remuneration of the ‘Identified staff’ attributable to SIT allocated on an assets under management basis.