Strategic Report
Governance Report
Financial Statements
Other Information
• Completion of regulatory governance activities including the review of the Group’s remuneration policies against MIFIDPRU Remuneration Code and Consumer Duty requirements, (including: revalidation of the Group’s code classification (non-SNI that is not significant); reapproval of the Group’s maximum variable to fixed pay ratio; re-testing of MRT identification criteria; review of the risk adjustment matrix; the review of front office incentive design; as well as the setting of cash and share-based incentive funding levels for the reporting period). Leaving and appointment arrangements for the CEO role On 24 June 2024, after 22 years’ service across a number of leadership roles, CEO Andrew Shepherd confirmed his intention to retire from the Group. The Board agreed that Andrew would step down from CEO and Executive Director responsibilities at the end of September 2024 and would retire from the Group. As a retiree, the Remuneration Committee determined that Andrew would be treated as a Good Leaver, and his entitlement to incentives would be treated in line with the remuneration policy. Specifically, he will continue to receive his existing salary in line with his contractual entitlement to be paid in lieu of notice. Having completed the FY24 reporting period, he will receive a bonus for this period on an unchanged basis, in line with the targets established at the beginning of the reporting period, and subject to the usual deferral arrangements. Additionally, he may be considered for a pro-rata bonus award in respect of the period of active service he makes to the Group in the FY25 reporting period up to 30th September 2024.
Andrew’s LTIP awards will be treated in accordance with the remuneration policy. A time pro-rata reduction will be applied to these awards, and the balances will vest on their normal vesting dates, subject to the regular performance assessments. In view of Andrew’s decision to retire, the Remuneration Committee determined that his salary would not be reviewed for the FY25 reporting period and that he would not be eligible for an LTIP grant in September 2024. Andrew will not receive any ex-gratia payment as part of his leaving arrangements and full details of the awards and payments made to him in his last year of service will be provided in next year’s Annual Remuneration Report. Andrea Montague was announced as CEO Designate at 24 June 2024, assuming non- regulated CEO responsibilities from that point. In recognition of her appointment, her salary was increased to £460,000 from the commencement of the FY25 reporting period, representing an increase of 6.3% on the FY24 salary of the outgoing CEO. In determining the FY25 CEO salary, the Remuneration Committee agreed a position that was both consistent with the percentage increment awarded to equivalently high performing employees in the general workforce, and also consistent with the salary expectations of external candidates included in the process and what would have been paid to an external candidate. The position also reflected the confidence the Remuneration Committee had in the contribution she would make in the CEO role, based on the outstanding contribution she had made beyond her Chief Financial Officer responsibilities during the FY24 reporting period. The reference salary for Andrea’s FY24 annual bonus opportunity
remained unchanged and aligned to her previous Chief Financial Officer salary.
provide more structure and accountability in the assessment of non-financial deliverables. Accordingly, gross revenue and cost/income ratio targets were added to the basket of financial measures, reflecting the Group’s evolving growth and cost efficiency strategic priorities and quantitative performance references were incorporated into some non-financial measures within the pre-existing strategy, client, people and risk categories. The use of quantitative references for non-financial categories was introduced to support a more objective assessment of non- financial ambitions. The strong financial return generated by the Group in FY24 drove above target outturns for revenue, profit, margin and cost efficiency measures, however this was partially offset by the Group’s net outflows performance. The formulaic pay-out was 68.5% of maximum opportunity for this part of the scorecard. No amendment was made, or discretion applied, by the Remuneration Committee to the formulaic financial measure outturns, these being deemed representative of holistic financial performance. This resulted in a slight year on year reduction in financial measures outturn from the 70.1% awarded for FY23. The scoring of non-financial ambitions, which included amongst other factors, the design and effective implementation of the Group’s strategy, the Group’s investment performance against peers, customer service and outcomes goals and the Group’s risk and controls performance, reflected both the overall organisational outcome, and also the relative contributions from each executive director, resulting in differentiated scores for each executive director. Where contributions were not assessed as being equal in delivering the overall category outcome, different performance scores were approved for each executive director.
Incentive outcomes for the year The organisational changes implemented by the Group in FY24 better positioned the Group for growth, improved our ability to deliver outstanding outcomes for our customers and supported significant cost savings, enabling the Group to deliver a year on year increase in underlying profits of 12.5% (£30.3 million to £34.1 million), exceeding market expectations. The Group’s strong investment performance over the full year and gross flows performance in later part of the year and enabled a growth in funds under management (“FUM”) in the reporting period of 7%, from £16.8 billion to £18.0 billion. With the former Chief Operating Officer and Executive Director, Lynsey Cross, stepping down from executive director responsibilities and leaving the Group in FY23, the Board comprised two Executive Directors (CEO – Andrew Shepherd and Chief Financial Officer – Andrea Montague) for the majority of the FY24 reporting period, the Chief Financial Officer having joined the Group at 1 August 2023. As such, the CEO is eligible for a full-year annual bonus and the Chief Financial Officer for the reporting period, who has since been promoted to CEO Designate, is eligible for an eleven-twelfths pro-ration. The Group maintained the overall bonus scorecard structure that operated for FY23, with a balance of 60% financial measures and 40% non-financial measures, with a small number of changes being agreed by the Remuneration Committee at the beginning of the reporting period. These sought to widen the financial measures referenced and
Brooks Macdonald Group plc Annual Report and Accounts 2024
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