This policy describes how Havelock London sets remuneration and addresses associated risks in accordance with the MIFIDPRU Remuneration Code. This is also part of the company’s wider risk management framework, aiming to align remuneration with risk, the company’s risk tolerance and potential conflicts of interest.
Background
Havelock London’s remuneration arrangements are kept deliberately simple and reflect the small size of the company and the very limited scope and complexities of its activities
Policy
A separate Remuneration Committee is not proportionate to the size of Havelock London’s business, so this function is undertaken by the Executive Committee.
The Executive Committee shall always consider the company’s long-term capital adequacy requirements when determining remuneration and employee headcount.
The Executive Committee shall ensure that remuneration arrangements align employee interests with those of clients, encourage the fair treatment of clients, promote compliance with laws, regulations and company policies, and do not discriminate based on gender or any other protected characteristics. Conversely, the Executive Committee shall consider potential conflicts of interest arising from remuneration: these are documented in the Conflicts of Interest register.
The company pays fixed remuneration to all employees in the form of a salary. Salaries are set to reflect an employee’s professional experience and responsibilities, are pre-determined, non-discretionary and do not depend on performance. The Executive Committee will review all employees’ fixed pay at least annually and consider increases to reflect both inflation and or changes in their experience and responsibilities.
The company can pay variable remuneration. If variable remuneration is paid the Board shall ensure it does not incentivise risk taking, weakening of oversight, or other conflicts of interest. It shall also ensure that the arrangements are risk-adjusted and sufficiently flexible to ensure capital adequacy is maintained. Variable remuneration will take the form of either a cash bonus or an award of share options, and only in exceptional circumstances will the ratio of variable to fixed compensation exceed one.
Cash bonuses will be awarded at the discretion of the Executive Committee. The determinant of the total value of bonuses paid will be the financial performance of the company. Individual cash bonuses will then be awarded based on an employee’s performance as determined by both financial and non-financial criteria. This includes, but is not limited to, adherence to the Company’s policies and values.
The Board of the company can also award employee share options to align their interests with the long-term success of the firm. The majority of the company’s shares are owned by senior employees, and therefore their interests are very well aligned with the long-term success of the firm.
As a result of these arrangements, Havelock London considers the risks associated with remuneration to be low.
Governance
The Board is responsible for determining Havelock London’s risk appetite – including risk arising from remuneration – and is therefore responsible for setting and overseeing this policy. The policy is implemented by the Executive Committee.
The Chief Executive Officer is responsible for implementing remunerations arrangements consistent with this policy and the company’s liquidity and capital requirements. The Compliance Officer will ensure the Firm’s remuneration policy complies with the relevant legislation and regulations.
The company is not large enough to have a complete separation of duty between code staff and employees that they supervise. The Board will, as far as is possible, manage this conflict by code staff being shareholders of the company who have its long-term success aligned to their own interests.
Review
The Board shall review this policy at least annually, taking into account the additional information on the regulatory background.