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Rothschild & Co | Annual Report 2017
Corporate governance
1.2.7.1.4 SIGNIFICANT ACCOUNTING JUDGEMENTS CONSIDERED
In reviewing the annual and half-year accounts, the Audit Committee takes
particular note of the significant accounting judgements and estimates
that have been made in the accounts’ preparation. These accounting
judgements and estimates are set out in the notes to the consolidated
financial statements on pages 145 to 176.
At meetings to consider the accounts, the Audit Committee receives a report
from management that explains the judgements and estimates made and
this report is considered at the respective Audit Committee meeting.
Furthermore, the Group’s external auditors submit their report to the Audit
Committee on the accounts, which includes their consideration of the main
accounting judgements and estimates, as well as other matters to report.
In their formal report to the Group’s shareholders, the Group’s external
auditors include the key audit matters that were addressed in the context
of their audit of the consolidated financial statements.
In conducting its review process, the Audit Committee ensures that the
matters reported by management and by the Group’s external auditors
are consistent, after allowing for variations in emphasis.
1.2.7.2 REMUNERATION AND NOMINATION COMMITTEE
1.2.7.2.1 COMPOSITION
As at 31 December 2017, the Remuneration and Nomination Committee
was composed of four members: Mr. Sylvain Héfès (Chairman), Mr. André
Lévy-Lang (independent member), Mr. Peter Smith (independent member)
and Ms. Luisa Todini (independent member).
1.2.7.2.2 RESPONSIBILITIES
The Remuneration and Nomination Committee is mainly responsible for:
• setting the principles and parameters of remuneration policy for the
Group as a whole and periodically reviewing the policy’s adequacy and
effectiveness taking into account all factors which it deems necessary
including the Group’s strategy from time to time;
• supervising and reviewing the broad policy framework for the
remuneration arrangements within the Group and principles applicable
to all staff members whose professional activities have a material
impact on the risk profile of the Group (the “Regulated Persons”)
(1)
;
• supervising the remuneration paid/awarded to members of the
Compliance and Risk divisions and, where appropriate, the employment
and remuneration arrangements of members of the Group Executive
Committee;
• identifying Regulated Persons as we define them in each of Rothschild
& Co, Rothschild & Compagnie Banque SCS and its subsidiaries,
N M Rothschild & Sons Limited and its subsidiaries for the purposes
of the French Prudential and Control Authority, and the United Kingdom
Financial Conduct Authority and Prudential Regulatory Authority as
appropriate;
• participating in the selection and nomination process of members
of the Supervisory Board, as provided by the Afep-Medef Code;
• reviewing the nature and scale of the Group’s short and long-term
incentive performance arrangements to ensure that they encourage
enhanced performance and reward individuals in a fair and responsible
manner for their contribution to the success of the Group in light of an
assessment of the Group’s financial situation and future prospects;
• discussing and reviewing with the Company’s Managing Partner the
determination and quantum of the total bonus pool; and
• undertaking any other remuneration-related obligations placed upon the
Remuneration and Nomination Committee by either the lead regulator or
a local regulator.
1.2.7.2.3 ACTIVITY
The Remuneration and Nomination Committee meets at least two times a
year or more frequently if so required. As a result of the change of year end
from 31 March to 31 December, a new meeting schedule has been adopted
to reflect this change.
As from the change of year end from 31 March to 31 December, the
December meeting is to review the Rothschild Martin Maurel sub-group’s
compensation and the February meeting is to review the Group entities’
compensation.
During the nine months to 31 December 2017, the Remuneration and
Nomination Committee met five times, with an average attendance rate
of 80% for all meetings.
In advance of each meeting, every member receives a file containing all
the documentation, notes and reports relating to each item on the agenda.
The meetings of the Remuneration and Nomination Committee were mainly
convened to set and to periodically review the principles and parameters
of its remuneration policies and their adequacy and effectiveness, review
developments in remuneration regulations and ensure that the Company’s
Managing Partner and business divisions are in compliance.
In addition, the Remuneration and Nomination Committee reviews the
proposals submitted by business divisions regarding fixed and variable
compensation with absolute discretion to adjust fixed compensation
proposals, bonus pools and individual payments, and to supervise
and review the broad policy framework for the remuneration of
senior employees, including the Regulated Persons across the
Rothschild & Co Group.
No Group employee is permitted to participate in discussions or decisions
relating to his or her remuneration.
The Chairman of the Supervisory Board, the Chairman, the Executive Deputy
Chairman and the Managing Partners of the Company’s Managing Partner,
the Group Human Resources Director and the Group Chief Financial Officer are
permanent attendees at the meetings of the Remuneration and Nomination
Committee.
In addition, as regards the meetings of the Remuneration and Nomination
Committee to review the proposals submitted by business divisions
regarding fixed and variable compensation, the Heads of Group business
divisions attend the meetings for part of the meeting to present their own
business division.
(1) The criteria used to identify Regulated Persons are notably set out in the following regulations: (i) the third iteration of the Capital Requirements Directive (CRD III) and associated guidelines, and (ii)
the qualitative role base criteria set out in the EBA Regulatory Technical Standard (RTS) for identifying material risk takers (Commission Delegated Regulation 604/2014).