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64 Corporate Governance Statement 65
Contents
Contents
The Performance & Remuneration individual fixed or variable pay awards. Pensions Malus and Clawback
Committee is made up of Non-Executive These assessments can negatively or The Bank does not operate an occupational Malus means the reduction and /or
Directors and shareholder representatives. positively affect any award given. pension scheme. In order to comply with cancellation of unpaid, unvested, or Strategic Report
The Chief Executive Officer, Chief People its regulatory requirement under auto- unsettled variable amounts of remuneration
Officer and General Counsel are attendees. Poor risk, compliance or conduct enrolment, the company contributes to when a Trigger Event is discovered, and
The full description of the Committee’s behaviours will affect the level of variable employee’s personal pension schemes the Board seeks to fulfil its fiduciary duty
composition, tasks and authority are pay awarded to individuals. The CRO via a Group Personal Pension Plan with to shareholders by invoking its discretion
available in its Terms of Reference. The provides a report to the Performance & Royal London. Additionally, the Bank to reduce and/or cancel a variable
Bank’s Performance & Remuneration Remuneration Committee in Q1 each year does not offer or make any discretionary remuneration amount.
Committee meets a minimum of three detailing any specific concerns he/she has pension benefits.
times a year. at individual, team and company level. Clawback means when incentive
The CRO report also outlines current and Guaranteed Variable Remuneration remuneration has already vested, been
It is inbuilt to the remuneration review future risks, an assessment of the capital settled, paid, or otherwise made available,
process that the Bank’s Risk and base of the firm and the impact these Signing-on or buy-out guaranteed variable and a Trigger Event occurs which indicates Corporate Governance Statement
Compliance function is able to provide have on the determining and payment of remuneration are given on the basis of: an error in the calculation of an individual’s
challenge to bonus and incentive payments variable pay. The CRO will recommend remuneration, and the Board seeks to
where it feels individuals may be rewarded to Committee whether any adjustment ∞ being exceptional; fulfil its fiduciary duty to shareholders by
for poor risk behaviours; this is achieved at either individual or company level is invoking its discretion to recoup all or part
through the Chief Risk Officer’s (CRO) warranted in their opinion. ∞ occur only in the context of hiring a new of a variable remuneration amount.
report to the Performance & Remuneration employee;
Committee, inclusion of the CRO in The Committee is also presented with A Trigger Event includes but is not limited to:
calibration and approval meetings, and the a financial performance report from ∞ made only where the Bank has a sound
membership of the Chair of Risk on the the CFO to assist their deliberations and strong capital base; ∞ a material misstatement of the financial
Performance & Remuneration Committee. on variable pay awards, which details results resulting in an adjustment in the
anticipated financial outturn. ∞ and are limited to the first year of service
Control Function Remuneration unless approved by the Committee. Bank’s audited accounts;
The Committee reviews multi-year
In line with SYSC 19D 3.18, the performance when considering The Bank does not routinely use early ∞ in the case of awards which are subject Independent Auditor’s Report
remuneration of senior officers in the Risk remuneration decisions, enabling it to termination or settlement payments. to the achievement of performance
and Compliance function is proposed by consider longer term performance and Where they are employed, they are in line conditions, the assessment of any
the Chief Executive Officer in liaison with post event risks. This is intended to ensure with regulation and reflect loss of office performance metric or condition
Human Resources and is decided upon by that individuals are held to account for and/or redundancy payments. They do based on error, or inaccurate or
Performance & Remuneration Committee. misleading information;
the long-term impact of their decisions not exceed the Bank’s variable pay cap.
and actions and to ensure that they Previously awarded bonuses will only be
Remuneration for senior officers within are not inappropriately rewarded for paid where an individual is deemed to be ∞ the fact that any information used to
Human Resources is decided upon by the short-term success. The Committee will a “good leaver” and their performance is determine the quantum of a variable
CEO with approval from Performance & apply adjustments to both previous and strong; post-event risk assessments will remuneration amount based on
Remuneration Committee. error, or inaccurate or misleading
current remuneration decisions to reflect apply. Settlement payments or “pay offs” information; and/or
multi-year performance (see malus and are not made in cases of poor conduct
Performance assessment Financial Statements
clawback below). or performance.
All remuneration decisions are subject to ∞ action or conduct of an individual
which, in the reasonable opinion of the
assessment of performance at individual, Board/Performance & Remuneration
business unit and company level (in Committee, amounts to serious
line with the PRA rulebook 15.4, and misconduct or gross negligence;
it should be noted that currently, the
Bank has only one business unit). When ∞ events or behaviours of an individual or
assessing performance, both financial and the existence of events attributable to an
non-financial measures are considered, individual which led to the censure of the
and to this end, clear behavioural criteria Bank, by a regulatory authority or have
as well as qualitative and quantitative had a significant detrimental impact on
measures are detailed in the specific the reputation of the Bank. Notes to the Financial Statements
variable pay schemes.
Individual performance is assessed through
the Bank’s performance review process
(ROMP) and is considered when making