Remuneration Policy
The objective of JOHCM’s Remuneration Policy (the “Policy”) is to establish a remuneration framework necessary to support our investment-led strategic approach, to attract, retain and motivate the best people over the long-term and to align all employees with the interests of clients and shareholders.
The Policy sets out the JOHCM remuneration structure for all categories of employees, with special emphasis on identified Material Risk Takers (see below).
Governance
J O Hambro Capital Management Holdings Limited is the holding company of J O Hambro Capital Management Limited (“JOHCM”). The sub-committees of its board of directors include:
The RemCo oversees remuneration decisions by JOHCM. It comprises three members, all of whom are independent directors. Two of these members are also members of the ARC, providing audit and risk input which is relevant or pertinent to specific remuneration decisions under consideration by RemCo. JOHCM’s own Risk Committee reports to the ARC on risk issues.
The JOHCM Risk and Compliance functions are also involved in the design and implementation of the Policy as well as providing input on individual performance issues through the appraisal process if appropriate.
By having independent directors as members of both the ARC and the RemCo and by considering the input from the JOHCM Risk and Compliance functions, JOHCM has a governance process around its remuneration decisions which ensures conformity with the risk appetite, tolerance and profile of both JOHCM and of its clients.
Identification of Material Risk Takers
The FCA Remuneration Code requires JOHCM to identify individuals whose professional activities may have a material impact upon the risk profile of the firm or the UCITS which they manage. Those individuals are classified as Material Risk Takers (“MRTs”). The following categories of staff within JOHCM have been identified as MRTs:
a) Members of the Executive Committee of JOHCM;
b) Heads of Control Functions who are not members of the Executive Committee;
c) Senior Fund Managers and Fund Managers of UCITS strategies;
d) The Head of Trading; and
e) Any other personnel whose total remuneration takes them into the same remuneration bracket as (a) and (b) above and whose activities have a material impact on the firm’s risk profile.
The list of MRTs is reviewed and approved by the RemCo on an annual basis and whenever there has been a significant change to the governance or corporate structure of the firm.
Remuneration and Performance
JOHCM’s remuneration framework is designed to ensure that financial reward is clearly and measurably linked to performance and in accordance with results achieved at individual, fund and corporate levels.
Measurement of Individual Performance
JOHCM recognises that its personnel are its key assets; the professional growth and development of its people are central to achieving JOHCM’s mission and strategy. Underpinning this developmental approach is the annual appraisal process.
The purpose of the JOHCM appraisal process is:
- to review performance against previously agreed objectives, the JOHCM competency framework and, where appropriate, against other risk, compliance or corporate standards; and
- In addition to reviewing performance against the job description and objectives, the appraiser may also take into account other broader behaviours in relation to the policies, procedures and standards of JOHCM.
Fixed Remuneration
Base salaries for all staff are set at levels which enable JOHCM to remain competitive to attract and retain key skills.
Variable Remuneration
The variable remuneration components of JOHCM’s remuneration framework are differentiated between fund management and non-fund management staff.
The schemes operating for fund management staff have been designed to ensure alignment between the fund manager and the interests and risk profiles of its clients. This is achieved by:
The Company operates an annual discretionary bonus scheme for non-fund management staff. RemCo determinations will ensure that the pool is aligned with JOHCM’s current financial, risk and compliance position as well as any future forecasts. The approval process is conducted in-line with the financial year end process so that the RemCo has full oversight and understanding of JOHCM’s risk and financial position.
Malus & Clawback Policy
JOHCM operates a Malus & Clawback policy (“M&C Policy”) to allow the adjustment and/or recovery of deferred or vested remuneration awarded to an individual or group of individuals in certain prescribed circumstances.
Buyouts and Guaranteed Variable Remuneration
Guaranteed variable remuneration is exceptional, occurs only in the context of hiring new staff and is limited to the first year of engagement.
Retention Awards
The RemCo may, in exceptional circumstances as determined as its absolute discretion, make a retention payment to a staff member to retain that staff member in the employment of JOHCM.
Personal Hedging
Staff are required to undertake not to use personal hedging strategies or remuneration- and liability-related insurance to undermine the risk alignment effects embedded in their remuneration arrangements.
Environmental, Social and Governance (“ESG”) Considerations
JOHCM’s business has been built on its ability to manage a wide variety of successful investment solutions, each with a bespoke philosophy. The firm aims to generate superior long-term investment returns by exploiting opportunities through our stock-picking skills within a rigorous risk and compliance framework.
Critical to our success has been the remuneration structures we have in place for our fund management teams, which aim to support our investment-led strategic approach and to attract, retain and motivate our fund managers. These remuneration arrangements are directly linked to the investment performance of the fund managed by the fund manager. Therefore a fund manager’s remuneration is aligned with asset owners’ long-term interests and the long-term success of the firm. This promotes a sound and effective risk management culture to protect the value of the investment portfolio. For many of our funds this includes integration of ESG risk considerations as they have a material impact on investment performance and therefore the remuneration of the fund manager.
