Tullett Prebon plc Annual Report 2010
Report on Directors’ Remuneration
The Report on Directors’ Remuneration sets out the role of the Remuneration Committee, the Company’s general remuneration policies and how they are applied to directors and details of directors’ remuneration for the year ended 31 December 2010. The report has been prepared in accordance with Schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008, the Listing Rules and the Combined Code, and will be put to shareholders for approval at the AGM on 12 May 2011. The Companies Act 2006 requires the auditor to report to the Company’s members on certain parts of the Report on Directors’ Remuneration and to state whether in their opinion those parts of the report have been properly prepared in accordance with the Act. All sections of this report, except for ‘Long term share incentive plans’ and ‘Details of directors’ remuneration’, are unaudited. In this report, we use the following terminology: ‘Executive Director’ means any executive member of the Board; ‘Senior Management’ means those members of the Company’s Executive Committee (other than the Executive Directors) and the ﬁrst level of management below that level; and ‘Broker’ means front ofﬁce revenue generators.
During 2010 there has been a considerable amount of regulation and guidance issued on remuneration in the ﬁnancial services sector, most notably the FSA’s Policy Statement on Revising the Remuneration Code (the ‘Remuneration Code’), to which the Company is now subject. The Company is a Tier Four ﬁrm for the purposes of the application of proportionality under the Remuneration Code. The Company’s remuneration policies and the Remuneration Committee’s terms of reference were reviewed in the light of the Remuneration Code. The revised remuneration policies are set out below and the revised terms of reference are available on the Company’s website. As a result of the changes made, the Remuneration Committee is satisﬁed that the Company’s remuneration policies, processes and governance were in compliance with Principles 1 to 11 of the Remuneration Code by the end of 2010, as required. The Remuneration Committee is conscious of the obligation on the Company to comply with those aspects of Principle 12 of the Remuneration Code that apply to it by no later than the end of June 2011. Professional advice During 2010 and subsequently the Remuneration Committee received advice from PricewaterhouseCoopers executive compensation consultants (PwC) on regulatory developments affecting remuneration, all aspects of the remuneration of the Executive Directors, the risk proﬁle of the Company and the implications of the risk proﬁle for the Company’s remuneration policies. PwC were appointed by the Remuneration Committee. During 2010 and subsequently PricewaterhouseCoopers LLP have also provided outsourced internal audit services, tax advice, and other associated services.
The members of the Remuneration Committee and its responsibilities are set out in the Corporate Governance Report on page 30, and that section of the Corporate Governance Report is incorporated into this Report on Directors’ Remuneration by reference. The Remuneration Committee is responsible, on behalf of the Board, for: – reviewing and approving the general principles of the Company’s remuneration policies; – reviewing the relationship between incentives and risk; – determining the application of the Company’s remuneration policies to the Executive Directors; – determining the remuneration of Executive Directors and the Chairman; – reviewing the application of the Company’s remuneration policies to Senior Management, Brokers and other employees; – approving the remuneration of Senior Management after consultation with the Chief Executive; and – approving all share and long term incentive schemes and their application. The Committee’s terms of reference are available on the Company’s website or, on request, from the Company Secretary. The Chairman of the Remuneration Committee attends Annual General Meetings of the Company and is available to answer questions raised by shareholders. Developments during 2010 The Remuneration Committee keeps up to date with the latest regulatory and market developments, guidelines and codes of practice published by various bodies, and research published by professional advisers.
The Company’s objective is to maximize returns to shareholders over the medium to long term, at an acceptable level of risk. The strategy to achieve this objective is to continue to build a business, operating as an intermediary in the wholesale OTC ﬁnancial markets internationally, with the scale and breadth to deliver superior performance and returns, whilst maintaining strong ﬁnancial management disciplines. The Company’s remuneration policies are designed to attract, motivate and retain staff with the necessary skills and experience to deliver the strategy, in order to achieve the Company’s objective. The Remuneration Committee has carefully considered the relationship between incentives and risk. Details of the Company’s key risks and risk management are set out in the Business Review in the Annual Report. The majority of transactions are brokered on a Name Give-Up basis where the business acts as agent in arranging the trade. Commissions earned on these activities are received monthly in cash. The business does not take any trading risk and does not hold principal trading positions. The business only holds ﬁnancial instruments for identiﬁed buyers and sellers in matching trades which are settled within 1-3 days. The business does not retain any contingent risks. The business does not have valuation issues in measuring its proﬁts. The Remuneration Committee considers that the Company’s remuneration policies reﬂect the low risk proﬁle of the Company, are consistent with and promote sound and effective risk management, and do not encourage risk taking.