1. Federated Hermes Limited (“Company”) Remuneration Policy
Our remuneration policy is designed to attract, motivate, retain and reward employees regardless of gender, ethnicity, age, disability, gender reassignment, race, marital or civil partnership status, pregnancy or maternity, religion or belief, or sexual orientation.
Our philosophy is to reward individual contribution, as demonstrated by the delivery of sustainable results that are aligned with our business strategy, values and, behaviours and which serve the best interests of our clients, their investors and our shareholder while enabling the business to profitably grow to its potential.
Through focusing on long term awards, our incentive pay strategies encourage all employees to act like long term shareowners, create sustainable wealth for our clients and their investors and support our responsible performance culture to create a sustainable business, discouraging excessive or concentrated risk taking and avoid conflicts of interest.
Individual and organisational performance is transparently and rigorously assessed against a combination of financial (multi-year) and non-financial targets to determine appropriate total compensation that will attract and retain our key talent.
2. Reward Strategy Principles
These principles form the basis of our approach to performance and behaviour-linked compensation. The principles of our remuneration policies, procedures and practices are:
- To encourage employees to deliver on the business’ purpose of stainable wealth creation that enriches investors, society and the environment.
- To be aligned with business strategy, objectives, values and long-term interests of Company and its clients and their investors as reflected in the Company Pledge.
- To provide competitive total remuneration potential, designed to attract, retain, motivate and reward employees that deliver outstanding long-term performance and corporate behaviours.
- To promote sound and effective risk management.
- To ensure remuneration is linked to investment, business, personal performance and corporate behaviours for all employees, and where appropriate measured over the short, medium and long term.
- To differentiate and reward strong performance and demonstration of behaviours and to proactively manage poor performance and behaviours not aligned to our values.
- To deliver reward programs which are transparent, simple to administer and affordable.
- To deliver compensation and benefit strategies which have the oversight and approval of our Remuneration Committee.
3. Sustainable Wealth Creation
Building on the principles above, the Company is committed to its business purpose of Sustainable Wealth Creation that enriches investors, society and the environment and being at the forefront of and developing industry best practice. Part of this is ensuring that this Policy incorporates consideration of stewardship and the integration of sustainability performance and risk in both the Company’s investment activities and its wider operations. In particular:
- To incentivise senior management to drive the Company’s strategy and initiatives in line with the Company’s business purpose of sustainable wealth creation and ensure that through appropriate stewardship it is at the heart of all the firm’s key business and operational processes.
- To promote best practice integration of Investor Stewardship and ESG (Environmental, Social and Governance) factors including the delivery of sustainable outcomes in the investment process and decision making.
- Employees to have performance objectives relating to responsibility as appropriate for their role.
- Sustainability risks are considered as part of the Company’s risk reporting and performance against risk appetite and sustainability risks forms part of the CRCO’s annual risk adjustment report.
- All employees are assessed against responsibility related objectives and behaviours in their annual performance assessment which informs annual bonus outcomes.
4. Identified staff
Regulation requires the Company to identify the employees whose professional activities have a material impact on the risk profile of the Company.
The Identified Staff for the Company are identified in accordance with the Company Remuneration Policy.
5. Remuneration Committee
The Remuneration Committee is constituted as an independent Committee of the Board of Federated Hermes Limited. Membership of the Remuneration Committee is formed by the Chair of Company and other Directors (both Executive and Non-Executive) who are appointed in line with business needs.
6. Annual Review
On an annual basis the Board will review the terms of this Remuneration Policy and assess whether its overall remuneration framework operates as intended and is compliant with the obligations on remuneration policy as set out in the Alternative Investment Fund Managers Directive (“AIFMD”), Undertakings for Collective Investment in Transferable Securities (“UCITS”), the Investment Firms Prudential Regime (“IFPR”) and the Markets in Financial Instruments Directive (“MiFID II”). Where applicable, under the rules of delegation, either the UCITS requirements will apply to delegates or they will be subject to an equally effective regime. The Remuneration Policy will be updated by the Board as and when required.
7. Effective Date
The effective date of this Policy is 2022.