REG - abrdn PLC - Final Results - Part 3 of 8
27/02/2024 07:00
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RNS Number : 5267E abrdn PLC 27 February 2024
abrdn plc
Full Year Results 2023
Part 3 of 8
Board of Directors
Our business is overseen by our Board of Directors. Biographical details (and
shareholdings) of the Directors as at 26 February 2024 are listed below.
Sir Douglas Flint CBE - Stephen Bird - Jason Windsor -
Chairman
Chief Executive Officer
Chief Financial Officer
Appointed to the Board Age Appointed to the Board Age Appointed to the Board Age
November 2018 68 July 2020 57 October 2023 51
Nationality Shares Nationality Shares Nationality Shares
British 200,000 British 782,355 British Nil
Board committees: NC
C
Sir Douglas' extensive experience of board leadership in global financial Stephen brings a track record of delivering exceptional value to clients, Jason joined abrdn as Chief Financial Officer in October 2023, bringing over
services has shaped a collaborative approach which helps to facilitate open creating high-quality revenue and earnings growth in complex financial twenty-five years of experience in the financial services industry. Having
and constructive boardroom discussion. He maintains a keen interest and markets, and deep experience of business transformation during periods of held senior finance roles in investments, insurance and banking, Jason has
involvement in international, financial and governance matters, retaining an technological disruption and competitive change. established a strong track record of leadership in finance, asset management,
expertise which is an important asset to abrdn. This expertise, together with
M&A, and strategy.
his prior board experience, help to focus board attention on their stewardship Stephen joined the Board in July 2020 as Chief Executive-Designate, becoming
responsibilities as well as guiding discussion and challenge on the design and Chief Executive Officer in September 2020. He is an abrdn representative His most recent role before joining abrdn was Chief Financial Officer of
delivery of our strategy. director to the US closed-end fund boards and the SICAV fund boards where Persimmon plc. Prior to this, Jason was Group Chief Financial Officer of Aviva
abrdn is the appointed investment manager. plc between 2019 and 2022. He had previously been Chief Financial Officer of
In other current roles, Sir Douglas is Chairman of IP Group plc and Chairman
Aviva's UK General Insurance and UK Life businesses, Chief Capital &
of the Royal Marsden Hospital and Charity. He is a member of a number of Previously, Stephen served as Chief Executive Officer of global consumer Investments Officer, and a director on the board of Aviva Investors.
advisory boards and trade associations through which he keeps abreast of banking at Citigroup from 2015, retiring from the role in November 2019. His
industry, regulatory and international affairs of relevance to his public responsibilities encompassed all consumer and commercial banking businesses in Before joining Aviva in 2010, Jason spent 15 years at Morgan Stanley in London
company responsibilities. 19 countries, including retail banking and wealth management, and operations and Singapore, latterly as a Managing Director within its Investment Banking
and technology supporting these businesses. Prior to this, he was Chief Division, where he advised UK and international banks, insurers and asset
Previously, Sir Douglas served as Group Chairman of HSBC Holdings plc from Executive for Citigroup's Asia-Pacific business across 17 markets, including managers on M&A, capital raising and strategy.
2010 to 2017. For 15 years prior to this he was HSBC's group finance director, India and China.
joining from KPMG where he was a partner, and from 2005 to 2011 he served as a
Jason is a governor of Felsted School in Essex.
non-executive director of BP plc. He has extensive experience of business in Stephen joined Citigroup in 1998. Over 21 years he held leadership roles in
Asia, having been a member of both the Mayor of Shanghai and Mayor of banking, operations and technology across its Asian and Latin American Jason holds a BA (Hons) from the University of Oxford, with a Part II thesis
Beijing's Advisory Boards and currently serves on the International Advisory businesses. Before this, he held management positions at GE Capital, where he in Atmospheric chemistry.
Panel of the Monetary Authority of Singapore. was director of UK operations from 1996 to 1998, and at British Steel.
Sir Douglas was awarded the CBE in 2006 and his knighthood in 2018, both in Stephen is a member of the Investment Association's board of directors, and
recognition of his service to the finance industry. In June 2022, he was the Financial Services Growth and Development Board in Scotland. He holds an
awarded an honorary degree by the University of Glasgow, his alma mater, in MBA in Economics and Finance from University College Cardiff and is an
recognition of his services to the business community. Honorary Fellow.
Appointed to the Board Age
July 2020 57
Nationality Shares
British 782,355
Appointed to the Board Age
October 2023 51
Nationality Shares
British Nil
Sir Douglas' extensive experience of board leadership in global financial
services has shaped a collaborative approach which helps to facilitate open
and constructive boardroom discussion. He maintains a keen interest and
involvement in international, financial and governance matters, retaining an
expertise which is an important asset to abrdn. This expertise, together with
his prior board experience, help to focus board attention on their stewardship
responsibilities as well as guiding discussion and challenge on the design and
delivery of our strategy.
In other current roles, Sir Douglas is Chairman of IP Group plc and Chairman
of the Royal Marsden Hospital and Charity. He is a member of a number of
advisory boards and trade associations through which he keeps abreast of
industry, regulatory and international affairs of relevance to his public
company responsibilities.
Previously, Sir Douglas served as Group Chairman of HSBC Holdings plc from
2010 to 2017. For 15 years prior to this he was HSBC's group finance director,
joining from KPMG where he was a partner, and from 2005 to 2011 he served as a
non-executive director of BP plc. He has extensive experience of business in
Asia, having been a member of both the Mayor of Shanghai and Mayor of
Beijing's Advisory Boards and currently serves on the International Advisory
Panel of the Monetary Authority of Singapore.
Sir Douglas was awarded the CBE in 2006 and his knighthood in 2018, both in
recognition of his service to the finance industry. In June 2022, he was
awarded an honorary degree by the University of Glasgow, his alma mater, in
recognition of his services to the business community.
Stephen brings a track record of delivering exceptional value to clients,
creating high-quality revenue and earnings growth in complex financial
markets, and deep experience of business transformation during periods of
technological disruption and competitive change.
Stephen joined the Board in July 2020 as Chief Executive-Designate, becoming
Chief Executive Officer in September 2020. He is an abrdn representative
director to the US closed-end fund boards and the SICAV fund boards where
abrdn is the appointed investment manager.
Previously, Stephen served as Chief Executive Officer of global consumer
banking at Citigroup from 2015, retiring from the role in November 2019. His
responsibilities encompassed all consumer and commercial banking businesses in
19 countries, including retail banking and wealth management, and operations
and technology supporting these businesses. Prior to this, he was Chief
Executive for Citigroup's Asia-Pacific business across 17 markets, including
India and China.
Stephen joined Citigroup in 1998. Over 21 years he held leadership roles in
banking, operations and technology across its Asian and Latin American
businesses. Before this, he held management positions at GE Capital, where he
was director of UK operations from 1996 to 1998, and at British Steel.
Stephen is a member of the Investment Association's board of directors, and
the Financial Services Growth and Development Board in Scotland. He holds an
MBA in Economics and Finance from University College Cardiff and is an
Honorary Fellow.
Jason joined abrdn as Chief Financial Officer in October 2023, bringing over
twenty-five years of experience in the financial services industry. Having
held senior finance roles in investments, insurance and banking, Jason has
established a strong track record of leadership in finance, asset management,
M&A, and strategy.
His most recent role before joining abrdn was Chief Financial Officer of
Persimmon plc. Prior to this, Jason was Group Chief Financial Officer of Aviva
plc between 2019 and 2022. He had previously been Chief Financial Officer of
Aviva's UK General Insurance and UK Life businesses, Chief Capital &
Investments Officer, and a director on the board of Aviva Investors.
Before joining Aviva in 2010, Jason spent 15 years at Morgan Stanley in London
and Singapore, latterly as a Managing Director within its Investment Banking
Division, where he advised UK and international banks, insurers and asset
managers on M&A, capital raising and strategy.
Jason is a governor of Felsted School in Essex.
Jason holds a BA (Hons) from the University of Oxford, with a Part II thesis
in Atmospheric chemistry.
Key to Board committees R Remuneration Committee
RC Risk and Capital Committee
A Audit Committee
NC Nomination and Governance Committee
C Committee Chair
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Jonathan Asquith - Catherine Bradley CBE - John Devine -
Non-executive Director and Senior Independent Director
Non-executive Director
Non-executive Director
Appointed to the Board Age Appointed to the Board Age Appointed to the Board Age
September 2019 67 January 2022 64 July 2016 65
Nationality Shares Nationality Shares Nationality Shares
British 205,864 British and French 12,181 British 52,913
Board committees: R NC Board committees: A NC RC Board committees: RC A NC
C C C
Jonathan has considerable experience as a non-executive director within the Catherine has more than 30 years'executive experience advising global John's previous roles in asset management, his experience in the US and Asia,
investment management and wealth industry. This brings important insight to financial institutions and industrial companies on complex transactions and and his background in finance, operations and technology are all areas of
his roles as Senior Independent Director and Chair of our Remuneration strategic opportunities. She brings knowledge from working across Europe and importance to our strategy. John's experience is important to the board's
Committee. Asia, serving on the boards of leading consumer-facing companies, and working discussions of financial reporting and risk management. He is Chair of our
with regulators which provides valuable input to her roles as Chair of our Risk & Capital Committee.
Jonathan is a non-executive director of CiCap Limited and its regulated Audit Committee and non-executive Chair of interactive investor, a wholly
subsidiary Coller Capital Limited. He is also a non-executive director of owned subsidiary of the group. John was appointed a director of our business in July 2016, at that time
B-FLEXION Group Holdings SA and subsidiaries including Vantage Infrastructure
Standard Life plc. From April 2015 until August 2016, he was non-executive
Holdings and Capital Four Holding A/S. At the end of 2020 he stepped down as Catherine is a non-executive director of Johnson Electric Holdings Limited, Chair of Standard Life Investments (Holdings) Limited.
Deputy Chair of 3i Group plc after nearly 10 years as a board member. and easyJet plc, where she chairs the finance committee. She is also senior
Previously, he has been Chair of Citigroup Global Markets Limited, Citibank independent director of Kingfisher plc. He is non-executive Chair of Credit Suisse International and of Credit Suisse
International Limited, Dexion Capital plc and AXA Investment Managers. He has
Securities (Europe) Limited, and a non-executive director of Citco Custody
also been a director of Tilney, Ashmore Group plc and AXA UK plc. Previously, Catherine served on the boards of leading industrial and Limited and Citco Custody (UK) Limited.
consumer-facing companies in the UK, France, and Hong Kong. She was appointed
In his executive career Jonathan worked at Morgan Grenfell for 18 years, by HM Treasury to the board of the Financial Conduct Authority in 2014 and From 2008 to 2010, John was Chief Operating Officer of Threadneedle Asset
rising to become group finance director of Morgan Grenfell Group, before going played an important role in establishing the FICC Markets Standards Board in Management Limited. Prior to this, he held a number of senior executive
on to take the roles of Chief Financial Officer and Chief Operating Officer at 2015. Catherine stepped down from these boards in 2020. Between 2021 and 2022 positions at Merrill Lynch in London, New York, Tokyo and Hong Kong.
Deutsche Morgan Grenfell. From 2002 to 2008 he was a director of Schroders she was also a board member of the Value Reporting Foundation, where she
plc, during which time he was Chief Financial Officer and later Executive Vice co-chaired the audit committee. He holds a BA (Hons) from Preston Polytechnic, and MBA in Banking from Bangor
Chairman.
University and is a Fellow of the Chartered Institute of Public Finance and
In her executive career, Catherine has held a number of senior finance roles Accounting.
He holds an MA from the University of Cambridge. in investment banking and risk management: in the US with Merrill Lynch, in
the UK and Asia with Credit Suisse, and in Asia with Société Générale.
She returned to Europe in 2014 to start her non-executive career.
Catherine graduated from the HEC Paris School of Management with a major in
Finance and International Economics. She was awarded a CBE in 2019.
Hannah Grove - Pam Kaur -
Non-executive Director
Non-executive Director
Appointed to the Board Age Appointed to the Board Age
September 2021 60 June 2022 60
Nationality Shares Nationality Shares
British and American 33,000 British Nil
Board committees: NC R Board committees: A RC
Hannah brings more than 20 years of leadership experience in the global Pam has more than 20 years' experience of leadership roles in business, risk,
financial services industry. Her expertise includes leading brand, client and compliance, and internal audit within several of the world's largest and most
digital marketing and communications strategies, including those for major complex financial institutions during periods of significant change and public
acquisitions, which she combines with deep knowledge of regulatory and scrutiny. She brings considerable expertise in leading the development and
governance matters. She is also our designated non-executive director for implementation of compliance, audit and risk frameworks and adapting these to
board employee engagement and sits as a non-executive director on the boards changing regulatory expectations.
of Standard Life Savings Limited and Elevate Portfolio Services Limited,
wholly owned subsidiaries of abrdn group. Pam currently holds the role of Group Chief Risk and Compliance Officer at
HSBC and is also a director of the Hong Kong Shanghai Banking Corporation.
Before joining our Board, Hannah enjoyed a 22-year career at State Street. Between 2019 and 2022, she served as a non-executive director on the board of
This included 12 years as Chief Marketing Officer, retiring from the role in Centrica, where she was also a member of the audit and risk committee, the
November 2020. She was a member of the company's management committee, its nomination committee and the safety, environment and sustainability committee.
business conduct & risk, and conduct standards committees, and a board
member for its China legal entity. Since qualifying as a chartered accountant with Ernst & Young, Pam has
progressed through a range of technical, compliance, anti-fraud and risk roles
Before joining State Street, Hannah was marketing director for the Money with Citigroup, Lloyds TSB, Royal Bank of Scotland, Deutsche Bank and HSBC.
Matters Institute, supported by the United Nations, the World Bank and private These positions have given her extensive insight into the benefits of
sector companies to foster sustainable development in emerging economies. effective internal control systems that recognise external regulatory
requirements.
In other current roles, Hannah is a member of the advisory board of Irrational
Capital. She has also received significant industry recognition as a champion She holds an MBA and B.Comm in Accountancy from Punjab University, and is a
of diversity and inclusion and is a member of the board of advisors for fellow of the Institute of Chartered Accountants of England and Wales.
reboot, an organisation that aims to enhance dialogue around race both at work
and across society.
Appointed to the Board Age
January 2022 64
Nationality Shares
British and French 12,181
Board committees: A NC RC
C
Appointed to the Board Age
July 2016 65
Nationality Shares
British 52,913
Board committees: RC A NC
C
Jonathan has considerable experience as a non-executive director within the
investment management and wealth industry. This brings important insight to
his roles as Senior Independent Director and Chair of our Remuneration
Committee.
Jonathan is a non-executive director of CiCap Limited and its regulated
subsidiary Coller Capital Limited. He is also a non-executive director of
B-FLEXION Group Holdings SA and subsidiaries including Vantage Infrastructure
Holdings and Capital Four Holding A/S. At the end of 2020 he stepped down as
Deputy Chair of 3i Group plc after nearly 10 years as a board member.
Previously, he has been Chair of Citigroup Global Markets Limited, Citibank
International Limited, Dexion Capital plc and AXA Investment Managers. He has
also been a director of Tilney, Ashmore Group plc and AXA UK plc.
In his executive career Jonathan worked at Morgan Grenfell for 18 years,
rising to become group finance director of Morgan Grenfell Group, before going
on to take the roles of Chief Financial Officer and Chief Operating Officer at
Deutsche Morgan Grenfell. From 2002 to 2008 he was a director of Schroders
plc, during which time he was Chief Financial Officer and later Executive Vice
Chairman.
He holds an MA from the University of Cambridge.
Catherine has more than 30 years'executive experience advising global
financial institutions and industrial companies on complex transactions and
strategic opportunities. She brings knowledge from working across Europe and
Asia, serving on the boards of leading consumer-facing companies, and working
with regulators which provides valuable input to her roles as Chair of our
Audit Committee and non-executive Chair of interactive investor, a wholly
owned subsidiary of the group.
Catherine is a non-executive director of Johnson Electric Holdings Limited,
and easyJet plc, where she chairs the finance committee. She is also senior
independent director of Kingfisher plc.
Previously, Catherine served on the boards of leading industrial and
consumer-facing companies in the UK, France, and Hong Kong. She was appointed
by HM Treasury to the board of the Financial Conduct Authority in 2014 and
played an important role in establishing the FICC Markets Standards Board in
2015. Catherine stepped down from these boards in 2020. Between 2021 and 2022
she was also a board member of the Value Reporting Foundation, where she
co-chaired the audit committee.
In her executive career, Catherine has held a number of senior finance roles
in investment banking and risk management: in the US with Merrill Lynch, in
the UK and Asia with Credit Suisse, and in Asia with Société Générale.
She returned to Europe in 2014 to start her non-executive career.
Catherine graduated from the HEC Paris School of Management with a major in
Finance and International Economics. She was awarded a CBE in 2019.
John's previous roles in asset management, his experience in the US and Asia,
and his background in finance, operations and technology are all areas of
importance to our strategy. John's experience is important to the board's
discussions of financial reporting and risk management. He is Chair of our
Risk & Capital Committee.
John was appointed a director of our business in July 2016, at that time
Standard Life plc. From April 2015 until August 2016, he was non-executive
Chair of Standard Life Investments (Holdings) Limited.
He is non-executive Chair of Credit Suisse International and of Credit Suisse
Securities (Europe) Limited, and a non-executive director of Citco Custody
Limited and Citco Custody (UK) Limited.
From 2008 to 2010, John was Chief Operating Officer of Threadneedle Asset
Management Limited. Prior to this, he held a number of senior executive
positions at Merrill Lynch in London, New York, Tokyo and Hong Kong.
He holds a BA (Hons) from Preston Polytechnic, and MBA in Banking from Bangor
University and is a Fellow of the Chartered Institute of Public Finance and
Accounting.
Hannah Grove -
Non-executive Director
Pam Kaur -
Non-executive Director
Appointed to the Board Age
September 2021 60
Nationality Shares
British and American 33,000
Board committees: NC R
Appointed to the Board Age
June 2022 60
Nationality Shares
British Nil
Board committees: A RC
Hannah brings more than 20 years of leadership experience in the global
financial services industry. Her expertise includes leading brand, client and
digital marketing and communications strategies, including those for major
acquisitions, which she combines with deep knowledge of regulatory and
governance matters. She is also our designated non-executive director for
board employee engagement and sits as a non-executive director on the boards
of Standard Life Savings Limited and Elevate Portfolio Services Limited,
wholly owned subsidiaries of abrdn group.
Before joining our Board, Hannah enjoyed a 22-year career at State Street.
This included 12 years as Chief Marketing Officer, retiring from the role in
November 2020. She was a member of the company's management committee, its
business conduct & risk, and conduct standards committees, and a board
member for its China legal entity.
Before joining State Street, Hannah was marketing director for the Money
Matters Institute, supported by the United Nations, the World Bank and private
sector companies to foster sustainable development in emerging economies.
In other current roles, Hannah is a member of the advisory board of Irrational
Capital. She has also received significant industry recognition as a champion
of diversity and inclusion and is a member of the board of advisors for
reboot, an organisation that aims to enhance dialogue around race both at work
and across society.
Pam has more than 20 years' experience of leadership roles in business, risk,
compliance, and internal audit within several of the world's largest and most
complex financial institutions during periods of significant change and public
scrutiny. She brings considerable expertise in leading the development and
implementation of compliance, audit and risk frameworks and adapting these to
changing regulatory expectations.
Pam currently holds the role of Group Chief Risk and Compliance Officer at
HSBC and is also a director of the Hong Kong Shanghai Banking Corporation.
Between 2019 and 2022, she served as a non-executive director on the board of
Centrica, where she was also a member of the audit and risk committee, the
nomination committee and the safety, environment and sustainability committee.
Since qualifying as a chartered accountant with Ernst & Young, Pam has
progressed through a range of technical, compliance, anti-fraud and risk roles
with Citigroup, Lloyds TSB, Royal Bank of Scotland, Deutsche Bank and HSBC.
These positions have given her extensive insight into the benefits of
effective internal control systems that recognise external regulatory
requirements.
She holds an MBA and B.Comm in Accountancy from Punjab University, and is a
fellow of the Institute of Chartered Accountants of England and Wales.
Michael O'Brien - Cathleen Raffaeli -
Non-executive Director
Non-executive Director
Appointed to the Board Age Appointed to the Board Age
June 2022 60 August 2018 67
Nationality Shares Nationality Shares
Irish 173,780 American 9,315
Board committees: A RC Board committees: R RC
Mike has held executive leadership roles within a number of leading global Cathi has strong experience in the financial technology, wealth management and
asset managers in London and New York. He brings extensive asset management banking sectors with a background in the platforms sector, as well as
experience, with a key focus throughout his career on innovation and international board experience. She brings these insights as non-executive
technology-driven change in support of better client outcomes. A qualified Chair of the boards of Standard Life Savings Limited and Elevate Portfolio
actuary, during his executive career with JP Morgan Asset Management, Services Limited, wholly owned subsidiaries of abrdn group. Her role provides
BlackRock Investment Management and Barclays Global Investors, he was a direct link between the board and the platform businesses that help us
responsible for developing and leading global investment solutions, connect with clients and their advisers.
distribution and relationship management strategies.
Cathi is managing partner of Hamilton White Group, LLC which offers advisory
Mike is a non-executive director of Carne Global Financial Services Limited, services, including business development, to companies in financial services
and he is a senior adviser to Osmosis Investment Management. He is also an growth markets. In addition, she is managing partner of Soho Venture Partners
investment adviser to the British Coal Pension Funds. Inc, which offers third-party business advisory services.
Previously, Mike served on the board of the UK NAPF and was a member of the UK Previously, Cathi was lead director of E*Trade Financial Corporation,
NAPF Defined Benefit Council. He retired in 2020 from his role as Co-Head, non-executive director of Kapitall Holdings, LLC and President and Chief
Global Investment Solutions at JP Morgan Asset Management. Prior to his move Executive Officer of ProAct Technologies Corporation. She was also a
to BlackRock in 2000, Mike qualified as an actuary with Towers Watson, where non-executive director of Federal Home Loan Bank of New York, where she was a
he served as an investment and risk consultant. member of the executive committee, and Vice Chair of both the technology
committee and the compensation and human resources committee.
Mike graduated from Limerick University with a BSc in Applied Mathematics. He
is also a Chartered Financial Analyst and a Fellow of the Institute of She holds an MBA from New York University and a BS from the University of
Actuaries. Baltimore.
Appointed to the Board Age
August 2018 67
Nationality Shares
American 9,315
Board committees: R RC
Mike has held executive leadership roles within a number of leading global
asset managers in London and New York. He brings extensive asset management
experience, with a key focus throughout his career on innovation and
technology-driven change in support of better client outcomes. A qualified
actuary, during his executive career with JP Morgan Asset Management,
BlackRock Investment Management and Barclays Global Investors, he was
responsible for developing and leading global investment solutions,
distribution and relationship management strategies.
Mike is a non-executive director of Carne Global Financial Services Limited,
and he is a senior adviser to Osmosis Investment Management. He is also an
investment adviser to the British Coal Pension Funds.
Previously, Mike served on the board of the UK NAPF and was a member of the UK
NAPF Defined Benefit Council. He retired in 2020 from his role as Co-Head,
Global Investment Solutions at JP Morgan Asset Management. Prior to his move
to BlackRock in 2000, Mike qualified as an actuary with Towers Watson, where
he served as an investment and risk consultant.
Mike graduated from Limerick University with a BSc in Applied Mathematics. He
is also a Chartered Financial Analyst and a Fellow of the Institute of
Actuaries.
Cathi has strong experience in the financial technology, wealth management and
banking sectors with a background in the platforms sector, as well as
international board experience. She brings these insights as non-executive
Chair of the boards of Standard Life Savings Limited and Elevate Portfolio
Services Limited, wholly owned subsidiaries of abrdn group. Her role provides
a direct link between the board and the platform businesses that help us
connect with clients and their advisers.
Cathi is managing partner of Hamilton White Group, LLC which offers advisory
services, including business development, to companies in financial services
growth markets. In addition, she is managing partner of Soho Venture Partners
Inc, which offers third-party business advisory services.
Previously, Cathi was lead director of E*Trade Financial Corporation,
non-executive director of Kapitall Holdings, LLC and President and Chief
Executive Officer of ProAct Technologies Corporation. She was also a
non-executive director of Federal Home Loan Bank of New York, where she was a
member of the executive committee, and Vice Chair of both the technology
committee and the compensation and human resources committee.
She holds an MBA from New York University and a BS from the University of
Baltimore.
The Corporate governance statement and the Directors' remuneration report,
together with the cross references to the relevant other sections of the
Annual report and accounts, explain the main aspects of the Company's
corporate governance framework and seek to give a greater understanding as to
how the Company has applied the principles and reported against the provisions
of the UK Corporate Governance Code 2018 (the Code).
Statement of application of and compliance with the Code
For the year ended 31 December 2023, the Board has carefully considered the
principles and provisions of the Code (available at www.frc.org.uk) and has
concluded that its activities during the year and the disclosures made within
the Annual report and accounts comply with the requirements of the Code. The
statement also explains the relevant compliance with the FCA's Disclosure
Guidance and Transparency Rules Sourcebook. The table on page 140 sets out
where to find each of the disclosures required in the Directors' report in
respect of all of the information required by Listing Rule 9.8.4 R, and our
statement on Board diversity is on page 92.
(i) Board leadership and company purpose
Purpose and Business model
The Board ratifies the Company's purpose set out on page 3 of the Strategic
report, and oversees implementation of the Group's business model, which it
has approved, and which is set out on pages 12 and 13. Pages 2 to 79 show how
the development of the business model in 2023 supports the protection and
generation of shareholder value over the long term, as well as underpinning
our strategy for growth. A significant development in 2023 supporting these
objectives was the continued diversification of the business model through
relentless focus on costs within the Investments business, continued
investment in the Adviser business and the integration of ii and the Personal
Wealth business. The Board's consideration of current and future risks to the
success of the Group is set out on pages 76 to 79, complemented by the report
of the Risk and Capital Committee on pages 107 to 110.
Oversight of culture
The Board and the Nomination and Governance Committee play a key role in
overseeing how the management of the Group assesses and monitors the Group's
culture. Through engagement surveys and the Board Employee Engagement
programme, the Board acquires a clear view on the culture evident within the
Group's businesses and how successfully expected behaviour is being embedded
across the group in ways that will contribute to our success.
The Board holds management to account for a range of engagement and diversity,
equity and inclusion outcomes, which are seen as important indicators of
culture, and which form a key part of the executive scorecard.
The Board and the executive leadership team (ELT) have defined a set of
Commitments - Client First, Empowered, Ambitious and Transparent - which
embody our cultural aspirations at abrdn and are designed to create the best
working environment for our colleagues, so contributing to better customer
experience and outcomes. Our culture is defined by these Commitments and the
behaviours which underpin them, which are set out on page 48.
Stakeholder engagement
The Annual report and accounts explains how the Directors have complied with
their duty to have regard to the matters set out in section 172 (1) (a)-(f) of
the Companies Act 2006. These matters include responsibilities with regard to
the interests of customers, employees, suppliers, the community and the
environment, all within the context of promoting the success of the Company.
The table on pages 88 and 89 sets out the Board's focus on its key
relationships and shows how the relevant stakeholder engagement is reported up
to the Board or Board Committees.
Engaging with investors
The Group's Investor Relations and Secretariat teams support the direct
investor engagement activities of the Chairman, Senior Independent Director
(SID), CEO, CFO and, as relevant, Board Committee chairs. During 2023, we
carried out a comprehensive programme of meetings with domestic and
international investors, via a range of 1:1, group, conference and reporting
related engagements. Investors had broad interests including progress on cost
reduction targets, synergies between the three business units, progress on
strategy to drive revenue growth, investment performance, financial
performance and share price, capital allocation and strategy for returns to
shareholders, the relationship with Phoenix and the role of the share stake,
customer cash balances and the regulatory focus on this area given high
interest rates, and corporate governance, including approach to ESG and
sustainability. The Chairman, SID, CEO and CFO bring relevant feedback from
this engagement to the attention of the Board.
The Board ensures its outreach activities encompass the interests of the
Company's circa one million individual shareholders. Given the nature of this
large retail shareholder base, it is impractical to communicate with all
shareholders using the same direct engagement model followed for institutional
investors. Shareholders are encouraged to receive their communications
electronically and around 400,000 shareholders receive all communications this
way. The Company actively promotes self service via the share portal, and more
than 203,000 shareholders have signed up to this service. Shareholders have
the option to hold their shares in the abrdn Share Account where shares are
held electronically and around 91% of individual shareholders hold their
shares in this way.
To give all shareholders easy access to the Company's announcements, all
information reported via the London Stock Exchange's regulatory news service
is published on the Company's website. The CEO and CFO continue to host formal
presentations to support both the full year and half year financial results
with the related transcript and webcast available from the Investors' section
of the Company's website. For 2024, the Company published a Q4 2023 update in
mid-January and intends to publish Q1 and Q3 2024 updates after the close of
these periods.
The 2023 Annual General Meeting (AGM) was held in Edinburgh on 10 May 2023.
The meeting was arranged as a 'hybrid' meeting. This allowed shareholders to
participate in the meeting remotely, as well as in person. For those
participating remotely, questions could be submitted during the meeting via a
'chat box', many of which were then posed to the Chair by a moderator. The
Chair and CEO presentations addressed the main themes of the questions which
had been submitted at the meeting. 45% of the shares in issue were voted.
Although all resolutions were passed, a number of resolutions received less
than 80% of votes cast in favour of the resolution. The results of the vote
were primarily driven by a small number of shareholders, and the significant
majority of shareholders who voted did so in favour of the resolutions.
Following the AGM, the Company Chair and Jonathan Asquith, abrdn's Senior
Independent Director, met with shareholders representing more than 80% of the
shares voted against the five resolutions, to understand their views.
The resolution to re-elect Catherine Bradley CBE as a Director received 75.89%
of votes in favour. One major shareholder applies more stringent requirements
than prevailing proxy advisor guidelines in relation to the number of external
mandates held, and the number of external mandates held by each Director are
within the requirements of the proxy advisor guidelines and in line with
market practice. As noted, Catherine has decided not to stand for re-election
at the 2024 AGM.
The other resolutions which received less than 80% of votes cast in favour of
them related to authority to allot shares, disapply pre-emption rights, buy
back issued ordinary shares, and to allot shares in relation to the issuance
of Convertible Bonds. The key area of concern cited by shareholders voting
against the resolutions related to shareholder dilution and, in relation to
share buybacks, shareholdings breaching certain thresholds. While the majority
of our shareholders are supportive of the authorities sought the Board have
recognised the concerns raised and will reflect these in the resolutions to be
proposed at the 2024 AGM. Our 2024 AGM will be held on 24 April in Edinburgh.
The AGM Guide 2024 will be published online at www.abrdn.com in advance of
this year's meeting. The voting results, including the number of votes
withheld, will be published on the website at www.abrdn.com after the meeting.
Engaging with employees
Hannah Grove continued as our designated non-executive Director for employee
engagement for a second year. abrdn's Board Employee Engagement (BEE)
programme is designed to ensure that employees' perspectives and sentiments
are heard and understood by the Board to help inform decision-making, and to
support colleagues' understanding about the role of the plc Board and ability
to have direct access to our Non-Executive Directors (NEDs).
During 2023, the programme comprised four pillars: (i) Listening Sessions, an
opportunity for colleagues to share their perspectives and feedback in smaller
group settings throughout the year, (ii) Meet the NEDs sessions, for larger
groups of colleagues to interact with Board members and ask questions
directly, (iii) Employee Network engagement, focused on both gathering
perspectives from abrdn's Diversity and Inclusion cohorts, and recognising
them for their contributions, and lastly (iv) Reporting and measurement,
including regular thematic updates to the Board and abrdn's ELT, feedback
gathered about the programming specifically via post event surveys, and
measurement compared to wider abrdn colleague sentiment through the engagement
survey.
Based on this strategy, the following are some example activities from 2023:
- Eleven Listening Sessions were held with groups across various levels,
businesses and geographies, including Culture Champions, the Future Leaders
cohort, Investment teams, Finimize and interactive investor colleagues.
- Five Meet the NEDs sessions took place including events with all
colleagues in London and Boston, as well as a specific session held by our
subsidiary Adviser board directors for Adviser colleagues in Edinburgh.
- Nine Employee Network engagements: including a recognition event for
network chairs with plc Board members in Edinburgh, a session with the newly
launched NextGen network in Tokyo, and a roundtable discussion with our US
network chairs in Philadelphia.
In 2023, BEE activity spanned eight abrdn locations across the UK, US and
APAC, with sessions and events delivered in a combination of in-person,
virtual or hybrid formats.
Overall, colleague sentiment garnered was broad in reach in terms of
geography, as well as business areas. The BEE programme received positive and
constructive feedback from colleagues that participated in the programme.
Hannah provided regular updates from the BEE programme to the Board covering
themes raised by colleagues including compensation, strategy, the pace of
change, technology and empowerment.
In 2024, the BEE programme will maintain its core objectives, gathering
feedback and demonstrating actionable outcomes, and focusing on key themes
including culture, strategy and connecting the dots across abrdn.
Communication and measurement will continue to underpin activity with plans to
increase the frequency of updates on the programme to all colleagues
throughout the year. We will also continue to benchmark the programme
externally to understand best practices and new approaches.
On 24 January 2024 the Company announced a transformation programme. In the
first half of 2024, a number of BEE initiatives will be focused on employee
listening and engagement with opportunity to discuss the commitments made. In
addition, we will look to capture insights from the BEE programme to support
the Board in its assessment of how the Company's desired culture has been
embedded in accordance with the updated requirements of the recently published
UK Corporate Governance Code.
Summary of Stakeholder engagement activities
In line with their obligations under s.172 of the Companies Act 2006, the
Directors consider their responsibilities to stakeholders in their discussions
and decision-making. The table below illustrates direct and indirect Board
engagement with various stakeholders. More details of stakeholder engagement
activities can be found on pages 55 and 56.
Key stakeholders Direct Board engagement Indirect Board engagement Outcomes
Clients - The CEO meets with key clients as required and reports to the Board on such - The CEOs of the businesses report at Board meetings on key client - Engagement supported the development of the key client management process,
meetings. engagement, support programmes and client strategies. and our client solutions and ESG approaches.
- The CEO takes part in key client pitches to hear directly from clients on - Market share data and competitor activity are reported to the Board. - The businesses position the business around client needs with performance
their requirements.
accountability measured on that basis.
- Results of client perceptions survey/customer sentiment index are reported.
- The Chair meets with peers and key clients at conferences and industry - Investment processes are driven by understanding client needs and designing
membership and advisory boards where he represents the Group. appropriate solutions taking into account client risk appetite and
sophistication.
- Board members feed into Board discussions any feedback received directly
from clients.
Our people - 'Meet the NEDs' BEE sessions for a diverse mix of staff at all levels allows - The Chief People Officer (CPO) reports to the Nomination and Governance - Engagement feedback recognised in Board discussions.
direct feedback in informal settings. Committee meeting on key hires and employee issues including development needs
to support succession planning. - Engagement feedback is a key input to talent and development programmes and
- Employee engagement NED in place and active with the employee diversity
the design of reward philosophy.
networks as well as with employees through their representatives. The BEE NED - The CPO produces reporting for the Board drawing out key factors influencing
reports regularly to the CEO and the Board. staff turnover, morale and engagement.
- Each year, the Chair and NEDs all mentor one or two CEO-1 or -2 level - Viewpoints and employee surveys collect aggregate, regional and functional
emerging talent. trend data which is reported to the Board.
- The CEO and CFO run 'Town Hall' sessions.
- The CEO meets with key clients as required and reports to the Board on such
meetings.
- The CEO takes part in key client pitches to hear directly from clients on
their requirements.
- The Chair meets with peers and key clients at conferences and industry
membership and advisory boards where he represents the Group.
- Board members feed into Board discussions any feedback received directly
from clients.
- The CEOs of the businesses report at Board meetings on key client
engagement, support programmes and client strategies.
- Market share data and competitor activity are reported to the Board.
- Results of client perceptions survey/customer sentiment index are reported.
- Engagement supported the development of the key client management process,
and our client solutions and ESG approaches.
- The businesses position the business around client needs with performance
accountability measured on that basis.
- Investment processes are driven by understanding client needs and designing
appropriate solutions taking into account client risk appetite and
sophistication.
Our people
- 'Meet the NEDs' BEE sessions for a diverse mix of staff at all levels allows
direct feedback in informal settings.
- Employee engagement NED in place and active with the employee diversity
networks as well as with employees through their representatives. The BEE NED
reports regularly to the CEO and the Board.
- Each year, the Chair and NEDs all mentor one or two CEO-1 or -2 level
emerging talent.
- The CEO and CFO run 'Town Hall' sessions.
- The Chief People Officer (CPO) reports to the Nomination and Governance
Committee meeting on key hires and employee issues including development needs
to support succession planning.
- The CPO produces reporting for the Board drawing out key factors influencing
staff turnover, morale and engagement.
- Viewpoints and employee surveys collect aggregate, regional and functional
trend data which is reported to the Board.
- Engagement feedback recognised in Board discussions.
- Engagement feedback is a key input to talent and development programmes and
the design of reward philosophy.
- - -
Key stakeholders Direct Board engagement Indirect Board engagement Outcomes
Community - CEO oversees the Phoenix, FNZ and Citigroup relationships and meets with his - The Board hears reports on first line key supplier relationships and their - The development of our business through our relationships with partners is a
opposite numbers as required. role in transition and transformation activities. critical element of the Board's strategy.
Business partners/ supply chain
- ED direct meetings with core suppliers. - Supplier due diligence surveys are undertaken. - Transformation discussions have included a focus on the quality, service
provision, availability and costs of relevant suppliers.
- The Risk and Capital Committee reviews the dependency on critical suppliers - Tendering process includes smaller level firms.
and how they are managed.
- The overriding guidelines for business partnerships have been established as
- Access and audit rights in place with key suppliers. working for both parties and creating efficient operations.
- The Audit Committee leads an assessment of external audit performance and
service provision. - Modern slavery compliance process in place. - The Board sought executive assurance on the operation and working practice
of key suppliers.
- The Board received detailed papers supporting the outsourcing of technology - Procurement/payment principles and policies in place.
and business services.
- Certain key suppliers regularly discussed at Audit Committee, Risk and
Capital Committee and Board.
- Oversight of key outsourcing arrangements reported to the Board.
Communities - Board members present at relevant events and conferences. - Stewardship/sustainability teams report regularly to the Board and - Considered as input to the Group's charitable giving programmes.
Committees.
- Chair/CEO/CFO represent the Group on public policy and industry
- Engagement drives the expression of our purpose.
organisations. - Feedback on annual Stewardship and TCFD reports.
- Board is kept up to date with the activities of the abrdn Financial Fairness - Review of charitable giving strategy.
Trust and the abrdn Charitable Foundation
- ESG presentations to the Board.
Regulators/ - Regular engagement by CEO, CFO, Chair and Committee Chairs. - CFO and Chief Risk Officer (CRO) update the Board regularly. - Relevant Board decisions recognise regulatory impact and environment.
policymakers/ - FCA has access to the Board. - Board hears reports on the results of active participation through industry
groups.
governments - 'Dear Board/CEO' letters issued from regulators.
- Relevant engagement with regulators in overseas territories.
Shareholders - Results, AGM presentations and Q&A. - Regular updates from the EDs/ Investor Relations Director/ Chair/Chair of There has been continued dialogue with shareholders on remuneration matters
Remuneration Committee summarising the output from their programmes of including in the period to the 2023 AGM in respect of the Directors'
- Chair, CEO and CFO meetings with investors. engagement. Remuneration Policy.
- Chair, Committee Chairs, Senior Independent Director and BEE NED round table - Analyst/Investor reports distributed to the Board.
with governance commentators.
- As relevant, feedback from corporate brokers.
- Remuneration Committee Chair meetings with institutional investors.
- Dedicated mailbox and shareholder call centre team.
- Chair/CEO direct shareholder correspondence.
Shareholders
- CEO oversees the Phoenix, FNZ and Citigroup relationships and meets with his
opposite numbers as required.
- ED direct meetings with core suppliers.
- The Risk and Capital Committee reviews the dependency on critical suppliers
and how they are managed.
- The Audit Committee leads an assessment of external audit performance and
service provision.
- The Board received detailed papers supporting the outsourcing of technology
and business services.
- The Board hears reports on first line key supplier relationships and their
role in transition and transformation activities.
- Supplier due diligence surveys are undertaken.
- Tendering process includes smaller level firms.
- Access and audit rights in place with key suppliers.
- Modern slavery compliance process in place.
- Procurement/payment principles and policies in place.
- Certain key suppliers regularly discussed at Audit Committee, Risk and
Capital Committee and Board.
- Oversight of key outsourcing arrangements reported to the Board.
- The development of our business through our relationships with partners is a
critical element of the Board's strategy.
- Transformation discussions have included a focus on the quality, service
provision, availability and costs of relevant suppliers.
- The overriding guidelines for business partnerships have been established as
working for both parties and creating efficient operations.
- The Board sought executive assurance on the operation and working practice
of key suppliers.
Communities
- Board members present at relevant events and conferences.
- Chair/CEO/CFO represent the Group on public policy and industry
organisations.
- Board is kept up to date with the activities of the abrdn Financial Fairness
Trust and the abrdn Charitable Foundation
- Stewardship/sustainability teams report regularly to the Board and
Committees.
- Feedback on annual Stewardship and TCFD reports.
- Review of charitable giving strategy.
- ESG presentations to the Board.
- Considered as input to the Group's charitable giving programmes.
- Engagement drives the expression of our purpose.
Regulators/
policymakers/
governments
- Regular engagement by CEO, CFO, Chair and Committee Chairs.
- FCA has access to the Board.
- 'Dear Board/CEO' letters issued from regulators.
- Relevant engagement with regulators in overseas territories.
- CFO and Chief Risk Officer (CRO) update the Board regularly.
- Board hears reports on the results of active participation through industry
groups.
- Relevant Board decisions recognise regulatory impact and environment.
Shareholders
- Results, AGM presentations and Q&A.
- Chair, CEO and CFO meetings with investors.
- Chair, Committee Chairs, Senior Independent Director and BEE NED round table
with governance commentators.
- Remuneration Committee Chair meetings with institutional investors.
- Chair/CEO direct shareholder correspondence.
- Regular updates from the EDs/ Investor Relations Director/ Chair/Chair of
Remuneration Committee summarising the output from their programmes of
engagement.
- Analyst/Investor reports distributed to the Board.
- As relevant, feedback from corporate brokers.
- Dedicated mailbox and shareholder call centre team.
There has been continued dialogue with shareholders on remuneration matters
including in the period to the 2023 AGM in respect of the Directors'
Remuneration Policy.
Shareholders
Speaking up
The workforce has the means to raise concerns in confidence and anonymously,
and these means are well communicated. The Audit Committee's oversight of the
whistleblowing policy and the Audit Committee Chair's role to report to the
Board on whistleblowing matters is covered in the Audit Committee report on
page 99.
Outside appointments and conflicts of interest
The Board's policy encourages executive Directors to take up one external
non-executive director role, as the Directors consider this can bring an
additional perspective to the Director's contribution. Stephen Bird has
representative director roles, on fund boards where abrdn is the appointed
investment manager and on the Investment Association. Jason Windsor is a
Governor of Felsted School and a Director of Felsted School Trustees Limited.
Any proposed additional appointments of the non-executive Directors are
firstly discussed with the Chair and then reported to the Nomination and
Governance Committee prior to being considered for approval. The Senior
Independent Director takes that role in relation to the Chair's outside
appointments. The register of the Board's collective outside appointments is
reviewed annually by the Board. Directors' principal outside appointments are
included in their biographies on pages 82 to 85. These appointments form part
of the Chair's annual performance review of individual non-executive
Directors' contribution and time commitment, and similarly that of the Senior
Independent Director of the Chair.
The Directors continued to review and authorise Board members' actual and
potential conflicts of interest on a regular and ad hoc basis in line with the
authority granted to them in the Company's Articles. As part of the process to
approve the appointment of a new Director, the Board considers and, where
appropriate, authorises their potential or actual conflicts. The Board also
considers whether any new outside appointment of any current Director creates
a potential or actual conflict before, where appropriate, authorising it. All
appointments are approved in accordance with the relevant group policies. At
the start of every Board and Committee meeting, Directors are requested to
declare any actual or potential conflicts of interests and in the event a
declaration is made, conflicted Directors can be excluded from receiving
information, taking part in discussions, and making decisions that relate to
the potential or actual conflict.
(ii) Division of responsibilities
The Group operates the following governance framework.
Governance framework
Board
The Board's role is to organise and direct the affairs of the Company and the
Group in accordance with the Company's constitution, all relevant laws,
regulations, corporate governance, and stewardship standards. The Board's role
and responsibilities, collectively and for individual Directors, are set out
in the Board Charter. The Board Charter also identifies matters that are
specifically reserved for decision by the Board. During 2023, the Board's key
activities included approving, overseeing and challenging:
- The updated strategy and the 2024 to 2026 business plan to implement the - Significant corporate transactions.
strategy.
- Succession planning, in particular in the appointment of Jason Windsor.
- Capital adequacy and allocation decisions including the decision to sell
stakes in HDFC Asset Management. - The quarterly performance of the Investments business.
- Oversight of culture, our standards and ethical behaviours. - The ESG approach, both as a corporate and as an asset manager.
- Dividend policy including the decision framework governing when to return - Significant external communications.
the dividend to growth.
- The work of the Board Committees.
- Financial reporting.
- Appointments to the Board and to Board Committees.
- Risk management, including the Enterprise Risk Management (ERM) framework,
risk strategy, risk appetite limits and internal controls and in particular - Matters escalated from subsidiary boards to the Board for approval.
how this was adapted for blended working including working from home.
The Board regularly reviews reports from the Chief Executive Officer and from
the Chief Financial Officer on progress against approved strategies and the
business plan, as well as updates on financial market and global economic
conditions. There are also regular presentations from the Business CEOs and
business functional leaders.
Chair Chief Executive Officer (CEO) Senior Independent Director (SID)
- Leads the Board and ensures that its principles and processes are The CEO operates within authorities delegated by the Board to: The SID is available to talk with our shareholders about any concerns that
maintained.
they may not have been able to resolve through the channels of the Chair, the
- Develop strategic plans and structures for presentation to the Board. CEO or Chief Financial Officer, or where a shareholder was to consider these
- Promotes high standards of corporate governance.
channels as inappropriate.
- Make and implement operational decisions.
- Together with the Company Secretary, sets agendas for meetings of the Board.
The SID leads the annual review of the performance of the Chair.
- Lead the other executive Director and the ELT in the day-to-day running of
- Ensures Board members receive accurate, timely and quality information on the Group.
the Group and its activities.
- Report to the Board with relevant and timely information.
- Encourages open debate and constructive discussion and decision-making.
- Develop appropriate capital, corporate, management and succession structures
- Leads the performance assessments and identification of training needs for to support the Group's objectives.
the Board and individual Directors.
- Together with the Chair, represent the Group to external stakeholders,
- Speaks on behalf of the Board and represents the Board to shareholders and including shareholders, customers, suppliers, regulatory and governmental
other stakeholders. authorities, and the local and wider communities.
Non-executive Directors (NEDs)
The role of our NEDs is to participate fully in the Board's decision-making
work including advising, supporting and challenging management as appropriate.
Nomination and Governance Committee (N&G) Audit Committee (AC) Remuneration Committee (RC) Risk and Capital Committee (RCC)
- Board and Committee composition and appointments. - Financial reporting. - Development and implementation of remuneration philosophy and policy. - Risk management framework.
- Succession planning. - Internal audit. - Incentive design and setting of executive Director targets. - Compliance reporting.
- Governance framework. - External audit. - Employee benefit structures. - Risk appetites and tolerances.
- Culture, Diversity, Equity & Inclusion (DEI). - Whistleblowing. - Transactional risk assessments.
- Regulatory financial reporting. - Capital adequacy.
- Non-financial reporting (ESG). - Anti-financial crime.
Executive leadership team (ELT)
The ELT supports the CEO by providing clear leadership, line of sight and
accountability throughout the business. The ELT is responsible to the CEO for
the development and delivery of strategy and for leading the organisation
through challenges and opportunities.
Businesses Talent Efficient Operations Control
Business CEOs support the CEO to deliver growth across the business: The Chief People Officer (CPO) supports the CEO in developing talent Strategy, Technology, Legal and Finance ELT members, including the CFO, The Chief Risk Officer (CRO) supports the ELT and the CEO in their first line
management and succession planning and culture initiatives. support the CEO by overseeing global functions and the delivery of functional management of risk. The Chief Internal Audit Officer attends ELT controls
- Investments. priorities. meetings.
- Adviser.
- ii.
The framework is formally documented in the Board Charter which also sets out
the Board's relationship with the boards of the key subsidiaries in the Group.
In particular, it specifies the matters which these subsidiaries refer to the
Board or to a Committee of the Board for approval or consultation.
Board balance and director independence
The Directors believe that at least half of the Board should be made up of
independent non-executive Directors. As at 26 February 2024, the Board
comprises the Chair, seven independent non-executive Directors and two
executive Directors. The Board is made up of six men (60%) and four women
(40%) (2022: men 55%, women 45%). Brian McBride stepped down from the Board on
10 May 2023 and Stephanie Bruce stepped down on 11 May 2023. Jason Windsor was
appointed to the Board on 23 October 2023.
The Chair was independent on his appointment in December 2018. The Board
carries out a formal review of the independence of non-executive Directors
annually. The review considers relevant issues including the number and nature
of their other appointments, any other positions they hold within the Group,
any potential conflicts of interest they have identified and their length of
service. Their individual circumstances are also assessed against independence
criteria, including those in the Code. The Nomination and Governance
Committee, on behalf of the Board, conducts a particularly rigorous review for
any non-executive director whose term exceeds six years. In addition to the
above, this review includes any feedback from the Board effectiveness review,
ongoing overall contribution, and the output from individual annual
performance discussions with each NED conducted by the Chair. John Devine is
the only non-executive Director to have served beyond six years, with Cathi
Raffaeli and Sir Douglas Flint passing this timeline later in 2024. No issues
or considerations were raised through this assessment.
Following the review, the Board has concluded that all the non-executive
Directors are independent and consequently, the Board continues to comprise a
majority of independent non-executive Directors.
Jonathan Asquith served as Senior Independent Director throughout 2023. In
this role, he is available to provide a sounding board to the Chair and serve
as an intermediary for the other Directors and the shareholders. He also led
the process to review the Chair's performance.
The roles of the Chair and the CEO are separate and are summarised on page 91.
Each has clearly defined responsibilities, which are described in the Board
Charter.
The Directors have access to the governance advice of the Company Secretary
whose appointment and removal is a matter reserved to the Board.
(iii) Board composition, succession, diversity and evaluation
The Board's policy is to appoint and retain non-executive Directors who bring
relevant expertise as well as a wide perspective to the Group and its
decision-making framework. The Board continues to support its Board Diversity
statement which states that the Board:
- Believes in equity and supports the principle that the best person
should always be appointed to the role with due regard given to the benefits
of diversity, including gender, ethnicity, age, and educational and
professional background when undertaking a search for candidates, both
executive and non-executive.
- Recognises that diversity can bring insights and behaviours that make
a valuable contribution to its effectiveness.
- Believes that it should have a blend of skills, experience,
independence, knowledge, ethnicity and gender amongst its individual members
that is appropriate to its needs.
- Believes that it should be able to demonstrate with conviction that
any new appointee can make a meaningful contribution to its deliberations.
- Is committed to maintaining its diverse composition.
- Supports the CEO's commitment to achieve and maintain a diverse
workforce and an inclusive workplace, both throughout the Group, and within
the ELT.
- Has a zero-tolerance approach to unfair treatment or discrimination of
any kind, both throughout the Group and in relation to clients and individuals
associated with the Group.
Board Diversity
Gender
Diagram removed for the purposes of this announcement. However it can be viewed in full in the pdf document
Nationality
Diagram removed for the purposes of this announcement. However it can be
viewed in full in the pdf document
Diversity activities and progress to meet our targets are covered in the
People - Diversity, equity & inclusion section of the Strategic report on
page 50. The ELT's diversity policy is covered in the Diversity, equity and
inclusion section of the Directors' report on page 138.
Board changes during the period are covered above and in the Directors' report
on page 137.
Ethnicity
Diagram removed for the purposes of this announcement. However it can be
viewed in full in the pdf document
In accordance with Listing Rule 9.8.6(9), as at 31 December 2023:
- at least 40% of the individuals on the board of directors are women;
- at least one individual on the board of directors is from
a minority ethnic background
During 2023, we applied our policy on diversity when searching for a successor
to Stephanie Bruce, with Jason Windsor ultimately appointed, as CFO.
Consequently, we do not currently meet the requirement under Listing Rule
9.8.6(9)(a)(ii) to have a woman represented in the identified Board leadership
positions (Chair, Senior Independent Director, CEO or CFO).
The Board supports the principle that the person best qualified, in the
particular circumstances of the role, should always be appointed to the role
with due regard given to the benefits of diversity, including the full range
of protected characteristics, as well as cognitive diversity. This principle
applies to the search for and appointment of all candidates, both executive
and non-executive. In reviewing the composition of the Board, the Committee
regards the Committee Chair roles as equal in importance to the designated
roles, which is reflected in their current composition.
Board appointment process, terms of service and role
Board appointments are overseen by the Nomination and Governance Committee and
more information can be found on page 113.
Each non-executive Director is appointed for a three-year fixed term and
shareholders vote on whether to elect/re-elect them at every AGM. Once a
three-year term has ended, a non-executive Director can continue for a maximum
of two further terms, if the Board is satisfied with the non-executive
Director's performance, independence and ongoing time commitment. Taking
account of their appointment dates the current average length of service of
the non-executive Directors is three years. For any non-executive Directors
who have already served two three-year terms, the Nomination and Governance
Committee considers any factors which have the potential to impact their
independence or time commitment prior to making any recommendation to the
Board. No Directors came to the end of a three-year term during 2023.
External search consultants may be used to support Board appointments. The
Group has used the services of MWM Consulting to support senior management
searches. MWM Consulting has no other connection to the Group or the
Directors.
Time commitment
The letter of appointment confirms that the amount of time each non-executive
Director is expected to commit to each year, once they have met all of the
approval and induction requirements, is a minimum of 35 days.
When appointing a non-executive Director, the Nomination and Governance
Committee carefully considers time commitments, investor guidelines and voting
policies and their application on current directorships. The Committee also
reviews in detail the planned changes to a non-executive Director's portfolio
and overall capacity, including the balance of listed and non-listed
non-executive Director roles. This is also reviewed by the Chairman as part of
a formal sequence of bilateral conversations with each Board member during the
Company's annual Board Effectiveness process. This covers: time commitment and
the impact of any anticipated changes to external appointments over the next
12 months; conflicts of interest and; any training requirements that would
support the Board member in their role during the year. The Company supports
plc Directors taking active roles on the main group subsidiary boards. Cathi
Raffaeli chairs the Standard Life Savings Limited and Elevate Portfolio
Services Limited boards, and Hannah Grove also sits on these boards. Catherine
Bradley was appointed as the chair of the interactive investor Limited board
on 1 January 2024. Time commitment for their roles on these group boards are
also considered as part of the annual evaluation process.
Having carefully reviewed various inputs, including those outlined above and
each non-executive Director's contribution and capacity in 2023, the
Nomination and Governance Committee concluded that all non-executive Directors
continue to have sufficient time to dedicate
to their role as independent non-executive Directors of abrdn plc.
The service agreements/letters of appointment for Directors are available to
shareholders to view on request from the Company Secretary at the Company's
registered address (which can be found in the Shareholder information section)
and will be accessible for the 2024 AGM. Non-executive Directors are required
to confirm that they can allocate sufficient time to carry out their duties
and responsibilities effectively. Their letters of appointment confirm that
their primary roles include challenging and holding to account the executive
Directors as well as appointing and removing executive Directors.
Director election and re-election
At the 2024 AGM, all of the Directors will retire and stand for election or
re-election. As well as in the Board of Directors section, the AGM Guide 2024
includes background information about the Directors, including the reasons why
the Chair, following the Directors' annual reviews, believes that their
individual skills and contribution support their election or re-election.
Advice
Directors may sometimes need external professional advice to carry out their
responsibilities. The Board's policy is to allow them to seek this where
appropriate and at the Group's expense. Directors also have access to the
advice and services of the Company Secretary. With the exception of
professional advice obtained by the Remuneration Committee, as detailed in
page 133, no independent professional advice was sought in 2023.
Board effectiveness
Review process
Following the externally facilitated review in 2022, the 2023 effectiveness
review was conducted internally, on behalf of the Board, by the Chairman and
supported by the Company Secretary. A questionnaire was issued to each Board
member, which allowed individual feedback on a confidential basis. This was
supplemented by any matters a Director wished to raise as part of their
year-end 1:1 discussion with the Chairman.
The tone of the review was positive and concluded that the Board and its
Committees continued to operate effectively during 2023, with no material
issues or concerns raised and priorities for the coming year clarified. Good
progress was noted on those matters identified in the 2022 review, including
greater focus on the Company's talent pipeline, the refresh of the NED
mentoring programme and work undertaken to improve the flow of information
across the Group. As part of this initiative, the Chairman hosted an inaugural
conference in September 2023 to bring together non-executive directors from
the Group's subsidiary companies and EMEA-based fund boards. The main areas
arising from the 2023 review on which the Board looked to see continued
improvement in 2024, both in respect of its own effectiveness and that of its
Committees, were in relation to improving the insights within and brevity of
materials presented, the continued development of management information to
support its oversight of the Company's transformation programme and avoiding
duplication across the agendas of the Board and its subsidiary companies where
this could be achieved. This included the planned use of more joint sessions
on matters of shared interest, such as on operational resilience, cyber
security and the Company's capital management policies. The report also
acknowledged that given the criticality of human talent and technology to
future sustainable success, succession planning would remain a core focus for
the Board as would technology development given its impact on the future of
asset and wealth management.
As in prior years, the report noted the strong levels of Board engagement and
participation, both in formal meetings and other Board initiatives, such as
the BEE programme. The report also recognised positively Board dynamics, the
effectiveness of Board Committees and the breadth of knowledge and experience
of Board members. Maintaining these attributes was seen as essential to the
Company's successful navigation of current macro-economic challenges and the
delivery of its desired strategic outcomes.
Chair
The review of Sir Douglas's performance as Chair was led by the SID,
Jonathan Asquith, supported by the Company Secretary. It was based on feedback
given in returned questionnaires specifically regarding the Chairman's
performance and discussions between the SID and the other non-executive
Directors. The feedback was summarised into a report which was considered by
the Directors in a meeting led by Jonathan Asquith and without Sir Douglas
being present. It was agreed that the Chair's industry experience, style and
development of the Board continued to be of significant benefit to the Group.
As with the main Board evaluation, the continued focus on delivery for
shareholders and other stakeholders was a key priority and the important role
that the Chairman plays in supporting the execution of the Group's strategy
was recognised. Jonathan Asquith met with Sir Douglas to pass on feedback from
the review directly and his final report was made available to all
non-executive Directors.
Directors
An important part of the annual effectiveness review process is the individual
evaluation of each member of the Board. This process is undertaken personally
by the Chair and this year was conducted through year-end bilateral
discussions with each Board member to a specific agenda. These discussions ran
alongside the broader effectiveness process and fed into Nomination and
Governance Committee's consideration of director re-election and ongoing
succession planning. In addition to discussing individual performance,
consideration was also given to Non-Executive Directors' time commitment and
capacity, conflicts of interest, any individual training and development needs
and broader Company engagement opportunities.
Director induction and development
The Chair, supported by the Company Secretary, is responsible for arranging a
comprehensive preparation and induction programme for all new Directors. The
programme takes their background, knowledge and experience into account. If
relevant, Directors are required to complete the FCA's approval process before
they are appointed and Directors self-certify annually that they remain
competent to carry out this aspect of their role. These processes continue to
adapt to meet evolving best practice in respect of the Senior Managers and
Certification Regime.
The formal preparation and Induction programme includes:
- Meetings with the executive Directors and the members of the ELT.
- Focused technical meetings with internal experts on specific areas
including the three businesses, regulatory reporting, ESG, conduct risk, risk
and capital management, and financial reporting.
- Visits to business areas to meet our people and gain a better insight
into the operation of the business and its culture.
- Meetings with the external auditors and contact with the FCA
supervisory teams.
- Meetings with the Company Secretary on the Group's corporate
governance framework and the role of the Board and its Committees.
- Meetings with the Chief Risk Officer on the risk management framework
as well as meetings on their individual responsibilities as holders of a
Senior Management Function role.
Background information is also provided including:
- Key Board materials and information, stakeholder and shareholder
communications and financial reports.
- The Group's organisational structure, strategy, business activities
and operational plans.
- The Group's key performance indicators, financial and operational
measures and industry terminology.
The induction programme provides the background knowledge new Directors need
to perform to a high level as soon as possible after joining the Board and its
Committees and to support them as they build their knowledge and strengthen
their performance further.
When Directors are appointed to the Board, they make a commitment to broaden
their understanding of the Group's business. The Secretariat, Finance, Risk
and Reward teams monitor relevant external governance and risk management,
financial and regulatory developments and keep the ongoing Board training and
information programme up to date. Specific Board and Committee awareness and
deep-dive sessions took place on:
- Geopolitics.
- Cyber resilience.
- abrdn's Internal Capital and Risk Assessment (being a risk management
process introduced by the Investment Firms Prudential Regime).
- Operational resilience self-assessment.
- Sustainability.
- Technology.
- FCA Consumer Duty.
- Anti-Financial Crime.
- Vulnerable Customers.
- Asset class deep dives:
o Fixed income.
o Equities.
o Multi-asset Investment Solutions.
o Real Estate.
o Real Assets and Alternatives.
(iv) Audit, risk and internal control
The Directors retain the responsibility to state that they consider the Annual
report and accounts, taken as a whole, is fair, balanced and understandable,
presents an assessment of the Company's position and prospects and presents
the necessary information for shareholders to assess the business and
strategy. They also recognise their responsibility to establish procedures to
manage risk and oversee the internal control framework. The Directors'
responsibilities statement is on page 141. The reports from the Audit
Committee and the Risk and Capital Committee Chairs show how the Committees
have supported the Board in meeting these responsibilities.
The Board's view of its principal and emerging risks and how they are being
managed is contained in the Risk management section of the Strategic report
on pages 76 to 79.
Annual review of internal control
The Directors have overall responsibility for the governance structures and
systems of the group, which includes the ERM framework and system of internal
control, and for the ongoing review of their effectiveness. The framework is
designed to manage, rather than eliminate, risk and can only provide
reasonable, not absolute, assurance against material misstatement or loss. The
framework covers all of the risks as set out in the Risk management section of
the Strategic report.
In line with the requirements of the Code, the Board has reviewed the
effectiveness of the system of internal control. The Audit Committee undertook
the review on behalf of the Board and reported the results of its review to
the Board. The system was in place throughout the year and up to the date of
approval of the Annual report and accounts 2023.
The review of abrdn's risk management and internal control systems was carried
out drawing on inputs across the three lines of defence taking into account
the operation of each component of the Enterprise Risk Management Framework.
The business continues to make control improvements to meet increasing
regulatory expectations, particularly, in the areas of operational resilience
and third-party oversight. 2023 has seen the business continue to strengthen
controls within its operating model through better definition of
accountability and processes. Technology advances and the implementation of
actions around the Consumer Duty and Operational Resilience regulations
continue to drive further improvements in the control environment. The Finance
function operates a set of defined processes which operate over all aspects of
financial reporting, which includes the senior review and approval of
financial results, controlled processes for the preparation of the IFRS
consolidation, and the monitoring of external policy developments to ensure
these are adequately addressed. These processes include the operation of a
Technical Review Committee and the Financial Reporting Executive Review Group
to provide senior review, challenge and approval of relevant disclosures,
accounting policies, and changes required to comply with external
developments.
The Board's going concern statement is on page 140 and the Board's viability
statement is on page 74.
(v) Remuneration
The Directors' remuneration report (DRR) on pages 115 to 134 sets out the work
of the Remuneration Committee and its activities during the year, the levels
of Directors' remuneration and the shareholder approved remuneration policy.
The Company's approach to investing in and rewarding its workforce is set out
on page 129 of the DRR. The Board believes that its remuneration policies and
practices are designed to support the Company's strategy and long-term
sustainable success. More information about the policies and practices can be
found in the DRR.
Other information
You can find details of the following, as required by FCA Disclosure and
Transparency Rule 7.2.6, in the Directors' report and in the Directors'
remuneration report:
Share capital
- Significant direct or indirect holdings of the Company's securities.
- Confirmation that there are no securities carrying special rights with
regard to control of the Company.
- Confirmation that there are no restrictions on voting rights in normal
circumstances.
- How the Articles can be amended.
- The powers of the Directors, including when they can issue or buy back
shares.
Directors
- How the Company appoints and replaces Directors.
- Directors' interests in shares.
Board meetings and meeting attendance
The Board and its Committees meet regularly, operating to an agreed timetable.
Meetings are usually held in Edinburgh or London. During the year, the Board
held specific sessions to consider the Group's strategy and business planning.
The Chair and the non-executive Directors also met during the year, formally
at each Board meeting, and informally, without the executive Directors present
and where matters including executive performance and succession and Board
effectiveness were discussed. The Board scheduled eight formal meetings and a
focused strategy meeting in 2023.
Directors are required to attend all meetings of the Board and the Committees
they serve on, and to devote enough time to the Company to perform their
duties. Board and Committee papers are distributed before meetings other than,
by exception, urgent papers which may need to be tabled at the meeting. If
Directors are not able to attend a meeting because of conflicts in their
schedules, they receive all the relevant papers and have the opportunity to
submit their comments in advance to the Chair or to the Company Secretary. If
necessary, they can follow up with the Chair of the meeting. Recognising that
some Directors may have existing commitments they cannot change at very short
notice, the Board has established the Standing Committee as a formal procedure
for holding unscheduled meetings. The Standing Committee meets when,
exceptionally, decisions on matters specifically reserved for the Board need
to be taken urgently. All Directors are invited to attend Standing Committee
meetings. The Standing Committee did not meet during 2023.
The Company Chair is not a member of the Audit, Risk and Capital, or
Remuneration Committees. He is invited to attend meetings of all Committees,
by invitation, in order to keep abreast of their discussions and routinely
does so. The table below reflects the composition of the Board and Board
Committees during 2023 and records the number of meetings and members'
attendance.
Board Group Audit Committee Nomination and Governance Committee Remuneration Committee Risk and Capital Committee
Chair
Sir Douglas Flint 9/9 - 4/4 - -
Executive Directors
Stephen Bird 9/9 - - - -
Jason Windsor(1) 2/2 - - - -
Non-executive Directors
Jonathan Asquith 9/9 - 4/4 7/7 -
John Devine 9/9 6/6 4/4 - 6/6
Hannah Grove 9/9 - 4/4 7/7 -
Pam Kaur 9/9 6/6 - - 6/6
Cathleen Raffaeli 9/9 - - 7/7 6/6
Catherine Bradley 9/9 6/6 4/4 - 6/6
Mike O'Brien 9/9 6/6 - - 6/6
Former members
Stephanie Bruce (stood down 10 May 2023) 3/3 - - - -
Brian McBride (stood down 10 May 2023) 3/3 - - 3/3 -
1. Jason Windsor was appointed on 23 October 2023.
Tenure as at February 2024
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Executive and Non-executive mix
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viewed in full in the pdf document
Board Committees
Diagram removed for the purposes of this announcement. However it can be
viewed in full in the pdf document
The Board has established Committees that oversee, consider and make
recommendations to the Board on important issues of policy and governance. At
each Board meeting, the Committee chairs provide reports of the key issues
considered at recent Committee meetings, and minutes of Committee meetings are
circulated to the appropriate Board members. This includes reporting from the
Chair of the Audit Committee on any whistleblowing incidents which have been
escalated to them. The Committees operate within specific terms of reference
approved by the Board and kept under review by each Committee.
All Board Committees are authorised to engage the services of external
advisers at the Company's expense, whenever they consider this necessary. With
the exception of fees paid to external advisers of the Remuneration Committee,
as detailed on page 133, no such expense was incurred during 2023.
Committee reports
This statement includes reports from the chairs of the Audit Committee, the
Risk and Capital Committee and the Nomination and Governance Committee. The
report on the responsibilities and activities of the Remuneration Committee
can be found in the Directors' remuneration report section.
1. Audit Committee report
The Audit Committee assists the Board in discharging its responsibilities for
external financial reporting, internal controls over financial reporting and
the relationship with the external auditors.
I am pleased to present my report as Audit Committee
(the Committee) Chair.
While the Committee focuses its attention primarily on the Company's financial
and non-financial control framework, during 2023 it has also put specific
governance emphasis on:
- the integration of Internal Audit as a key, seamless partner to the
Committee.
- better differentiation, sequencing, and complementarity between the
Risk and Capital Committee and the Audit Committee.
- the governance around internal controls, in particular as the
Enterprise Risk Management framework evolves.
- the introduction of deep-dives on key subject areas to expand the
Committee's knowledge.
- oversight of the Group's evolution as it continues its transition to
align its resources and capabilities to meet client needs.
- significant changes in senior personnel in the Finance function.
The Committee also continued to focus on the quality of financial reporting.
While ensuring we fulfil our delegated responsibilities on behalf of the
Board, the Audit Committee is a dynamic forum which benefits from a high
degree of transparency from management, enabling effective discussion and
decision making. This will remain fundamental to the Committee's effectiveness
and its oversight of the Company's financial and non-financial reporting and
control environment during 2024.
The report is structured in four parts:
(i) Governance
(ii) Report on the year
(iii) Internal audit
(iv) External audit
Catherine Bradley
Chair, Audit Committee
(i) Governance
Membership
All members of the Audit Committee are independent non-executive Directors.
For their names, the number of meetings and committee member attendance during
2023, please see the table on page 96.
The Board believes Committee members have the necessary range of financial,
risk, control and commercial expertise required to provide effective challenge
to management and have competence in accounting and auditing as well as recent
and relevant financial experience. Catherine Bradley is a non-executive
director of Johnson Electric Holdings Limited and of easyJet plc, where she
chairs the finance committee. She is also senior independent director of
Kingfisher plc. Catherine has previously chaired the audit committees of
Groupe Peugeot Citroen and of the Financial Conduct Authority. John Devine is
a member of the Chartered Institute of Public Finance and Accounting. Pam Kaur
is a qualified chartered accountant. Mike O'Brien is a fellow of the Institute
and Faculty of Actuaries. The Committee members are also members of audit
committees related to their other non-executive Director roles.
Invitations to attend Committee meetings are extended to the Chair, the Chief
Executive Officer, the Chief Financial Officer, the Group Financial
Controller, the Chief Internal Audit Officer and the Group Chief Risk Officer,
as well as the External auditors.
The Audit Committee meets privately for part of its meetings and also has
regular private meetings separately with the external auditors and the Chief
Internal Audit Officer. These meetings address the level of co-operation and
information exchange and provide an opportunity for participants to raise any
concerns directly with the Committee.
Key responsibilities
The Audit Committee's responsibilities are to oversee, and report to the Board
on:
- The appropriateness of the Group's accounting and accounting policies,
including the going concern presumption and viability statement.
- The findings of its reviews of the financial information in the
Group's annual and half year financial reports.
- The clarity of the disclosures relating to accounting judgements and
estimates.
- Its view of the 'fair, balanced and understandable' reporting
obligation.
- The findings of its review of certain Group prudential external
disclosures.
- Internal controls over financial reporting.
- ESG disclosures relating to financial and quantitative information.
- Liaison with the Remuneration Committee on any financial reporting
matters related to the achievement of targets and measures.
- Outcomes of investigations resulting from whistleblowing.
- The appointment or dismissal of the Chief Internal Audit Officer, the
approved internal audit work programme, key audit findings and the quality of
internal audit work.
- The skills of the external audit team and their compliance with
auditor independence requirements, the approved audit plan, the quality of the
firm's execution of the audit, and the agreed audit and non-audit fees.
In carrying out its duties, the Committee is authorised by the Board to obtain
any information it needs from any Director or employee of the Group. It is
also authorised to seek, at the expense of the Group, appropriate external
professional advice whenever it considers this necessary. The Committee did
not need to take any independent advice during the year.
In accordance with the Senior Managers and Certification Regime the Audit
Committee Chair is responsible for the oversight of the independence, autonomy
and effectiveness of our policies and procedures on whistleblowing including
the procedures for the protection of employees who raise concerns related to
detrimental treatment. Throughout the year the Audit Committee Chair met
regularly with the Chief Internal Auditor, the Chief Sustainability Officer -
Investments and the Global Head of Corporate Sustainability to discuss their
work, findings and current developments.
Committee effectiveness
The Committee reviews its remit and effectiveness each year. Following the
externally facilitated review in 2022, the 2023 review was conducted
internally, on behalf of the Board, by the Company Secretary. The review
concluded that the Committee continued to operate effectively during 2023 with
no material issues or concerns raised. More information about the process
involved, and its outcomes, can be found on page 94.
(ii) Report on the year
Audit agenda
As well as regular reporting, agenda items were aligned to the annual
financial cycle as set out below:
Jan-Mar - Annual report and accounts 2022.
- Strategic report and financial highlights 2022.
- Financial reporting judgements.
- Process execution event in the Investments business
- Liaison with the Remuneration Committee on any financial reporting
matters related to the achievement of targets and measures.
- External auditor's review of Full year results.
- Whistleblowing.
- Sustainability reporting.
- Effectiveness of the Internal Audit function.
Apr-Jun - Internal audit findings.
- Prudential and Regulatory reporting
- Initial financial reporting matters for Half year 2023.
- Whistleblowing.
- External auditor's management letter, and audit strategy.
- Risk and Control Self-Assessment (RCSA) reform
Jul-Sep - Half year results 2023.
- External auditors' review of Half year results.
- External auditors' independence.
- Internal audit findings.
- Whistleblowing.
Oct-Dec - Initial financial reporting matters for Full year 2023, including
pension scheme assumptions.
- Non-audit services policy.
- The internal audit plan and charter.
- Internal audit findings.
- Effectiveness of the external auditors and related non-audit services.
- Whistleblowing.
- Sustainability and ESG reporting.
- Risk management and internal control system annual review and future
plans.
- CASS reporting update.
- Corporate and Audit Reform update.
The indicative proportion of time spent on the business of the Committee is
illustrated below:
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viewed in full in the pdf document
Detail of work
The focus of work in respect of 2023 is described below.
Financial and non-financial reporting
Our accounts are prepared in accordance with International Financial Reporting
Standards (IFRS). The Committee believes that some Alternative Performance
Measures (APMs), which are also called non-GAAP measures, can add insight to
the IFRS reporting and help to give shareholders a fuller understanding of the
performance of the business. The Committee considered the presentation of APMs
and related guidance as discussed further in the 'Fair, balanced and
understandable' section below.
The Committee reviewed the Group accounting policies and confirmed they were
appropriate to be used for the 2023 Group financial statements. IFRS 17
Insurance Contracts was adopted in 2023. This primarily impacted our HASL
joint venture business. Read more in the Basis of preparation in the Group
financial statements section.
The Committee reviewed the basis of accounting and in particular the
appropriateness of adopting the going concern basis of preparation of the
financial statements. In doing so, it considered the Group's cash flows
resulting from its business activities and factors likely to affect its future
development, performance and position together with related risks, as set out
in more detail in the Strategic report. The Committee recommended the going
concern statement to the Board.
In addition, the Committee considered the form of the viability statement and
in particular whether the three-year period remained appropriate, and
concluded that it did. This reflects both our internal planning cycle and the
timescale over which changes to major regulations and the external landscape
affecting our business typically take place. In formulating the statement, the
Committee considered the result of stress testing and reverse stress testing
presented to the Risk and Capital Committee. The Committee recommended the
viability statement to the Board.
During 2023, the Committee reviewed the Annual report and accounts 2022 and
the Half year results 2023. For both periods it received written and/or oral
reports from the Chief Financial Officer, the interim Chief Financial Officer,
the Company Secretary, the Chief Internal Audit Officer and the external
auditors. The Committee used these reports to aid its understanding of the
composition of the financial statements, to confirm that the specific
reporting standards and compliance requirements had been met and to support
the accounting judgements and estimates. Following its reviews, the Committee
was able to recommend the approval of each of the reports to the Board, being
satisfied that the full and half year financial statements complied with laws
and regulations and had been appropriately compiled.
The Committee recognises the importance of sustainability and ESG reporting.
During 2023 the Committee discussed and reviewed the sustainability reporting
landscape and the related governance framework at a number of meetings. In
particular, as part of the review of the Annual report and accounts, the
Committee reviewed Task Force on Climate-Related Financial Disclosures (TCFD).
The Committee's review focused on ensuring metrics and outcomes were
appropriately explained and validated. KPMG in their role as auditor have
reviewed our TCFD disclosures as part of their audit engagement. More
information can be found on page 105.
Accounting estimates and judgements
The Audit Committee considered all estimates and judgements that Directors
understood could be material to the 2023 financial statements. The Committee
also focused on disclosure of these key accounting estimates and judgements.
Significant accounting estimates, judgements and assumptions for the year How the Audit Committee addressed these significant accounting estimates and
ended 31 December 2023 assumptions
Goodwill impairment reviews
Goodwill is required to be tested annually for impairment and the The Committee spent time reviewing and challenging recoverable amount
determination of recoverable amounts for this impairment assessment is a key assumptions at three meetings. For abrdn financial planning the Committee
area of estimation. The impairment assessment is performed by comparing the considered several different valuation approaches and discussed the valuation
carrying amount of each cash-generating unit (CGU) with its recoverable assessment with management and agreed that recoverable amount was within the
amount, being the higher of its value in use (VIU) and fair value less costs reasonable range.
of disposal (FVLCD). In 2023 impairments of goodwill were recognised in
relation to the abrdn financial planning CGU (impairment of £36m) in the ii For Finimize the Committee noted that the business is inherently difficult to
segment and in relation to the Finimize CGU (impairment of £26m) within Other value as there are few directly comparable companies and therefore there are a
business operations and corporate costs (previously in Investments) and range of reasonable valuations. The Committee discussed the valuation
therefore the determination of the recoverable amount for these CGUs was a key assessment with management and agreed that recoverable amount was within the
judgement which directly impacted the amount of the impairment. The reasonable range.
impairments include the impact of lower projected revenues as a result of
adverse markets and macroeconomic conditions, and for Finimize the impact of The Committee agreed with management's view that the goodwill for the
lower short-term projected growth following a strategic shift that prioritises interactive investor CGU was not impaired. The Committee noted the inherent
profitability over revenue growth. sensitivity of the recoverable amounts and supported the disclosure of
appropriate sensitivities.
The recoverable amount for abrdn financial planning was determined based on
FVLCD, with the primary approach being a multiples valuation approach based on Further details on goodwill impairment reviews are disclosed in Note 13 of the
price to revenue and price to assets under advice. The recoverable amount for Group financial statements.
Finimize was also determined based on FVLCD, with the primary approach being a
revenue multiple valuation approach.
Goodwill relating to the interactive investor CGU was also tested for
impairment and the recoverable amount, based on FVLCD, indicated that no
impairment was required.
UK defined benefit pension plan
In compiling a set of financial statements, it is necessary to make some The Committee considered the proposed assumptions taking into account market
judgements and estimates about outcomes that are dependent on future events. data and information from pension scheme advisors. The Committee concurred
This is particularly relevant to the defined benefit pension plan surplus with management and their actuarial advisors that appropriate adjustments are
which is inherently dependent on how long people live and future economic required to avoid the mortality assumptions being skewed by excess COVID-19
outcomes. deaths and to allow for the ongoing uncertainty around the pandemic's impact
on future mortality improvement.
For the principal UK defined benefit pension plan, the Committee reviewed the
assumptions for mortality, discount rate and inflation. Note 31 of the Group financial statements provides further details on the
actuarial assumptions used, and sets out the impact of mortality, discount
rate and inflation sensitivities. Note 31 also provides details on the
accounting policy applied and accounting policy judgements relating to the
Group's assessment that it has an unconditional right to a refund of a
surplus, and the treatment of tax relating to this surplus.
Tritax contingent consideration fair value
In 2021, the abrdn group purchased 60% of the membership interests in Tritax The Committee analysed and discussed management's assumptions underlying the
Management LLP. Subject to certain conditions, an additional contingent fair value of the contingent consideration at 31 December 2023 and agreed that
deferred earn-out is expected to be payable to acquire the remaining 40% of the fair value was within the reasonable range. The Committee reviewed and
membership interests in Tritax should the selling partners choose to exercise supported that disclosure of sensitivities to key assumptions should be
put options in respect of each of the years ended 31 March 2024, 31 March 2025 provided given the inherent uncertainties in the valuation. See Note 36 of the
and 31 March 2026. The amount payable is linked to the EBITDA of the Tritax Group financial statements for further details.
business in the relevant period. abrdn has the right to purchase any
outstanding interests at the end of 2026 through exercising a call option.
The contingent consideration liability is required to be recognised at fair
value, which is primarily dependant on future earnings projections.
Significant accounting estimates, judgements and assumptions How the Audit Committee addressed these significant
for the year ended 31 December 2023
accounting estimates and assumptions
Investments in subsidiaries
In relation to the abrdn plc Company only accounts, an assessment is made at The Committee discussed the investment in subsidiaries impairment assessment
each reporting date as to whether there are any indicators of impairment in with management and noted that the judgements in relation to these assessments
relation to investments in subsidiaries. At year end 2023 management noted were materially the same as the judgements relating to the goodwill impairment
that the Company's net assets attributable to shareholders of £4.6bn (post reviews. The Committee supported that relevant disclosures were made in the
impairments) continues to be higher than the Company's market capitalisation Company only accounts including disclosure that appropriate consideration had
of £3.3bn. Taking this into account along with the continued headwinds facing been given to the Company net assets being higher than the abrdn market
active asset managers, it was assessed that there were indicators of capitalisation. The Committee noted that the Company's distributable profits
impairments in relation to the Company's asset management holding companies, were £3.1bn following the 2023 impairments which continued to provide support
abrdn Investment Holdings Limited (aIHL) and abrdn Holdings Limited (aHL). for the dividend policy.
aIHL had also paid up significant dividends in 2023 following the sale of
abrdn Capital Limited and the sale of its subsidiary's holding in HDFC Asset Further details on the assessment of investments in subsidiaries are set out
Management. Following the performance of valuation exercises, impairments of in Note A of the Company financial statements section
aIHL and aHL of £169m and £40m respectively have been recognised.
Indicators of impairment were also identified in relation to abrdn Financial
Planning Limited (aFPL). The goodwill relating to aFPL had been impaired at
the consolidated level in 2023. Following the performance of the valuation
which also supported the assessment of goodwill above, an impairment of the
Company carrying value of £52m has been recognised.
The Company's investment in its subsidiary abrdn (Mauritius Holdings) 2006
Limited (aMH06) was impaired during 2023 by £43m. The impairment resulted
from the payment of dividends from aMH06 to the Company in 2023. Following the
payment of the dividends, the recoverable amount of aMH06 was less than £1m.
No other indicators of impairment were identified on any material investment
in subsidiaries including ii which, as noted above, is also fully supported by
a valuation exercise performed for goodwill purposes.
Indicators of reversal of impairment must also be considered and in relation
to Aberdeen Corporate Services Limited, following the recent Court of Session
ruling on the surplus for the UK principal plan, it is considered appropriate
to recognise a reversal of impairment of £13m.
Principal risks are disclosed in the Strategic report and recommended to the
Board by the Risk and Capital Committee. The Committee was satisfied that the
estimates and quantified risk disclosures in the financial statements were
consistent with the Strategic report. The Committee concluded that appropriate
judgements had been applied in determining the estimates and that sufficient
disclosure had been made to allow readers to understand the uncertainties
surrounding outcomes.
Fair, balanced and understandable
The Committee supported management's continued aim to compile the Annual
report and accounts to be 'fair, balanced and understandable'.
abrdn's principles
To create clarity on fair, balanced and understandable for abrdn a set of
principles is applied, as set out below:
Fair - The narrative contained in the Annual report and accounts is honest,
accurate and comprehensive.
'We are being open and honest in the way we present our discussions and
analysis, and are providing what we believe to be an accurate assessment of - The key messages in the narrative in the Strategic report and
business and economic realities.' Governance sections of the Annual report and accounts reflect the financial
reporting contained in the financial statements.
- The Key Performance Indicators (KPIs) for the period are consistent
with the key messages outlined in the Strategic report.
Balanced - The Annual report and accounts presents both successes and challenges
experienced during the year and, as appropriate, reflects those expected in
'We are fully disclosing our successes, the challenges we have faced in the the future.
period, and the challenges and opportunities we anticipate in the future; all
with equal importance and at a level of detail that is appropriate for our - The level of prominence we give to successes in the year versus
stakeholders.' challenges faced is appropriate.
- The narrative and analysis contained in the Annual report and accounts
effectively balances the information needs and interests of each of our key
stakeholder groups.
Understandable - The layout is clear and consistent and the language used is simple and
easy to understand (industry specific terms are defined where appropriate).
'The language we use and the way we structure our report is helping us present
our business and its performance clearly; in a way that someone with a - There is a consistent tone across and good linkage between all
reasonably informed knowledge of financial statements and our industry would sections in a manner that reflects a complete story and clear signposting to
understand.' where additional information can be found.
Activities
An Internal Review Group (IRG) is in place which reviews the Annual report and
accounts specifically from a fair, balanced and understandable perspective and
provides feedback to our financial reporting team on whether it conforms to
our standards. The members of the IRG are independent of the financial
reporting team and include colleagues from Investor Relations, ESG reporting,
Risk, Internal Audit, Communications and Strategy.
The key points discussed by the IRG covered:
- The impact of markets on business performance, particularly in
relation to the Investments business.
- The balance of reporting relating to the business risk environment.
- How previously reported matters had been updated.
Fair, balanced and understandable guidance was provided to relevant
stakeholders involved in the Annual report and accounts production process.
The Audit Committee, reviewed the messaging in the Annual report and accounts,
taking into account material received and Board discussions during the year.
Three drafts of the Annual report and accounts 2023 were reviewed by the Audit
Committee at three meetings. The Committee complemented its knowledge with
that of executive management and internal audit. An interactive process
allowed each draft to embrace contributions.
The Annual report and accounts goes through an extensive internal verification
process of all content to verify accuracy.
The Committee also reviewed the use and presentation of APMs which complement
the statutory IFRS results. This review considered guidelines issued by the
European Securities and Markets Authority in 2016 and the thematic reviews by
the Financial Reporting Council (FRC). A Supplementary information section is
included in the Annual report and accounts to explain the rationale for using
these metrics and to provide reconciliations of these metrics to IFRS measures
where relevant. This section also provides increased transparency over the
calculation of reported financial ratios.
Adjusted operating profit and adjusted profit before tax are key profit APMs.
The Committee considered whether the allocation of items to adjusted operating
profit was in line with the defined accounting policies, consistent with
previous practice and appropriately disclosed. Where there were judgemental
areas, such as in relation to certain interactive investor related costs, the
Committee specifically reviewed the proposed treatments and ensured that the
Annual report and accounts provided appropriate disclosures.
The Audit Committee agreed to recommend to the Board that the Annual report
and accounts 2023, taken as a whole, is fair, balanced and can be understood
by someone with a reasonably informed knowledge of financial statements and
our industry.
Prudential reporting
The Committee also considered disclosures relating to IFPR (Investment Firms
Prudential Regime) results included in the Strategic report and notes sections
of the Annual report and accounts and half year reporting, together with
related assurance over these disclosures.
Internal controls
As noted earlier, the Directors have overall responsibility for abrdn's
internal controls and for ensuring their ongoing effectiveness. This does not
extend to associates and joint ventures. Together with the Risk and Capital
Committee, the Committee provides comfort to the Board of their ongoing
effectiveness.
Internal audit regularly reviews the effectiveness of internal controls and
reports to the Committee and the Risk and Capital Committee.
The Finance function sets formal requirements for financial reporting which
apply to the Group as a whole, defines the processes and detailed controls for
the consolidation process and reviews and challenges reporting submissions.
Further, the Finance function runs a Technical Review Committee and is
responsible for monitoring external technical developments. The Committee
focuses on ensuring appropriate sign-offs on financial results are provided,
and a mechanism for the escalation of issues from major regulated subsidiary
Boards is in place.
The control environment around financial and non-financial reporting will
continue to be monitored closely.
In early 2023, the Committee discussed the implications of a significant
process execution event and this was reflected in 2022 financial reporting.
Whistleblowing
Our people are trained via mandatory training modules to detect the signs of
possible fraudulent or improper activity and how to report concerns either
directly or via our independent whistleblowing hotline. The Committee Chair is
the designated whistleblower's champion and the Committee receives regular
updates on the operation of the whistleblowing procedures (Speak Up) from the
Conduct and Conflicts Oversight Manager. The anonymised reports include a
summary of the incidents raised as whistleblowing, and information on
developments of the arrangements in place, to ensure concerns can be raised in
confidence about possible malpractice, wrongdoing and other matters.
The Committee oversees the findings of investigations and required follow-up
action. If there is any allegation against the Risk or internal audit
functions, the Committee directs the investigation. The Committee is satisfied
that the Group's procedures are currently operating effectively. The Committee
Chair reports to the Board on the updates the Committee receives.
(iii) Internal audit
The role and mandate of the internal audit function is set out in its Charter,
which is reviewed and approved by the Committee annually. Whilst internal
audit maintains a relationship with the external auditors, in accordance with
relevant independence standards, the external auditors do not place reliance
on the work of internal audit. The internal audit plan is reviewed and
approved by the Committee at least annually and is flexed during the year to
respond to internal and external developments. The function's coverage aligns
to the Group's activities and footprint, taking account of local internal
audit requirements. Regular reporting is provided to the Committee to
illustrate plan progress, any emerging risks or themes and the status of
implementation of recommendations.
The Committee assesses the independence and quality assurance practices of the
Internal Audit function and agrees the effectiveness of the function, aligned
to the Group's objectives on an annual basis. Independent external reviews are
also undertaken at regular intervals. The most recent one was completed in H2
2021 by Deloitte who assessed the abrdn internal audit function as having the
highest overall rating with conformance against all aspects of the Institute
of Internal Auditors' International Professional Practices Framework (IPPF)
and the Internal Audit Financial Services Code of Practice (the Standards).
The Committee's own review of the function in 2023 was positive and supports
the continuous evolution and enhancement of Internal Audit.
The Committee Chair meets the Chief Internal Audit Officer periodically,
without management being present.
(iv) External auditors
The appointment
The Committee has responsibility for making recommendations to the Board on
the reappointment of the external auditors, determining their independence
from the Group and its management and agreeing the scope and fee for the
audit. Following its review of KPMG's performance, the Committee concluded
that there should be a resolution to shareholders to recommend the
reappointment of KPMG at the 2024 AGM.
The Committee complies with the UK Corporate Governance Code, the FRC Guidance
on Audit Committees with regard to the external audit tendering timetable, the
provisions of the EU Regulation on Audit Reform, and the Competition and
Markets Authority Statutory Audit Services Order with regard to mandatory
auditor rotation and tendering. The Committee will continue to follow the
annual appointment process but does not currently anticipate re-tendering the
audit before 2026. This is currently considered to be in the best interests of
the Company taking into account the results of the formal review of the
effectiveness of the KPMG audit discussed in this section.
The audit was last subject to a tender during the first half of 2016, and on
17 May 2016 the Company announced its intention to appoint KPMG as its auditor
for the year ending 31 December 2017, replacing PwC who were the Company's
previous auditors.
In March 2017, the proposed acquisition of Aberdeen Asset Management PLC was
announced. Consequently, the Standard Life plc Audit Committee (now abrdn plc)
sought assurance that KPMG's independence would not be compromised as a result
of their previous position as external auditor of Aberdeen Asset Management
PLC, from its incorporation in 1983 until 30 September 2015. While recognising
that the KPMG tenure had ceased nearly two years prior to the proposed
acquisition, a paper outlining the matters which had been considered was
brought to the Committee and, following review, the Committee was satisfied
that there were no impacting issues.
KPMG's independence has subsequently been regularly reviewed by the Committee
and we remain satisfied of their independence. Further detail on this
assessment is set out below. We consider KPMG's tenure for abrdn plc and its
group of companies to run from the completion of the 2016 tender exercise and
their appointment for year end in 2017. The audit for the year ended 31
December 2023 is, therefore, KPMG's 7th year as auditor. The Senior Statutory
Auditor is Richard Faulkner.
Auditor independence
The Board has an established policy (the Policy) setting out which non-audit
services can be purchased from the firm appointed as external auditors. The
Committee monitors the implementation of the Policy on behalf of the Board.
The aim of the Policy, which is reviewed annually, is to support and safeguard
the objectivity and independence of the external auditors and to comply with
the revised FRC Ethical standards for auditors (Ethical Standards). It does
this by prohibiting the auditors from carrying out certain types of non-audit
services, and by setting out which non-audit services are permitted. It also
ensures that where fees for approved non-audit services are significant, they
are subject to the Committee Chair's prior approval. KPMG has implemented its
own policy preventing the provision by KPMG of most non-audit services to FTSE
350 companies which are audit clients. A 70% fee cap on non-audit services to
audit clients is in place.
The services prohibited by the Policy are as set out in the FRC Revised
Ethical Standard 2019.
The Policy permits non-audit services to be purchased, following approval,
when they are closely aligned to the external audit service and when the
external audit firm's skills and experience make it the most suitable
supplier.
These include:
- Audit related services, such as regulatory reporting.
- Investment circular reporting accountant engagements.
- Attesting to services not required by statute or regulation (e.g.
controls reports).
- Other reports required by a regulator or assurance services relating
to regulatory returns.
- Sustainability and TCFD report audits/reviews.
- Fund merger assurance engagements, where the engagement is with the
manager and the external auditor is also the auditor of the fund.
KPMG has reviewed its own independence in line with these criteria and its own
ethical guideline standards. KPMG has confirmed to the Committee that
following its review it is satisfied that it has acted in accordance with
relevant regulatory and professional requirements and that its objectivity is
not impaired.
Having considered compliance with our Policy and the fees paid to KPMG, the
Committee is satisfied that KPMG has remained independent.
Audit and non-audit fees
The Group audit fee payable to KPMG in respect of 2023 was £7.2m (2022: KPMG
£6.2m). In addition, £2.8m
(2022: £2.3m) was incurred on audit related assurance services. Fees for
audit related assurance services are primarily in respect of client money
reporting and the half year review. The Committee is satisfied that the audit
fee is commensurate with permitting KPMG to provide a quality audit and
monitors regularly the level of audit and non-audit fees. Non-audit work can
only be undertaken if the fees have been approved in advance in accordance
with the Policy for non-audit fees. Unless fees are small (which we have
defined as less than £75,000), the approval of the Committee Chair is
required.
Non-audit fees amounted to £1.0m (2022: £1.3m), of which £1.0m (2022:
£1.0m) related to other assurance services and £nil (2022: £0.3m) related
to other non-audit fee services. Other assurance services in 2023 primarily
related to control assurance reports, which are closely associated with audit
work. The external auditors were considered the most suitable supplier for
these services taking into account the alignment of these services to the work
undertaken by external audit and the firm's skill sets. The Committee also
monitors audit and non-audit services provided to non-consolidated funds and
were satisfied fees for those services did not impact auditor independence.
Further details of the fees paid to the external auditors for audit and
non-audit work carried out during the year are set out in Note 7 of the Group
financial statements.
The ratio of non-audit fees to audit and audit related assurance fees is 10%
(2022: 15%). The total of audit related assurance fees (£2.8m) and non-audit
fees (£1.0m) is £3.8m, and the ratio of these audit related assurance fees
and non-audit fees to audit fees is 53% (2022: 58%). As noted above the audit
related assurance fees are primarily fees in relation to required regulatory
reporting, where it is normal practice for the work to be performed by the
external auditor.
The Committee is satisfied that the non-audit fees do not impair KPMG's
independence.
Audit quality and materiality
The Committee places great importance on the quality of the external audit and
carries out a formal annual review of its effectiveness.
The Committee looks to the audit team's objectivity, professional scepticism,
continuing professional education and its relationship with management, all in
the context of regulatory requirements and professional standards.
Specifically:
- The Committee discussed the scope of the audit prior to its
commencement.
- The Committee reviewed the annual findings of the Audit Quality Review
team of the FRC in respect of KPMG's audits. The Committee was satisfied
insofar as the issues might be applicable to abrdn's audit, that KPMG had
proper and adequate procedures in place for our audit.
- The Committee approved a formal engagement with the auditor and agreed
its audit fee.
- The Committee Chair had regular meetings with the lead audit partner
to discuss Group developments.
- The Committee receives updates on KPMG's work and its findings and
compliance with auditor independence requirements.
- The Committee reviewed and discussed the audit findings including
audit differences prior to the approval of the financial statements. See the
discussion on materiality in the following paragraphs for more detail.
- The Committee also continued to monitor and discuss relevant external
matters in relation to KPMG as a firm.
The Committee discussed the accuracy of financial reporting with KPMG both as
regards accounting errors that would be brought to the Committee's attention
and as regards amounts that would need to be adjusted so that the financial
statements give a true and fair view. Differences can arise for many reasons
ranging from deliberate errors (fraud etc.) to good estimates that were made
at a point in time that, with the benefit of more time, could have been more
accurately measured. KPMG have set overall audit materiality at £13.7m (2022:
£14m) based on revenue (as set out in the KPMG independent auditors' report).
This is within the range in which audit opinions are conventionally thought to
be reliable. To manage the risk that aggregate uncorrected differences become
material, the Committee supported that audit testing would be performed to a
lower materiality threshold for individual reporting units. Furthermore, KPMG
agreed to draw the Committee's attention to all identified uncorrected
misstatements greater than £0.7m (2022: £0.7m). The aggregated net
difference between the reported pre-tax profit and the auditor's judgement of
pre-tax profit was less than £5m which was less than audit materiality. The
gross differences were attributable to various individual components of the
consolidated income statement and balance sheet. No audit difference was
material to any line item in either the income statement or the balance sheet.
Accordingly, the Committee did not require any adjustment to be made to the
financial statements as a result of the audit differences reported by the
external auditors.
KPMG has confirmed to the Committee that the audit complies with their
independent review procedures.
2. Risk and Capital Committee report
I am pleased to present my report as Chair of the Risk and Capital Committee
(or the "Committee" for the purpose of this report).
The Risk and Capital Committee supports the Board in providing effective
oversight and challenge of risk management and the use of capital across the
Group so as to ensure that we meet the expectations of our shareholders,
regulators, and clients.
During 2023 the Committee ensured there was a client first focus in the
management of risk and capital matters. Particular focus was placed on client
and conduct risk, and operational and financial resilience. Throughout 2023,
the Committee considered the financial and strategic considerations of the
challenging market and economic environment and deepened focus on
sustainability and geopolitical risks. The Committee continued to review and
challenge key activities undertaken by the business and advise the Board on
these, including:
- Evolution of the Enterprise Risk Management (ERM) framework.
- Delivery of the Group's ICARA and capital and liquidity.
- Conduct risks across our three businesses and implementation of the new
Consumer Duty and continued support of vulnerable customers.
- Key project delivery updates from the transformation activity across the
Group.
- The progress to strengthen anti-financial crime and anti-money
laundering activity across the Group.
- Work to mature our approach to managing cyber resilience in line with
the US National Institute of Standards and Technology (NIST) framework.
- The simplification and diversification of the business model.
- The Group's exposure to emerging risks, including client, sustainability
and geopolitical risks and events.
Furthermore, the Committee has closely monitored developments from our
regulators across the world as they have progressed the regulatory agenda,
including the areas of ESG, operational resilience and innovation in
technologies (AI).
Further details on these and other activities carried out by the Committee
during the year can be found in the report that follows.
John Devine
Chair, Risk and Capital Committee
Membership
All members of the Risk and Capital Committee are independent non-executive
Directors. For their names, the number of meetings and Committee member
attendance during 2023, please see the table on page 96.
The Committee meetings are attended by the Chief Risk Officer. Others invited
to attend on a regular basis include the Chief Executive Officer, the Chief
Financial Officer, Group General Counsel and the Chief Internal Auditor, as
well as the External auditors.
Regular private meetings of the Committee's members have been held during the
year, providing an opportunity to raise any issues or concerns with the Chair
of the Committee. The Committee's members have also held regular private
meetings with the Chief Risk Officer and access to management and subject
matter experts outside of the Committee meetings, to support them in gaining
an in-depth understanding of specific topics.
Key responsibilities
The Company's purpose results in opportunities and exposure to a range of
risks and uncertainties. Understanding and actively managing the sources and
scale of these opportunities and risks are key to fulfilling this purpose.
The role of the Committee is to provide oversight and advice to the Board, and
where appropriate, the Board of each relevant Group company on the following:
- The Group's current risk strategy, material risk exposures and their
impact on the levels and allocations of capital.
- The structure and implementation of the Group's ERM framework and its
ability to react to forward-looking issues and the changing nature of risks.
- Changes to the risk appetite framework and quantitative risk limits.
- Risk aspects of major investments, major product developments and
corporate transactions.
- Regulatory compliance across the Group.
- Specific deep dives including asset classes and the treatment of
vulnerable customers.
Further detail on the work performed in each of these areas is set out in the
report below. In addition, the Committee acts as the Board Risk Committee for
the Group's two main UK investment companies, abrdn Investment Management
Limited (aIML) and abrdn Investments Limited (aIL). Accordingly, the CEO of
these entities is also invited to attend the Committee meetings.
In carrying out its duties, the Committee is authorised by the Board to
obtain any information it requires from any Director or employee of the Group.
It is also authorised to seek, at the expense of the Group, appropriate
external professional advice whenever it considers this necessary. The
Committee did not need to take any independent advice during the year.
The Committee's work in 2023
Overview
The Committee operates a dynamic agenda and uses each meeting to consider a
range of recurring items as well as other items that are more ad hoc and/or
more forward-looking in nature. An indicative breakdown as to how the
Committee spent its time is shown below:
Diagram removed for the purposes of this announcement. However it can be
viewed in full in the pdf document
The key recurring items which were considered by the Committee are:
- The 'Views on Risk' report - this provides an independent holistic
assessment from the Chief Risk Officer of the key risks and uncertainties
faced by the Group's businesses and the monitoring against risk appetites.
- Conduct risks in each of abrdn's three main businesses and, in
particular, implementation of the Consumer Duty rules.
- Ongoing activity to enhance and develop abrdn's ERM framework, including
the process for risk identification and conformance with the ERM and Policy
framework.
- Performance of the Group's ICARA processes in accordance with IFPR,
including the firm's stress and scenario testing programme. The ICARA supports
the Committee in understanding changes to the risk profile of the Group and
the capital position over time.
Through these recurring activities the Committee was able to challenge
management's assessment of risks and oversee the key actions being taken to
manage these risks.
In addition to reviewing these recurring items, the Committee provided
oversight of a broad range of topics in 2023. This included consideration of:
Jan-Mar - Advice provided to the Remuneration Committee regarding the delivery
of performance relative to risk appetites
- Conduct risks for the Investments business
- Findings from the abrdn Investment Management business internal
controls report
- Stress testing results from the ICARA process
- Operational resilience annual self-assessment
- Review of abrdn's principal risks and risk disclosures for the Annual
report and accounts
Apr-Jun - Conduct risks for the ii business
- Consumer Duty implementation update
- Real Assets and Alternative investments
- Anti-financial crime related activity
- Trade and Transaction Reporting
Jul-Sep - Conduct risks for the Adviser business
- ICARA 2023 approach
- Digital Assets Products
- Management of IT obsolescence
Oct-Dec - ICARA process and FCA supervisory review
- The remit of the Risk & Compliance function
- Consumer Duty implementation progress
- Vulnerable Customers
- Cyber Risk and Cyber Security
- Conflicts of Interest
- 2024 Monitoring & Oversight assurance plan
After each meeting, the Committee Chair reports to the Board, summarising the
key points from the Committee's discussions and any specific recommendations
Risk exposures and risk strategy
abrdn's risk appetite framework enables the communication, understanding and
control of the types and levels of risk that the Board is willing to accept in
its pursuit of the strategy of the Group. This includes the business plan
objectives and the capital and liquidity it requires.
The Committee has received regular reporting through the 'Views on Risk'
report on each of the Group's 12 principal risks, including risk dashboards,
commentary and management information.
The Committee continued to monitor the risk appetite measures and limits
against the approved Board risk appetites, revised in Q4, 2022. The Committee
considered changes to the risk profile in view of the external environment and
ongoing transformation of the business.
Through reviewing the Views on Risk reporting, the Committee supports the
Board by monitoring risk exposures and the resilience of the capital position
under current and stressed conditions. Key items that the Committee discussed
during the year in this context included:
- The risks associated with the delivery of the business plan.
- Components of the Group's risk appetite framework.
- The process of completion of the abrdn ICARA and its results.
- Improvements to anti-financial crime processes.
- Deepening the focus on conduct risks and embedding Consumer Duty.
- The management of cyber risk and operational resilience across the
Group.
Results from regular stress testing and scenario analysis has supported the
Committee in understanding, monitoring, and in managing the capital and
liquidity risk profile of the business under stressed conditions. These
results provided the Committee with a forward-looking assessment of the
Group's financial resilience in response to potentially significant adverse
events affecting key risk exposures. The material presented to the Committee
included combined stress scenarios which looked at simultaneous stresses
impacting on economic conditions, flows and idiosyncratic factors specific to
the Group.
From reviewing the stress testing and scenario analysis results, the Committee
concluded that the Group was financially resilient and there was no
requirement for the business to reduce its risk exposures.
The Committee has also considered the results of reverse stress testing to
explore extreme but plausible events that have the potential to cause the
business to become unviable. This allowed the Committee to assess the risk of
business failure and the ability of the Group to prevent and mitigate this
risk. The reverse stress testing considered the impact of a combination of
cyber-attacks resulting in the non-viability of the Group.
From reviewing the reverse stress testing results, the Committee concluded
that the risk of the Group having to wind down due to this scenario was
remote. The Committee also noted that the Group has strengthened controls and
resilience and actively manages its relationships with third parties. The
Committee receives regular reporting on cyber risks and third party
management.
Enterprise Risk Management (ERM) framework
During the year, the business continued to evolve the ERM framework used to
identify, assess, control, and monitor the Group's risks.
The Committee has obtained assurance regarding the operation of the ERM
framework through its review of regular content within the Views on Risk
report. In particular we have used our review of the various risk and capital
dashboards, including the consolidated dashboard on key conduct risk
indicators and Board risk appetite metrics to understand the Group's risk
profile and the conformance and effectiveness of the framework in supporting
the management of these risks.
The Committee receives reporting from the Risk and Compliance function on the
results of the quarterly risk management survey of regional and functional
executives which is used to support identification of key risks facing the
business. The completion of this survey, along with subsequent discussion of
the results by the Executive Leadership Team, helps to drive greater risk
awareness and accountability. Furthermore, through reviewing the results of
the survey, the Committee has been able to ensure there is appropriate focus
on the key risks facing the business.
Exceptions-based reporting is provided to the Committee through the Views on
Risk report. This sets out any matters of significance in respect of the
results of Policy compliance reporting and actions being taken in response to
risk events. These two items also support the Committee in performing its
oversight of the ERM framework.
Regulatory developments and compliance
The Committee reviews and assesses regulatory compliance plans detailing the
planned schedule of monitoring activities to be performed by the Risk and
Compliance function to ensure there is appropriate coverage. Regular updates
on key findings from regulatory compliance activity and progress against the
plans were reported to the Committee through the Views on Risk report.
As a Committee we have closely monitored global regulatory developments to
understand and anticipate potential implications for the Group and the wider
financial services sector. In particular the Committee paid close attention to
geopolitical risks and resulting operational implications. The Committee has
also closely followed regulatory developments and implementation activity in
relation to the new Consumer Duty, operational resilience, and new
sustainability regulations globally.
Governance arrangements
The Committee has continued to refer to the work of those non-executive risk
committees operating in subsidiary companies to provide oversight and
challenge of risks within those subsidiaries. This has included the risk
committees in place for abrdn Life and Pensions Limited, Standard Life Savings
Limited, and Elevate Portfolio Services Limited.
The Committee receives updates from, and reviews the minutes of, these
committees in order to maintain awareness and oversight of risks across the
Group. In addition to the Committee reviewing reporting from the subsidiary
risk committees, arrangements also exist for the Committee's Chair to attend
these subsidiary risk committees on request.
In its capacity since January 2022 as the board risk committee to the Group's
two main UK investment firms, the Committee routinely considered the
implications of Group risk management activities for these two firms and
identified any significant risk concerns to be brought to the attention of the
respective Boards, The Chair of the two investment firm Boards has a standing
invitation to attend the Risk and Capital Committee.
During the year, the Committee provided advice to the Remuneration Committee
regarding the delivery of performance in the context of incentive packages. In
particular, the Committee considered whether performance had been delivered in
a manner that was consistent with the Group's strategy, risk appetite and
tolerances, and capital position. The provision of this advice helps to ensure
that the Group's overall remuneration practices are aligned to the business
strategy, objectives, culture and long-term interests of the Group and that
individual remuneration is consistent with, and promotes, effective risk
management.
Committee effectiveness
The Committee reviews its remit and effectiveness each year. Following the
externally facilitated review in 2022, the 2023 review was conducted
internally, on behalf of the Board, by the Company Secretary. The review
concluded that the Committee continued to operate effectively during 2023 with
no material issues or concerns raised. More information about the process
involved, and its outcomes, can be found on page 94.
3. Nomination and Governance Committee report
I am pleased to present the Nomination and Governance Committee (the
Committee) report for the year ended 31 December 2023.
The Committee's key priorities this year were to maintain effective board
governance processes while the group continued to transition to a more
sustainable business model and to support succession planning for the Board
and the executive, particularly in relation to the recruitment of our new
Chief Financial Officer and Chief Investment Officer, together with the
reconfiguration of the leadership team within the Investments business.
Additionally, we continued to oversee initiatives supporting the development
of talent, leadership, diversity, equity and inclusion. Monitoring the
embedding of the Company's values within our expectations of employee and
employer behaviours to reinforce our cultural commitments, became an important
regular agenda item. This followed the expansion of the remit of the Committee
in 2022 to include oversight of culture, recognising the contribution this
would make as an important enabler within the Company's transformation
programmes. Further detail on this can be found on pages 48 to 53.
Governance Framework
We continued to review our governance framework against the Code principles
and provisions and welcomed the revisions made to the Code in early 2024.
There were no material changes proposed to our governance framework during
2023.
Board evaluation
Following the externally-facilitated review in 2022, our 2023 Board review was
conducted internally and concluded the Board was operating effectively and
highlighted areas where further progress could be made in 2024. More
information about what the process involved, and its outcomes, can be found on
page 94.
Culture, Diversity, Equity and Inclusion
The Committee received regular updates on the work being done to implement the
Group's culture, diversity, equity and inclusion programmes. Having worked
through four distinct phases of activity regarding embedding culture change
from activation to hardwiring, we completed the formal programmatic element of
the work in 2023. Diversity, Equity and Inclusion remained a key focus and
commitment of the Board, especially given the challenge of historic
under-representation of women and minority ethnic colleagues within the fund
management industry.
While the Committee fully supported the recruitment and promotion of the
person best qualified for individual roles, it challenged the modest
deterioration in DEI progress against established targets and was reassured
that there was no systematic bias. On the positive side, we made progress in
reducing UK gender pay and median bonus gaps and achieved better DEI
representation within early careers and talent pipelines when compared with
our global workforce statistics. Within this, I was pleased our 2023 graduate
intake was 44% female, which provides a building block for a more balanced
future talent pipeline while we continue to focus on inclusive recruitment
actions to maintain this progress.
The Committee recognised there is still more to do and remains focused and
committed to holding the executive to account for delivery of tangible
actions.
There is more detail about this below and on pages 50 and 51.
In my statement last year, I reported the sad passing of Lynne Connolly in
early 2023 after living with incurable cancer for many years. Lynne headed our
DEI programmes for six years and was an inspiration to all of our colleagues.
Lynne not only worked hard to make DEI progress in abrdn, she was passionate
about working across the business community to make collective efforts. She
supported the GenAnalytics/Herald awards (and their Diversity Conference) over
the years. I reported last year that we planned to establish an award scheme
in her memory and was therefore delighted that we agreed with her family and
the organisers of the Scottish Diversity Awards that a special award would be
established in her name (The Lynne Connolly Achievement in Diversity Award).
The inaugural award was presented at the annual GenAnalytics/Herald awards
ceremony on 12 October 2023.
Talent and Leadership
The Committee received regular reports from teams involved with Talent and
Organisation Effectiveness, oversighting their plans to deliver effective
leadership, talent and performance management across the Group. During the
year we have spent particular time on the talent pipeline. It is pleasing that
since the last report the Company's approach to talent has continued to
develop and become more targeted and systematic. This was particularly
reflected in the establishment of various leadership and readiness cohorts and
the frequency and detail of the talent discussions occurring at both executive
level and with the Committee. Following the launch of a new 18-month long
future leaders programme this has already led to the role expansion/promotion
of 34% of the introductory cohort.
Board composition
The Committee, on behalf of the Board, assesses the balance of executive and
non-executive Directors, and the composition of the Board in terms of the
skills, experience, diversity and capacity needed for the Company to be
successful. These factors are important to the Board when reviewing overall
composition and during the year were reviewed by the Committee, covered in my
1:1 discussions with Directors, all of which fed in to the Board effectiveness
review.
As I have covered already in my Chairman's statement, both Stephanie Bruce,
our previous CFO and Brian McBride did not seek re-election at the 2023 Annual
General Meeting at which their significant contributions to the development of
abrdn were recognised. In October 2023 we welcomed Jason Windsor as our new
CFO. Jason joined from Persimmon plc having spent the vast majority of his
career prior to that in financial services, notably through 12 years at Aviva,
latterly as Group Chief Financial Officer.
Our policy on diversity was applied when searching for Stephanie's successor
at the long list and short list stage. Whilst we recognise the appointment of
Jason means we do not currently meet the requirement to have a woman
represented in the identified Board leadership positions prescribed by the UK
Listing Rules (Chair, Senior Independent Director, CEO or CFO) the Board, with
the support of the Committee, continues to support the principle that the
person best qualified, in the particular circumstances of the role, should
always be appointed with due regard given to the benefits of diversity,
including the full range of protected characteristics as well as cognitive
diversity. This principle applies to the search for and appointment of all
candidates, both executive and non-executive, and will continue to form an
important part of future Board succession considerations. In reviewing the
composition of the Board, the Committee regards the Committee Chair roles as
equal in importance to the designated roles, which is reflected in their
current composition.
Catherine Bradley has advised that she will not seek re-election at the
Company's Annual General Meeting on 24 April 2024 and will stand down from
that date. She will remain Chair of interactive investor (ii), a wholly owned
subsidiary of the Group. An announcement regarding her successor following
the AGM will be made in due course.
There were no other Board or Committee composition changes during the year.
Sir Douglas Flint
Chairman and Chair of the Nomination and Governance Committee
Membership
The members of the Committee are the Chairman, the Chairs of Board Committees
and the NED responsible for Employee Engagement. For their names, the number
of meetings and committee member attendance during 2023, please see the table
on page 96.
Stephen Bird, in his CEO role, is invited to Committee meetings to discuss
relevant topics, such as the roles within and membership of the ELT, talent
development and management succession.
Key responsibilities
The Committee's primary role is to support the composition and effectiveness
of the Board, and to oversee the Group's activities to strengthen its talent
pipeline. It also oversees ongoing development and implementation of the
Group's governance framework and its work to embed appropriate diversity and
inclusion policies.
The Committee's key responsibilities are:
- Identifying and recommending Directors to be appointed to the Board
and the Board Committees and ensuring relevant training is provided on
appointment and throughout their tenure.
- Reviewing and assisting in the development and implementation of
initiatives to embed the Board's desired outcomes for diversity, equity and
inclusion within the Group and to define, monitor and performance manage the
behaviours expected of all employees that will be seen to represent the
Group's culture.
- Reviewing Board diversity, skills and experience.
- Supporting the process and output of the Board's effectiveness review.
- Overseeing succession planning, and leadership and talent management
development throughout the Group.
- Considering how the Group should comply with current and upcoming
corporate governance requirements, guidance and best practice and relevant
directors' duties.
The Committee reports regularly to the Board so that all Directors can be
involved in discussing these topics as appropriate.
The Committee's work in 2023
An indicative breakdown as to how the Committee spent its time is shown below:
Jan-Mar - Reviewed compliance with the UK Corporate Governance Code for the 2022
ARA.
- Reviewed the results of the Committee Effectiveness Review.
- Reviewed progress on Talent and Leadership development activities.
- Recommended the appointment of Jason Windsor as CFO and Peter Branner
as CIO.
- Reviewed the recommendations to shareholders to re/elect Directors at
the AGM.
- Received an update on the 2022 year-end annual performance process.
- Received the results of the staff engagement survey.
Apr-Jun - Reviewed the Group's Culture and Talent Strategy plan.
- Reviewed the management structure and talent pipeline in the
Investments business following the dissolution of the Co-CEO model.
- Received an update on Diversity, Equity and Inclusion progress and
action plans.
- Reviewed ELT succession planning.
- Reviewed the Group's annual Stewardship Code Report.
Jul-Oct - Received an update on Diversity, Equity and Inclusion progress and
action plans.
- Reviewed response to the UK Corporate Governance Code Consultation.
- Received an update on ELT and critical role succession plans.
- Received a diagnostic on Group governance and opportunities.
Nov-Dec - Received an update on Diversity, Equity and Inclusion progress and
2023-24 priorities.
- Reviewed progress on Talent and Leadership development activities.
- Received the regular update on the activities of the abrdn Financial
Fairness Trust.
An indicative breakdown as to how the Committee spent its time is shown below:
Board and committee appointments and composition
The Committee keeps under constant review the skills, experience and
capabilities needed for particular Board roles. This recognises the need to
secure a pipeline of potential successors to be able to chair the Board
Committees, and also the need to plan ahead to take account of the length of
time served on the Board by the current independent non-executive Directors.
In addition, it also recognises the skills which the Board will need as it
moves forward to oversee the implementation of the Group's approved strategy
and takes account of the Group's commitments to achieve and maintain its
published Board diversity targets.
Where Board augmentation is needed, an external search consultant is then
requested to prepare a list of suitable candidates. From that, the Committee
agrees a shortlist. Following interviews with potential candidates, the
Committee makes recommendations to the Board on any proposed appointment,
subject always to the satisfactory completion of all background checks and
regulatory notifications or approvals. Part of this includes considering
existing or planned external commitments of candidates to assess their ability
to meet the necessary time commitment and whether there are any conflicts of
interest to address.
The Committee also oversees the process that recommends continuation of
appointments; members of the Committee do not, however, take part in
discussions when their own performance - or continued appointment - is being
considered.
During the year the Committee considered the appointment of Catherine Bradley
as Chair of interactive investor (ii), a wholly owned subsidiary of the Group.
As part of the appointment to the ii Board, the Committee reviewed Catherine's
time commitment and capacity, and agreed that this was complementary to her
roles on the plc Board. Catherine has advised that she will not seek
re-election at the Company's Annual General Meeting on 24 April 2024 and will
stand down from that date as a Non-Executive Director of abrdn plc. She will
remain Chair of interactive investor.
Succession planning and talent management activities
The Committee regularly reviews succession planning activities, including
identifying key person and retention risk, and talent development programmes
across the Group.
During 2023, in particular, the Committee discussed the future leadership and
talent needs of the Group and how the current programmes could be revised to
take account of the skills and expertise required by both the Board and the
ELT. These programmes are designed to recognise the changing shape of the
Group, and also to identify both the talent available within the Group and the
need/benefits of external recruitment. Diversity was considered as a core part
of these discussions, and progress was reviewed against our diversity goal to
achieve minimum 40% women on ELT succession plans.
The Talent and Change agenda is led by the CPO, in conjunction with the CEO.
The Committee spent time during 2023 building on the foundations built in 2022
and looking at the strategic priorities of the talent team to:
- Bring the best possible people into the organisation and continue to
develop our colleagues.
- Enable people to be the best they can and encouraging movement of
talent across our organisation.
- Create the best possible environment for our people to thrive.
The Committee discussed the team's progress to deliver initiatives to support
early careers, talent acquisition, future talent, core capabilities and
behaviours and effective performance management. The Committee discussed the
inclusive design of the initiatives such as early careers, talent acquisition
and future talent and considered the diversity of talent this achieved.
The Committee reviewed the effectiveness of its NED mentoring programme which
allows each NED to get to know members of the next generation of talent
through individual meetings which take place over the course of the year and
evolve based on the needs of each individual being mentored. Having received
positive feedback from both mentors and mentees, the mentoring relationships
were refreshed in 2023 to continue the Board's exposure to our top talent and
the programme will continue in 2024. In addition, we created a new talent
group focused on our Executive Succession Talent. The group is our most senior
talent group with the purpose of ensuring engagement, retention, and readiness
of our identified Executive Leadership Team successors.
During the year, the Committee reviewed the succession and contingency
planning for our top performing fund managers. In addition, 47 enterprise-wide
roles were identified which are considered as critical to delivering business
results and revenue growth. The identification of successors for these roles
will create opportunities for talent development as well as ensuring better
business continuity.
The Committee regards all of these initiatives as helpful in supporting its
oversight of the development of the Company's key talent. Continuing to focus
on those commercial roles and those that manage key client and revenue
generating relationships will remain an important focus of the Committee.
Board evaluation
The Committee has a key role in supporting the Board evaluation process.
Details of the 2023 review are on page 94.
Culture, Diversity, Equity and inclusion
The Committee and the Board spent time with both the CEO and the Chief People
Officer understanding their progress against plans to strengthen meaningful
measurement and reporting of culture across the Group, including the
introduction of the abrdn index, focusing attention on those things that shape
culture and tracking progress through our transformation.
The Board and the ELT previously defined a set of commitments which define the
Group's culture - Client First, Empowered, Ambitious and Transparent.
Information on our cultural commitments can be found on page 48. During 2023
the Committee have overseen the launch and embedding of these commitments
against a detailed plan of activities to hardwire these commitments into all
key aspects of colleague experience. We measure overall progress against our
cultural ambitions through our listening strategy and our employee engagement
online platform. Insight and progress is shared and discussed with the
Committee.
The Board's diversity statement is on page 92. The Committee has a key role in
supporting publication of this statement through its oversight of DEI
activities. DEI activities are presented at the Committee at least twice a
year to report on progress to deliver against Committee-approved framework,
action plans and initiatives. The Committee reviewed progress against the
Group's DEI framework priorities, being:
- Making diversity, equity and inclusion part of our purpose.
- Maintaining inclusive and equitable ways of working.
- Attracting and developing diverse talent.
- Ensuring colleagues feel included and valued every day.
The committee further reviewed relevant DEI trends, data points, and
regulation including:
- Internal colleague sentiment in relation to DEI themes such as data
collection and inclusive experience.
- External landscape and regulation including the FCA and PRA
consultation papers related to DEI within financial services.
- Target setting discussion in line with the UK Government-backed Parker
Review.
ESG reporting
During the year, ESG reporting in 2023 - including the UK Stewardship report,
and the Sustainability and TCFD report - was predominantly considered by the
Board and the Audit Committee. With the publication of the Company's Climate
Transition Plan expected in the first half of 2024, the Committee's role and
remit of how it can best support the Board's oversight of the delivery of the
Company's commitments and the reporting thereof, will be reviewed.
Committee effectiveness
The effectiveness review was conducted internally in 2023 following the
external review undertaken in 2022.
Details of the 2023 review are on page 94 and reflect the themes raised
across the Board and its Committees
4. Directors' remuneration report
Remuneration Committee Chair's statement
This report sets out what the Directors of abrdn were paid in 2023 together
with an explanation of how the Remuneration Committee reached its
recommendations.
Where tables and charts in this report have been audited by KPMG LLP we have
marked them as 'audited' for clarity.
The report is structured in the following sections and corresponding page
numbers:
Page
At a glance - 2023 remuneration outcomes 119
At a glance - 2024 Policy implementation in 2024 120
Directors' remuneration in 2023 121
Shareholdings and outstanding share awards 124
Executive Directors' remuneration in context 128
Remuneration for non-executive Directors and the Chairman 131
The Remuneration Committee 133
Approval
The Directors' remuneration report was approved by the Board and signed on its
behalf by:
Jonathan Asquith
Chair of the Remuneration Committee
26 February 2024
Dear shareholder
On behalf of the Board I am pleased to present the Directors' remuneration
report for the year ended 31 December 2023.
Introduction
At the 2023 AGM our directors' remuneration report for 2022 received a 93%
vote in favour and our new Directors' remuneration policy (Policy) was
approved with a 94% vote in favour. I would like to thank all shareholders for
your continued strong level of support and constructive dialogue on
remuneration matters, particularly in the period leading up to the 2023 AGM in
respect of the Policy.
2023 was another year of significant change for abrdn. While the headwinds
facing active asset managers only grew stronger, we reshaped our footprint and
took steps to reduce complexity. As set out in the Chairman's statement and
the Chief Executive Officer's review, a number of strategic actions were taken
to streamline our businesses and set up a platform for growth. These included
reducing costs through the consolidation and closure of sub-scale funds,
investing in technology capabilities and marketing resources, selling our US
Private Equity franchise, securing the agreement to sell our European Private
Equity franchise and acquiring the healthcare fund management capabilities of
Tekla Capital Management, increasing our holding of closed-end funds.
In a year of continued challenge for the active investment industry, flows and
investment performance were disappointing in our Investments business, while
rising profits in Adviser and ii were insufficient to counter the decline in
revenues in Investments, despite strong cost-cutting in the area. As a result,
financial performance metrics came out towards the bottom end of the range.
There were better outcomes against non-financial targets, which measured
progress on strategic actions taken by management to set the stage for growth
while maintaining our focus on our people, culture and customers as we
transform our business and continue our efforts to advance sustainable
investing and limit our own climate impact.
New Chief Financial Officer's remuneration
We were delighted to welcome Jason Windsor to the Board and the executive team
on his appointment as Chief Financial Officer on 23 October 2023. Jason is a
highly experienced Chief Financial Officer bringing demonstrable expertise and
significant knowledge of our industry from over a decade within Aviva plc,
latterly as Group Chief Financial Officer. His deep knowledge and experience
in our sector together with his broader financial markets experience provide
an ideal complement to the capabilities of the existing executive team.
The remuneration arrangements for Jason Windsor's appointment and Stephanie
Bruce's exit were agreed by the Remuneration Committee in conformity with the
Policy agreed at the 2023 AGM. As detailed in the announcement on 27 July
2023, Jason's remuneration package comprises:
- A base salary of £675,000 per annum.
- A pension allowance of 18% of salary aligned to the maximum
contribution available to abrdn's UK-based employees and other benefits in
line with our Policy.
- An Annual Bonus up to a maximum of 150% of salary subject to
performance (with 50% of any bonus earned being deferred for three years into
abrdn shares, which will vest in three equal annual tranches). The award for
performance year 2023 was prorated to reflect his joining the Company part way
through the performance year.
- An annual Long Term Incentive award of 225% of salary (final
vesting percentage is based on stretching financial and shareholder return
targets over the three-year performance period and the award is subject to a
further two-year holding period after vesting).
The structure and quantum of the Chief Financial Officer's remuneration
package is consistent with our Policy and falls below the maximum levels
permitted under the Policy. Jason's package was calibrated in the context of
an assessment of what it would take to attract the required skills and
expertise from the market (utilising benchmarking data for similar roles
across FTSE Financial Services peer group companies), the expectations of
other candidates put forward for the role and Jason's previous remuneration
packages.
The Remuneration Committee is confident that the remuneration package, which
was shared with the market at the time, has been set at a level that takes
into account the skills and experience that Jason brings.
In line with our Policy and standard practice, Jason also received buy-out
awards to compensate for remuneration he forfeited on leaving his previous
employer. All such awards reflect the value and structure of awards foregone,
including the vesting and/or holding periods. Where relevant, these awards
include abrdn performance conditions enabling immediate alignment to abrdn
performance. Further details are set out on pages 126 and 127.
How our Policy was applied in 2023
Strategic advances in 2023 to enable a leaner Investments business, generate
capacity for Adviser clients and generate organic customer growth in ii were
balanced by shortfalls in the Investments business's financial performance as
the macro environment continued to be challenging for abrdn. With 35% of the
annual bonus and 100% of the LTIP driven directly by profit and total
shareholder return measures, low rewards for executive Directors reflected the
low returns for shareholders balanced by a recognition of the progress made in
developing ii and Adviser and in addressing cost issues in Investments.
In this context, the Remuneration Committee is comfortable that the Policy
operated as intended.
Annual bonus (detail on pages 121 to 123)
Financial performance (65%)
Financial targets were set with reference to the Board-approved plan including
measures on net flows, investment performance and adjusted operating profit
before tax. Against the backdrop of a 'higher for longer' rate environment and
continued significant macroeconomic and geopolitical headwinds, financial
performance was subdued.
Investment performance: performance for fixed income, quantitative,
alternative investment strategies and liquidity remained strong. However,
Equities were impacted by our AUM bias towards Asia and Emerging Markets and
the quality growth style. 2023 was also challenging for multi-asset strategies
and real estate valuations experienced early on some of the sharpest
corrections for many years and impacted returns over all periods. Overall,
performance did not meet the threshold required for a payout under the annual
bonus plan.
Net flows: continued challenging asset allocation trends had an adverse impact
on flows, with Institutional and Retail Wealth experiencing lower gross flows
while net flows improved in Insurance Partners. Although Adviser and Personal
Wealth proved more resilient, market conditions and cost of living pressures
contributed to net outflows there too, while ii net inflows remained strong
despite a subdued retail market. In aggregate, performance on net flows fell
below the threshold required to qualify for payouts under the annual bonus
plan.
Adjusted operating profit before tax: this came in 5% lower than the prior
year, at £249m. ii and the Adviser business increased profitability, with ii
including the benefit of a full 12 months' contribution compared to 7 months
in 2022. However, this was offset by reduced revenue in the Investments
business reflecting net outflows and adverse market conditions. The overall
outcome was between threshold and target.
The outcomes for the financial element of the 2023 annual bonus are summarised
below.
Financial performance measure Weighting 2023 outcome
(% of total scorecard) (% of total scorecard)
Investment performance 15% 0%
Net flows 15% 0%
Adjusted operating profit before tax 35% 9.42%
This resulted in an overall assessment of 9.42% out of a maximum of 65% on
financial measures.
Non-financial performance (35%)
In 2023, we assessed non-financial performance against three baskets of
measures: Strategic (three measures aligned to each of our businesses), ESG
(comprising Environment and Social categories) and Customer.
Strategic: the Investments business closed or merged over 100 funds, sold the
US Private Equity franchise and delivered savings of £102m, generating a
leaner business although revenues still fell faster than costs. Adviser
delivered its largest and most complex technology upgrade, despite early
implementation headwinds, enhancing our platform proposition in advance of the
impending launch of adviserOS in 2024. ii enriched its offering in the year
with its pilot of ii community, the launch of Investor Essentials and Pension
Essentials, alongside further expansion in its SIPP programme and a new
approach to brand development, increasing customers by 4% organic growth and
gaining market share despite subdued market conditions. ii also launched new
website infrastructure in January 2023, modernising the design and improving
user experience. The Remuneration Committee took into account these
significant strategic actions to better position the businesses for future
growth and determined the final outcome of 8% out of 10%.
Environment: targeted engagement continued with our largest financed emitters
(162 resolutions voted on in 2023). Tracking at a 41% carbon intensity
reduction in in-scope public market portfolios compared to our 2019 baseline
(25% reduction in in-scope real estate portfolio), we are on track for our
target of a 50% reduction by 2030. For our own operational net zero, we remain
well-placed to meet our long-term net zero carbon emission target. The
Remuneration Committee took into account more than 5 separate qualitative and
quantitative performance indicators in agreeing the outcome at 5% out of 5%.
Social/people: engagement levels held steady despite continued large-scale
transformation and organisational change. Sense of inclusion, the nature of
each individual's work and personal motivation levels all continue to score
well, although we recognise that there is more work to do. 2023 saw noteworthy
steps taken to transform the culture of abrdn, with the culture programme work
completing and the final phase of our 'Commitments' work delivered. DEI levers
of change held steady. Taking into account more than 15 qualitative and
quantitative performance indicators and noting minimal traction on employee
engagement levels, the Remuneration Committee determined the final outcome of
6% out of 10%.
Customer: in the Investments business, strong relationships with clients
persisted with independent client survey feedback highlighting good client
service and account management. In Adviser, delivering the recent technology
release for the Wrap platform disrupted service for clients in the short term,
although our 'Return to Green' activity in H2 2023 saw service levels and
client satisfaction improve. For ii, the Remuneration Committee recognised the
organic growth in customer numbers, the increase in market share and the
continued positive feedback from customers regarding their experience with ii.
Taking into account more than 20 qualitative and quantitative performance
indicators, the Remuneration Committee determined the final outcome of 7.5%
out of 10%.
Considering all components together, this resulted in an overall assessment of
26.5% out of a maximum of 35% on non-financial measures.
Remuneration Committee assessment
To assess whether the outcomes generated by the scorecard were fair in the
broader performance and risk context, the Remuneration Committee reviewed the
individual components which contributed to the delivery of this performance
and the alignment of scorecard outcomes with the experience of a range of
stakeholders. Further components the Remuneration Committee considered are set
out on page 123.
In particular, the Remuneration Committee carefully considered the experience
of employees and how executive Director incentive outcomes compared to
employee incentive outcomes. External market conditions have been challenging
for abrdn in recent years and this has heavily impacted both executive
Director and employee pay outcomes. By design, there are differences in the
priorities which drive how these two populations are remunerated; as a result,
their relative experiences can be different.
Executive Directors' annual bonus levels reduced from 80.5% (2021) to 30.25%
(2022) of maximum opportunity. The increase to 35.92% for 2023 represents an
important but limited reversal of that move, recognising the progress that the
executive Directors are making in reshaping abrdn to cope with the challenges
facing the company and the wider asset management industry.
For key staff below Board level, we have implemented various other reward
changes, including granting restricted stock awards and increasing salaries,
which have not been awarded to our executive Directors. In this context, the
Remuneration Committee concluded that executive Director outcomes reflected
the overall employee experience.
The Remuneration Committee concluded that the outcomes delivered by the
scorecard were a fair and balanced assessment of performance and no adjustment
to them was needed or made.
Summarising these results, the Remuneration Committee approved the following
outcomes based on performance against targets:
Executive Director Final outcome 2023 total bonus
(% of max)
(£000s)
Stephen Bird 35.92% 786
Jason Windsor 35.92% 70(1)
Stephanie Bruce 35.92% 103(2)
1. The 2023 total bonus for Jason Windsor is prorated to reflect his
appointment to the Board effective 23 October 2023.
2. The 2023 total bonus for Stephanie Bruce is prorated to reflect her
stepping down from the Board effective 11 May 2023.
Long-term incentives (detail on pages 123 to 127)
Vesting of the 2021 Long-Term Incentive Plan (LTIP) award granted to Stephen
Bird and Stephanie Bruce is based on performance over the three-year period
ending on 31 December 2023. A proportion of Jason Windsor's 2021 Long-Term
Incentive Buyout is also subject to the performance conditions of the 2021
LTIP (see pages 126 and 127 for more detail). After review, the Remuneration
Committee concluded that the performance for the Adjusted Diluted Capital
Generation per share metric was between threshold and target and the overall
award should vest at 18.75%.
Policy implementation in 2024
Following a review, no change has been made to salaries for the executive
Directors or fees for the non-executives for 2024.
In line with previous practice, we will continue to set stretch targets for
the annual bonus and the LTIP to ensure that the maximum opportunity will only
be earned for exceptional performance.
The scorecard for the 2024 annual bonus is detailed on page 120 and the
targets, which are commercially sensitive, will be disclosed at the end of
this performance year in the 2024 Annual report and accounts. The scorecard
continues to focus the majority of the opportunity on the achievement of
financial targets as set out in our Policy (65%), with the balance measured
against non-financial performance including Strategic, ESG and Customer
objectives. The Remuneration Committee has agreed a Strategic measure and a
basket of key indicators in the other areas which will allow a rounded
assessment of performance to be made. Details on these metrics, including how
the Remuneration Committee assessed performance against them, will be
disclosed retrospectively.
As outlined in the Chairman's statement, the Group is updating one of its key
performance indicators moving forward, from adjusted capital generation (ACG)
to net capital generation (NCG).
The Remuneration Committee reviewed the impact of this change and agreed that
the 2024 LTIP will consist of two equally weighted targets, Net Capital
Generation per share Compound Annual Growth Rate (NCG CAGR) and Relative TSR.
The new metric of NCG CAGR more closely aligns to the dividend paying
capability of the Company over the long term, compared to ACG CAGR, and
incentivises the phasing out of restructuring costs in the long term as
targeted in the Board-approved business plan. NCG is defined as ACG less
restructuring and corporate costs (net of tax). The three-year NCG per share
target range has been set at 15%-25% CAGR, which is aligned with the business
plan agreed with the Board. The annual development of this measure is not
linear and target ranges for any future grants will be calibrated to allow for
this. The Remuneration Committee also reviewed the TSR peer group for the
Relative TSR metric. Details of the 2024 LTIP grant can be found on page 120.
During the year, the Remuneration Committee remained mindful of the debate and
discussions led by the Capital Markets Industry Taskforce on resetting the
approach to executive pay for UK listed firms. We continue to welcome the
debate on the use of restricted share awards and the promised review of the
Investment Association Principles of Remuneration. The Remuneration Committee
will review any future guidelines and consider whether there is a beneficial
role for restricted share awards in the abrdn remuneration structure.
To help you navigate the report effectively, I would like to draw your
attention to the sections on pages 119 and 120 which summarise both the
outcomes for 2023 and how the Policy will be implemented in 2024. Further
detailed information is then set out in the rear section of the report for
your reference as required.
On behalf of the Board, I invite you to read our remuneration report. As
always, the Remuneration Committee and I are open to hearing your views on
this year's report and our Policy in general.
At a glance - 2023 remuneration outcomes
Outcome of performance measures ending in the financial year
The following charts show performance against the target range for the annual
bonus and commentary on the 2021-2023 LTIP. Further detail on the assessment
of the performance conditions can be found on pages 121 to 123.{graph here}
graph here}
1. % AUM above benchmark average of three-year for all asset classes.
2. Excl. cash/liquidity and Insurance.
2023 annual bonus scorecard outcome
The following table sets out the final outcome for the 2023 annual bonus. A
detailed breakdown of the assessment of performance conditions can be found on
pages 121 to 123.
Bonus Scorecard Outcome Total Bonus Outcome
Financial metrics (minimum 65%) Non-financial metrics (maximum 35%) Board approved outcome Salary received in year Maximum opportunity Total award Total award
(% of maximum)
(% of salary)
(% of salary)
(£000s) (£000s)
Stephen Bird 9.42% 26.5% 35.92% 875 250% 89.80% 786
Jason Windsor(1) 130 150% 53.88% 70
Stephanie Bruce(2) 192 150% 53.88% 103
1. Jason Windsor was appointed to the Board effective 23 October 2023. The
salary received in year and total 2023 annual bonus awarded value is prorated
to reflect the proportion of the 2023 performance year for which he served at
abrdn. For further information, see pages 121 to 127.
2. Stephanie Bruce stepped down from the Board effective 11 May 2023. The
salary received in year and total 2023 annual bonus awarded value is prorated
to reflect the proportion of the 2023 performance year for which she served at
abrdn. For further information, see pages 121 to 126.
2021-2023 LTIP outcome
The performance period for the 2021-2023 LTIP concluded on 31 December 2023.
Performance was assessed against two measures: Adjusted Diluted Capital
Generation per share (CAGR) and Relative TSR performance. The performance for
the Adjusted Diluted Capital Generation per share (CAGR) metric fell between
threshold and target and, therefore, the overall award will vest at 18.75%.
Detail of the performance assessment for the 2021-2023 LTIP can be found on
page 123.
Total remuneration outcomes in 2023
The chart below shows the remuneration outcomes for the CEO in 2023 based on
performance compared to the maximum opportunity.
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At a glance - 2024 Policy implementation
This section sets out how we propose to implement our Policy in 2024. The full
Policy, which remains unchanged for 2024 from the Policy approved by
shareholders at the 2023 AGM, including detail on how it addresses the
principles as set out in the 2018 Corporate Governance Code, can be found in
the 2022 Annual report and accounts on pages 120 - 130.
Element of remuneration Key features of operation 2024 implementation
Salary
Core reward for undertaking the role Normally reviewed annually, taking into account a range of internal and Stephen Bird: £875,000
external factors.
Jason Windsor: £675,000
Pension
Competitive retirement benefit Aligned to the current maximum employer contribution available to the UK wider Stephen Bird: 18% of salary
workforce (18% of salary).
Jason Windsor 18% of salary
Benefits
Competitive benefits Includes (i) private healthcare; (ii) death in service protection (iii) income No change to benefits provision
protection (iv) reimbursement of membership fees of professional bodies; and
(v) eligibility for the all employee share plan.
Annual bonus
To reward the delivery of the Company's business plan Annual performance assessed against a range of key financial and non-financial No change to quantum
measures. At least 65% will be based on financial measures. At least 50%
deferred into shares vesting in equal tranches over a three-year period. Stephen Bird: 250% of salary
Awards are subject to malus and clawback terms. Jason Windsor: 150% of salary
See below for 2024 performance conditions
Long-term incentive plan
To align with our shareholders and reward the delivery of long-term growth
Awards are subject to a three-year performance period, with a subsequent Stephen Bird: 350% of salary
two-year holding period. Dividend equivalents accrue over the performance and
holding period. Jason Windsor: 225% of salary
Awards are subject to two equally weighted performance metrics linked to 2024 performance metrics are set out below
long-term strategic priorities and the creation of long-term shareholder
value.
Awards are subject to malus and clawback terms.
Shareholding requirements Executive Directors are required to build up a substantial interest in Company Stephen Bird: 350% of salary
shares. The share ownership policy for executive Directors requires shares up
to the value of the shareholding requirement to be held for a period of two Jason Windsor: 225% of salary
years following departure from the Board.
Performance conditions for 2024 annual bonus
Financial (65% weighting) Investment performance (15%), Adjusted operating profit (35%) and Net flows
(15%)
Non-financial (35% weighting) Performance against Customer (10%) and ESG objectives (incorporating people
engagement and diversity metrics, and environmental measures) (15%) and
progress on a key strategic initiative (10%)
Due to commercial sensitivity, actual targets and ranges will be disclosed at
the end of the performance period. The Remuneration Committee retains an
appropriate level of flexibility to apply discretion to ensure that
remuneration outcomes reflect a holistic view of overall performance,
including conduct and culture.
Performance conditions for 2024 Long-term incentive plan
Target range(1)
Net Capital Generation per share (50% weighting)(2) 15% - 25% CAGR
Relative TSR (50% weighting)(3) Equal to median - equal to upper quartile
1. Straight line vesting occurs between threshold and maximum. 25% vesting
for threshold performance.
2. See the Remuneration Committee Chair's letter on page 118 for an
explanation of the Net Capital Generation per share (CAGR) metric.
3. The peer group is made up of the following global
asset management peers: AJ Bell, Alliance Bernstein, Amundi, Ashmore Group,
DWS Group, Hargreaves Lansdown, IntegraFin Holdings, Janus Henderson Group,
Jupiter Fund Management, Liontrust Asset Management, M&G, Ninety One,
Quilter, Rathbones Group, Schroders and St James's Place.
Directors' remuneration in 2023
This section reports remuneration awarded and paid at the end of 2023 in
further detail, including payments to past Directors.
Single total figure of remuneration - executive Directors (audited)
The following table sets out the single total figure of remuneration for each
of the individuals who served as an executive Director at any time during the
financial year ending 31 December 2023:
Executive Basic salary for year Taxable benefits in year Pension allowance paid in year Bonus paid in cash Bonus deferred £000s(2) LTIP with period ending 2019 EIP Buyout Awards Total Total fixed Total variable
£000s
£000s(1)
£000s
£000s
in the year
for the year
Directors
£000s(3) £000s £000s
£000s £000s £000s
Stephen Bird 2023 875 1 158 393 393 323 - - 2,143 1,034 1,109
2022 875 1 158 331 331 - - - 1,696 1,034 662
Jason Windsor(4) 2023 130 - 23 35 35 4 - 712 939 153 786
Stephanie Bruce(5) 2023 192 - 34 51.5 51.5 -(6) - - 329 226 103
2022 538 1 97 122 122 791 (139) - 1,532 636 896
1. This includes the taxable value of all benefits
paid in respect of the relevant year. Included for 2023 are medical premiums
at a cost to the group of £606 per annum for executive Directors.
2. This represents 50% of the total bonus award and is
delivered in shares which will vest in equal tranches over a three-year
period.
3. The values reported for 2023 are the market values
of the LTIP awards that will vest, at 18.75% of maximum, based on the
three-year performance measurement period ending on 31 December 2023. The
share price at the date of vesting is not known at the date of publication of
this report. Therefore, the number of abrdn plc shares that will vest
(excluding dividend equivalent shares accrued) has been multiplied by the
average share price over the quarter ending 31 December 2023 (166.52 pence).
This amount will be restated in the 2024 Annual report and accounts once the
share price at date of vesting is known.
4. Jason Windsor was appointed to the Board effective
23 October 2023. All figures reflect amounts paid/awarded since the date of
appointment. The value of buyout awards above represents the buyout awards
granted without performance conditions. The value of the LTIP with period
ending in the year relates to the proportion of his 2021 Long-Term Incentive
Buyout award subject to abrdn performance conditions. For further information,
see pages 126 and 127.
5. Stephanie Bruce stepped down from the Board
effective 11 May 2023. All figures reflect amounts paid/awarded until this
point. See pages 123 and 124 for further information on payments made to
Stephanie Bruce as a past director.
6. Details of the 2021-2023 LTIP outturn for Stephanie
Bruce are presented on page 124.
Base Salary (audited)
There was no change to the base salaries of executive Directors in 2023.
Pension (audited)
Under the Policy approved at the 2023 AGM, the executive Directors received a
cash allowance in lieu of pension contribution of 18% of base salary.
Annual Bonus Plan
The following section contains details on the targets and the Remuneration
Committee's assessment of outcomes for the period 1 January 2023 to 31
December 2023 against each of the elements of the executive Director bonus
scorecard.
Financial performance metrics - 65% of total scorecard outcome
Weighting Threshold Stretch Actual Result
(% of overall scorecard)
(25% of maximum)
(100% of maximum)
(% of overall outcome)(1)
Investment performance - % AUM above benchmark average of three-year and 15% 50% 70% 42% 0%
five-year for all asset classes
Core Investment net flows(2) (£bn) 9.75% (8.4) 2.8 (14.1) 0%
UK Savings & Wealth (Adviser & ii) net flows (£bn) 5.25% 3.5 9.7 0.7 0%
Adjusted operating profit before tax(3) (£m) 35% 247 324 249 9.42%
1. Straight-line vesting between threshold and stretch
targets.
2. Excluding cash/liquidity and Insurance.
3. Targets and actual outcome exclude US Private
Equity franchise for Q4 2023 in line with completion of sale of the US Private
Equity franchise in Q4 2023.
Category Highlights from assessment Result
(% of overall outcome)
Strategic (10%): There were a number of strategic initiatives across our three businesses that 8%
were critical to the long-term success of the Group. Three key strategic
Achievement of key strategic actions across our businesses measures were chosen; one for each of our businesses.
- Investments: through a number of actions to simplify the business,
including closing or merging over 100 funds and the sale of our US Private
Equity franchise, we went beyond our £75m cost reduction target to deliver
savings of £102m.
- Adviser: delivered the largest and most advanced technology release ever
completed on the Wrap platform., setting us up to further enhance our platform
proposition with the impending launch of adviserOS in 2024.
- ii: excluding recently migrated customers, customer numbers of ii
increased by 4%, despite a subdued market. ii's market share also increased
over 2023 and its proposition was significantly enhanced with the launch of
Investor Essentials, Pension Essentials and the pilot of ii community. ii also
launched new website infrastructure in January 2023, modernising the design
and improving user experience.
Environment (5%): The environmental measures we selected focused on the important contribution 5%
our Company has to make as a global institutional investor and a responsible
Progress towards portfolio decarbonisation and Operational Net Zero targets Company. The Remuneration Committee considered more than five quantitative and
qualitative measures. Our Sustainability and TCFD report, available on our
website, contains further detail on our performance in this area. Key factors
in the determination were:
- Targeted engagement continued with our largest financed emitters and
encouraged improvement through 162 resolutions voted on in 2023.
- We continue to enhance the tools to measure carbon intensity and in 2023,
we were tracking at a 41% carbon intensity reduction in in-scope public market
portfolios compared to our 2019 baseline (25% reduction in in-scope real
estate portfolio), remaining on track for our target of a 50% reduction versus
our 2019 baseline by 2030.
- For our own operational net zero, we remain well on track to meet our
long-term net zero carbon emission target of 50% less than our 2018 baseline
by 2025, with a 69% reduction versus our 2018 baseline in 2023.
Social/people (10%): Noteworthy steps taken to transform the culture at abrdn, abrdn is a people business and we believe that in order to succeed it needs to 6%
maintenance of engagement score and sustained progress on gender embed diversity, equity and inclusion within a strong and shared cultural
representation and ethnicity diversity targets framework, enabling us to continue to attract and maintain an engaged and
diverse talent base. The Remuneration Committee considered more than 15
quantitative and additional qualitative measures, including data points
relating to gender representation across the workforce, employee engagement,
gender and ethnicity data and new hire statistics.
- Despite difficult market conditions and continued large-scale
transformation and organisational change, our People engagement levels held
steady at 54% (2022: 50%). We recognise that there is still more to do to
improve employee engagement levels in our business.
- 2023 saw noteworthy steps taken to transform the culture at abrdn, with
the culture programme work completing and the final phase of our 'Commitments'
work delivered.
- Our Gender Pay Gap has been reduced for the sixth consecutive year.
- Females and individuals identifying as minority ethnic in total new hires
both increased year on year to 44% and 9% respectively.
- Maintained strong scores on employee perceptions of abrdn as an
inclusive organisation and whether people from diverse backgrounds can succeed
at abrdn.
Category Highlights from assessment Result
(% of overall outcome)
Customer (10%): Our three-business model gives us a diverse customer base, from institutional 7.5%
to adviser to retail. We measure our success in delivering for our customers
Measured across the Adviser, ii and Investments businesses with reference to business-specific quantitative and qualitative metrics that
holistically capture the experience of our different client groups. The
Remuneration Committee considered more than 20 quantitative and qualitative
measures from internal and external sources. Key factors in the determination
were:
- In the Investments business, good relationships with clients persisted
with independent client survey feedback highlighting good client service and
account management. Client relationship meetings with Phoenix highlighted
transparency, trust and responsiveness via high-quality resolutions as key
attributes of the partnership.
- In Adviser, our 'Return to Green' activity in H2 2023 saw service levels
and client satisfaction improve from the early disruption caused by the
technology upgrade implementation headwinds. AdviserAsset, which provides an
external view of our client service and user experience, rated Elevate and
Wrap as Platinum for the 6th and 9th consecutive years respectively.
- In ii, there was an increase in customer numbers, an increase in market
share and continued positive feedback from customers regarding their customer
experience with ii.
In considering whether the bonus outcomes derived from the scorecards were
fair in the context of the overall results, the Remuneration Committee took
into account the feedback received from the Audit Committee and the Risk and
Capital Committee on material accounting, reporting and disclosure matters and
the management of risk within the business.
2021-2023 LTIP outcome
The following table details the targets and assessment of outcomes for the
2021-2023 LTIP. The performance period for this award concluded on 31 December
2023. The Remuneration Committee concluded that the performance for the
Adjusted Diluted Capital Generation per share (CAGR) metric was between
threshold and target and, therefore, the overall award will vest at 18.75%.
Threshold (25%) Maximum (100%) Actual outcome % vesting
Adjusted Diluted Capital Generation per share (CAGR) (50%) 8% 20% 10% 37.5%
Relative TSR (50%)(1) Median Upper quartile Below median 0%
1. The peer group was made up of the following global
peers: Man Group, Ameriprise, M&G, Affiliated Managers, Alliance
Bernstein, Franklin Resources, SEI Investments, DWS Group, Amundi, Janus
Henderson Group, Invesco, Schroders, T Rowe Price, St James' Place, Quilter,
Ashmore and Jupiter Fund Management.
As a result of the above outcomes, details of the awards that vested are as follows:
Executive Number of shares granted Proportion of award vesting Number of shares vesting(1) Value of vested shares (£)(2)
Directors
Stephen Bird 1,033,650 18.75% 193,809 322,731
Jason Windsor(3) 11,530(4) 18.75% 2,162 3,600
1. Excluding dividend equivalents.
2. Based on average abrdn plc share price over the quarter ending 31
December 2023 (166.52). The amount attributable to share price appreciation is
£nil.
3. Values for Jason Windsor reflect the proportion of his 2021 Long-Term
Incentive Buyout award subject to abrdn performance conditions. See pages 126
and 127 for further information.
4. Number of shares granted to Jason Windsor is the number of abrdn plc
shares granted under his 2021 Long-Term Incentive Buyout, which is 183,024,
multiplied by the proportion of his 2021 Long-Term Incentive Buyout subject to
abrdn performance conditions, which is 6.3%. See pages 126 and 127 for further
information.
Payments to past Directors and payments for loss of office (audited)
Payments made to former executive Directors that have not been previously
reported elsewhere are reported if they are in excess of £20,000.
Stephanie Bruce stepped down from the Board effective 11 May 2023 and went on
garden leave effective 11 May 2023 to her termination date of 31 December
2023. Between 11 May 2023 and 31 December 2023, Stephanie received salary,
pension allowance and taxable benefits, totalling £409,218.
The Company has also made a payment in lieu of notice of basic salary, pension
allowance and taxable benefits, in monthly instalments (subject to mitigation)
over the remainder of Stephanie Bruce's contract (being a further two months
and eight days to 8 March 2024). The final monthly instalment is due to be
paid in March 2024. The total of the three payments will be £121,071.
Stephanie Bruce was entitled to a capped contribution towards legal fees
incurred in connection with her exit arrangements. The contribution towards
legal fees did not exceed £20,000.
The table below summarises total payments to Stephanie Bruce as a past
director for 2023:
Payment element Amount (£)
Salary, pension allowance and taxable benefits whilst on garden leave 409,218
Payment in lieu of notice of basic salary, pension allowance and taxable 121,071
benefits
2021 - 2023 LTIP 113,417(1)
1 Based on average abrdn plc share price over the quarter
ending 31 December 2023 (166.52 pence). The amount attributable to share price
appreciation is £nil.
For Stephanie's outstanding incentive awards, in accordance with the relevant
plan rules, the following treatment applied:
- Unvested deferred bonus awards (including the pro-rated 2023 bonus) will
continue to vest on normal vesting dates and will remain subject to malus and
clawback.
- Unvested LTIP awards will continue to vest on normal vesting dates and
will remain subject to the satisfaction of the relevant performance conditions
(measured over the full performance period), holding periods and malus and
clawback. All LTIP awards will be prorated based on the proportion of the
performance period completed to Stephanie's termination date.
- The Company's post-cessation shareholding requirements apply for a
two-year period from Stephanie's date of departure from the Board on 11 May
2023.
Shareholdings and outstanding share awards
This section reports our executive Directors' interests in shares.
Directors' interests in shares (audited)
Our shareholding requirements for executive Directors are detailed on page
120. The Policy requires executive Directors to accumulate and maintain a
material long-term investment in abrdn plc shares. The Remuneration Committee
reviews progress against the requirements annually. Personal investment
strategies (such as hedging arrangements) are not permitted for the purposes
of reducing the economic exposure arising from the shareholding requirements.
The following table shows the total number of abrdn plc shares held by the
executive Directors and their connected persons:
Unvested shares
Total number of shares owned at 1 January 2023 Shares acquired during the period 1 January 2023 and 31 December 2023 Total shares owned as at 31 December 2023 Options exercised during the period 1 January 2023 and 31 December 2023 Vested but unexercised share options Subject to performance conditions(1) Not subject to performance conditions(2) Shares lapsed(3)
Stephen Bird 782,355 - 782,355 - 190,610 3,992,940 532,499 945,765
Jason Windsor - - - - - 1,320,515 450,611 -
Stephanie Bruce(4) 606,633 41,757 648,390 81,879 9,496 879,438 234,742 1,092,457
1. Includes: 2021, 2022 and 2023 LTIP awards for Stephen Bird and Stephanie
Bruce (awards subject to performance targets over three-year periods) and
Long-Term Incentive Buyout awards for Jason Windsor (see details on pages 126
and 127). The number of share options presented under awards subject to
performance conditions exclude shares to be awarded in lieu of dividend
equivalents.
2. Includes: deferred bonus awards for Stephen Bird and Stephanie Bruce and
Bonus Award Buyouts for Jason Windsor. The number of share options presented
under awards not subject to performance conditions include shares to be
awarded in lieu of dividend equivalents.
3. For Stephen Bird, the share options lapsed relate to the outcome of the
2020 LTIP award - see page 109 of the 2022 Annual report and accounts. For
Stephanie Bruce, the share options lapsed relate to the outcome of the 2020
LTIP award, the 2019 Executive Incentive Plan (EIP) and the prorating of her
2022 and 2023 LTIP awards for time employed during the performance periods.
4. On 30 November 2023, Stephanie Bruce exercised the second tranche of the
deferred portion of her 2020 annual bonus award and the first tranche of the
deferred portion of her 2021 annual bonus award. The vested but unexercised
share options for Stephanie are the share options under the first tranche of
her 2019 EIP award, prorated for the vesting outcome - see page 111 of the
2022 Annual report and accounts.
The following table shows the number of qualifying awards included in
assessing achievement towards the shareholding requirement, as at 31 December
2023. The total Qualifying holding includes shares held outright (which derive
from vested and exercised awards plus any purchased shares) as well as
Qualifying unvested or unexercised awards. Purchased shares are valued at the
higher of the cost of the purchase as disclosed in RNS announcements or the
closing market price on 31 December 2023. Qualifying unvested or unexercised
awards include 50% of the value (as a proxy for the payment of tax due on the
exercise of the awards) of awards not subject to performance conditions and
which have not yet vested.
Qualifying unvested or unexercised awards
Number of shares under the deferred share plan which are not subject to Number of shares under option under long-term incentive plans which are no Total Qualifying holding (shares owned from table above and 50% of Qualifying Value of holding(2) Shareholding requirement Basic Total of the value of shares owned and 50% of the value of qualifying awards Shareholding requirement met?
performance conditions longer subject to performance conditions unvested or unexercised awards)(1)
(as % salary)
salary at 31 December 2023 as a % of salary
Stephen Bird 723,109 - 1,143,910 £2,408,664 350% £875,000 275% In progress
Jason Windsor 450,611 - 225,306 £402,508 225% £675,000 60% In progress
Stephanie Bruce(3) 225,248 18,990 770,509 £1,458,340 300% £538,125 271% In progress
1. Of the total number of shares shown, Stephen Bird purchased 750,000
shares at a total cost of £1,705k and Stephanie Bruce purchased 238,571
shares at a total cost of £508k.
2. The closing market price at 31 December 2023 used to determine the value
of non-purchased shares was 178.65 pence.
3. The 18,990 shares under option under long-term incentive plans which are
no longer subject to performance conditions, for Stephanie Bruce, are the
second and third tranches of her 2019 EIP award, prorated for the vesting
outcome - see page 111 of the 2022 Annual report and accounts.
Executive Directors who have not yet satisfied the shareholding requirement
are expected to accumulate shares until they have fully met their shareholding
requirement. They are required to hold 100% of vested shares (post-tax)
granted under the Company's share plans (including any dividend equivalents)
until they have met their shareholding requirement. All other shares acquired
and held by the executive Director or owned indirectly by a partner or family
trust also count towards the shareholding requirement.
Stephen Bird and Jason Windsor, who were appointed during 2020 and 2023
respectively, have not yet met the shareholding requirement. However, the
Remuneration Committee is satisfied with the progress they have made towards
their respective requirements given their tenure.
Under the Policy, an executive Director is required to hold shares up to the
value of their shareholding requirement for 24 months following departure from
the Board. However, if at the date of departure from the Board, the executive
Director holds shares with a value lower than the value of the requirement,
the number of shares held at the date of departure from the Board must be
retained for 24 months thereafter. Any self-purchased shares are not subject
to this requirement. Accordingly, Stephanie Bruce is required to retain any
shares (excluding self-purchased shares) until 11 May 2025.
Awards granted in 2023 (audited)
The table below shows the key details of the LTIP, deferred and buyout awards
granted in 2023:
Participant Type of Basis of award % of Face value Number of shares awarded % payable Details on performance conditions
award
salary
at grant
for threshold performance
Nil-cost option LTIP(1) 350% £3,062,500 1,512,121 25% Award is subject to performance against targets measured over three years as
set out on page 107 of the 2022 Annual report and accounts
Stephen Bird
Nil-cost option Deferred Bonus(1) Not applicable £330,859 163,363 Not Not applicable
applicable
Jason Windsor Nil-cost option 2021 Long-Term Incentive Buyout(2) Not applicable £289,233 183,024 See 'Chief Financial Officer buyout awards' section below
Nil-cost option 2022 Long-Term Incentive Buyout(2) £816,441 516,637
Nil-cost option 2023 Long-Term Incentive Buyout(2) £981,136 620,854
Nil-cost option 2021 Bonus Award Buyout (bought-out)(2) Not applicable £85,697 54,228 Not applicable
Nil-cost option 2021 Bonus Award Buyout(2) £257,860 163,171
Nil-cost option 2022 Bonus Award Buyout(2) £368,545 233,212
Stephanie Bruce Nil-cost option LTIP(1, 3) 200% £1,076,250 531,402 25% Award is subject to performance against targets measured over three years as
set out on page 107 of the 2022 Annual report and accounts
Nil-cost option Deferred Bonus(1) Not applicable £122,087 60,281 Not Not applicable
applicable
1. The share price used to calculate the number of shares for the LTIP and
Deferred Bonus awards was 202.53 pence (the five-day average price over the
five dealing days prior to the grant date of 11 April 2023).
2. The share price used to calculate the number of shares for the Buyout
awards was 158.03 pence (the five-day average price over the five dealing days
prior to Jason Windsor's date of appointment on 23 October 2023).
3. As set out in the announcement on 12 April 2023, time pro-rating will be
applied to the number of shares (if any) over which the Stephanie Bruce's 2023
LTIP award vests by reference to the proportion of the award performance
period that had elapsed at her termination date of 31 December 2023.
Chief Financial Officer buyout awards
Jason Windsor was granted buyout awards to compensate for remuneration he
forfeited on leaving his previous employer to join abrdn. As set out in the
announcement on 6 November 2023, buyout awards granted to replace forfeited
awards that were subject to performance conditions remain subject to
performance conditions. The relevant proportion of each buyout award will be
adjusted to reflect the actual vesting of the relevant forfeited awards they
replace.
The following principles were applied in agreeing these buyout awards:
- The buyout awards do not exceed the value of the awards forfeited. A
conversion rate was used to calculate the number of abrdn plc shares awarded
using the five-day average abrdn plc and Persimmon Plc share prices over the
five dealing days prior to Jason Windsor's date of appointment to the Board.
- The vesting timelines of the buyout awards are the same as those which
applied to the forfeited awards.
- Buyout awards granted to replace forfeited awards that were subject to
performance conditions remain subject to performance conditions. These awards
are subject to:
o abrdn performance conditions for the proportion of the original performance
period for which Jason Windsor is an abrdn employee.
o Performance conditions set by his previous employers for the proportion of
the original performance period for which Jason Windsor was not an abrdn
employee.
- The buyout awards were granted subject to continued employment and the
malus and clawback conditions in the Policy approved at the 2023 AGM.
Jason is eligible to receive a buyout award in relation to the potential bonus
foregone for the period 1 January to 13 October 2023 as a result of leaving
his previous employer. This buyout award will reflect the performance outcome
of his previous employer (Persimmon plc) and will be determined by the
Remuneration Committee following the publication of the Persimmon plc 2023
Annual report and accounts. Any buyout award will be made 50% in cash and 50%
in deferred shares and will be disclosed in the 2024 Annual report and
accounts.
For the awards granted in respect of the forfeited Long Term Incentive awards,
the following proportion of each award is subject to abrdn / previous relevant
employer performance conditions respectively.
Award Proportion subject to performance conditions set by previous employer(1) Proportion subject to abrdn performance conditions
2021 Long-Term Incentive Buyout 93.7% (Aviva performance conditions) 6.3% (2021-2023 performance conditions)
2022 Long-Term Incentive Buyout 60.3% (Persimmon performance conditions) 39.7% (2022-2024 performance conditions)
2023 Long-Term Incentive Buyout 26.9% (Persimmon performance conditions) 73.1% (2023-2025 performance conditions)
1. Awards will vest subject to the Remuneration Committee's assessment of
the extent to which the original performance conditions set by previous
employers would have vested. The assessment will be informed by the previous
employers' public disclosures.
Share dilution limits
All share plans operated by the Company which permit awards to be satisfied by
issuing new shares contain dilution limits that comply with the guidelines
produced by the Investment Association (IA). On 31 December 2023, the
Company's standing against these dilution limits was 0.00% where the guideline
is no more than 5% in any 10 years under all discretionary share plans in
which the executive Directors participate and 0.51% where the guideline is no
more than 10% in any 10 years under all share plans.
As is normal practice, there are employee trusts that operate in conjunction
with the Executive LTIP, the abrdn Discretionary Plan, the deferred elements
of the abrdn plc annual bonus plan, the Aberdeen Asset Management deferred
plans and the abrdn all-employee plans. On 31 December 2023, the trusts held
58,344,840 shares acquired to satisfy these awards. Of these shares,
11,469,400 committed to satisfying vested but unexercised option awards. The
percentage of share capital held by the employee trusts is 3.17% of the issued
share capital of the Company - within the 5% best practice limit endorsed by
the IA.
Promoting all-employee share ownership
The Company promotes employee share ownership with a range of initiatives,
including:
- The abrdn plc (Employee) Share Plan which allows eligible UK employees
(our largest jurisdiction) to buy abrdn plc shares directly from earnings. A
similar tax-approved plan is used in Ireland. At 31 December 2023, 1,338
individuals in the UK and Ireland were actively making monthly contributions
averaging £74. At 31 December 2023, 1,632 individuals were abrdn plc
shareholders through participation in the Plan.
- The Sharesave Plan which was offered in 2023 to eligible employees in the
UK. This plan allows UK tax resident employees to save towards the exercise of
options over abrdn plc shares with the option price set at the beginning of
the savings period at a discount of up to 20% of the market price. At 31
December 2023, 1,472 employees were saving towards one or more of the
Sharesave offers.
Executive Directors' service contracts
Service contracts for both executive Directors are not for a fixed term but
have notice periods in line with the executive Director's role:
- Six months by the executive Director to the employer.
- Up to 12 months by the employer to the executive Director.
Executive Directors' external appointments
Executive Directors can accept a limited number of external appointments to
the boards of other organisations and can retain any fees paid for these
services. Stephen Bird and Stephanie Bruce held representative directorships
on behalf of the Group during the year. Jason Windsor is a Governor of Felsted
School and a Director of Felsted School Trustees Limited. The executive
Directors received no fees for their external appointments in 2023.
Significant external positions held during the year are set out below.
Executive Director Role and Organisation 2023 Fees
Stephen Bird Member of the Financial Services Growth & Development Board(1) £nil
Board member at the Investment Association(2) £nil
Member of the President's Committee for the Confederation of British £nil
Industry(3)
£nil
Member of the Lord Mayor's Strategic Advisory Board for the Finance for Growth
Project(4)
1. Appointed on 17 January 2022.
2. Appointed on 27 April 2022.
3. Appointed on 3 February 2023.
4. Appointed on 18 April 2023.
Executive Directors' remuneration in context
Pay compared to performance Diagram removed for the purposes of this announcement. However it can be
The graph shows the difference in the total shareholder return at 31 December viewed in full in the pdf document
2023 if, on 1 January 2014, £100 had been invested in abrdn plc and in the
FTSE 350 respectively. It is assumed dividends are reinvested in both. The
FTSE 350 has been chosen as abrdn plc has been a member of this index for the
full 10-year period.
The following table shows the single figure of total remuneration for the
Director in the role of Chief Executive Officer for the same 10 financial
years as shown in the graph above. Also shown are the annual incentive awards
and LTIP awards which vested based on performance in those years.
Year ended Chief Executive Officer Chief Executive Officer single total figure of remuneration (£000s) Bonus outcome/ annual incentive rates against maximum opportunity (%) Long-term incentive plan vesting rates against maximum opportunity (%)
31 December
2023 Stephen Bird 2,143 35.92 18.75
2022 Stephen Bird 1,696 30.25 -
2021 Stephen Bird 2,795 80.5 -
2020 Stephen Bird 1,044 48 -
Keith Skeoch 1,075 48 -
2019(1) Keith Skeoch 1,050 9 -
2018(1,2) Keith Skeoch 814 10 -
Martin Gilbert 814 10 -
2017(2) Keith Skeoch 3,028 82 70
Martin Gilbert 1,317 56 -
2016 Keith Skeoch 2,746 81 31.02
2015 Keith Skeoch 1,411 87 40.77
2015 David Nish 2,143 90 40.77
2014 David Nish 6,083 95 100
1. The outcome has been updated to reflect the EIP vesting.
2. Co-CEOs.
Relative importance of spend on pay
The following table compares what the Company spent on employee remuneration
to what is paid in the form of dividends to the Company's shareholders. Also
shown is the Company's adjusted profit before tax which is provided for
context as it is one of our key performance measures:
2023 % change 2022
Remuneration payable to all Group employees (£m)(1) 529 -4% 549
Dividends paid in respect of financial year (£m) 267 -9% 295
Share buybacks and return of capital (£m) 302 0% 302
Adjusted profit before tax (£m) 330 30% 253
1. In addition, staff costs and other employee related costs of £78m (2022:
£88m) and £4m (2022: £11m) are included in restructuring and corporate
transaction expenses and in cost of sales respectively. See Note 6 of the
Group financial statements for further information.
Annual percentage change in remuneration of Directors compared to UK based employees
The table below shows the percentage year-on-year change in salary, benefits
and annual bonus in the relevant year for the executive Directors, along with
any percentage change in fees for the non-executive Directors, compared to the
average Group employee. Year-on-year movement on base salaries or Director
fees is primarily attributable to part-year appointment changes.
% Base salary/fee Annual bonus outcome % Benefits(1)
2023 2022 2021 2020 2023 2022 2021 2020 2023 2022 2021 2020
Executive Directors Stephen Bird - - 100% - 19% -62% 234% - - - - -
Jason Windsor(2) - - - - - - - - - - - -
Stephanie Bruce(3) -64% - - 74% -58% -62% 69% 54% -100% - - 100%
Non-executive Directors(4, 5) Sir Douglas Flint - - - - - - - - - - - -
Jonathan Asquith - - - 202% - - - - - - - -
Catherine Bradley 20% - - - - - - - - - - -
John Devine - 6% -3% -2% - - - - - -100% - -100%
Hannah Grove 21% 334% - - - - - - - - - -
Pam Kaur 72% - - - - - - - - - - -
Brian McBride -69% -13% 59% - - - - - - - - -
Michael O'Brien 72% - - - - - - - - - - -
Cathleen Raffaeli 1% 10% - - - - - - - - - -100%
Group employees(6) 5.4% - - 2.5% -20% -47% 50% -52.5% - - - 17%
1. The change in benefits figures for employees (including executive
Directors) are based on the change in medical premium paid by the Group on
their behalf. Benefits do not include pension contributions for these
purposes.
2. Jason Windsor was appointed to the Board effective 23 October 2023.
Therefore, there are no prior years' remuneration figures to use for
comparison.
3. Stephanie Bruce stepped down from the Board effective 11 May 2023. 2023
remuneration figures for Stephanie used for the purposes of year-on-year
comparison reflect amounts paid until the date on which she stepped down from
the Board.
4. Remuneration for non-executive Directors and the Chairman is disclosed on
page 131.
5. Brian McBride stepped down from the Board effective 10 May 2023.
Catherine Bradley was appointed to the Board effective 4 January 2022 and Pam
Kaur and Michael O'Brien were appointed to the Board effective 1 June 2022.
See the single total figure of remuneration - non-executive Directors table on
page 131 for more detail on differences in year-on-year remuneration.
6. Disclosure is made on the basis of the period 1 April 2022 to 1 April
2023.
How pay was set across the wider workforce in 2023
Our principles for setting pay across the wider workforce are consistent with
those for our executive Directors, in that the proportion of the remuneration
package which is linked to performance increases for more senior roles within
the Company as responsibility and accountability increase.
Base salaries are targeted at an appropriate level in the relevant markets in
which the Group competes for talent. The Remuneration Committee considers the
base salary percentage increases for the Group's broader UK and international
employee populations when determining any annual salary increases for the
executive Directors. In 2023, Group-wide pay was determined with a focus on
factors such as individual skills and experience and position relative to
market. Having considered the market position of our executive Director pay,
the Remuneration Committee determined that there was limited scope to make any
adjustment and, therefore, no increases were applied in 2023.
The eligibility criteria for participation in variable pay plans is set so
that more senior individuals have a greater proportion of their pay linked to
performance. For roles where variable remuneration eligibility is retained,
our clear approach is designed to support and reward performance at a Company,
team and individual level. Performance related variable remuneration includes
deferred variable compensation at a suitable level for the employee's role,
ensuring a performance link over a longer time horizon than a single year.
Variable remuneration for employees, including executive Directors, is
determined as a total pool which is distributed across the business based on
the performance of each business line and function. Individuals are then
considered for a bonus payment on the basis of their individual performance
objectives and goals, taking into account conduct.
The Group operates a Compensation Committee comprising the Chief People
Officer (Chair), Chief Financial Officer and Chief Risk Officer, the role of
which is to consider the implementation of the remuneration policy across the
Group. The terms of reference of the Compensation Committee are set by the
Remuneration Committee and the Chair of the Compensation Committee formally
reports to the Remuneration Committee on all matters which fall within the
Compensation Committee's remit.
Pay ratio
The table below sets out the ratio of CEO pay to the median, 25(th) and 75(th)
percentile total remuneration of full-time equivalent UK employees. We have
identified the relevant employees for comparison using our gender pay gap data
set (snapshot data from 5 April 2023), referred to as Methodology B in the
legislation. This was chosen by the Remuneration Committee as it utilised a
data set which had already been processed and thoroughly reviewed and this
enabled timely reporting for disclosure purposes. Some employing entities are
excluded from the gender pay gap calculation in line with the regulations due
to the number of individuals employed by these entities being less than 250.
The Remuneration Committee considered this would not have a material impact on
the outcome of the pay ratio calculation given the limited number of
individuals this excludes, relative to the total population being captured,
and the range of the remuneration for those excluded individuals, which was
spread across quartiles.
The remuneration paid to each of the individuals identified under methodology
B was reviewed against other individuals within the quartile both above and
below. The individuals identified at the 50(th) and 75(th) percentiles had
been promoted in the year; therefore, the next identified individuals were
selected. Benefits figures were based on the medical premium paid by the
Company on behalf of employees.
The ratio has increased from 2022, which reflects the fact that the CEO has a
greater level of remuneration at risk which is dependent on Company
performance; based on both financial and non-financial performance in 2023,
the bonus for the CEO paid out at 35.92% of maximum, compared to 30.25% of
maximum in 2022 and the LTIP vested at 18.75% of maximum in 2023 compared to
it lapsing in its entirety in 2022. External market conditions have been
challenging for abrdn in recent years and this has heavily impacted both
executive and employee pay outcomes. By design, there are differences in the
priorities which drive how these two populations are remunerated; as a result,
their relative experiences can be different.
The Remuneration Committee is comfortable that the pay ratio reflects the pay
and progression policies and Remuneration Philosophy across the Company as set
out above. Further detail on the make up of workforce pay is set out below.
Year Method 25(th) percentile 50(th) percentile 75(th) percentile
Stephen Bird 2023 Option B 39 27 19
Stephen Bird 2022 Option B 35 25 16
Stephen Bird 2021 Option B 62 45 25
Stephen Bird/Keith Skeoch 2020 Option B 49 30 18
Keith Skeoch 2019 Option B 34 23 13
Keith Skeoch 2018 Option B 30 19 12
Base salary Total pay
(£000s) (£000s)
CEO remuneration 875 2,143
25(th) percentile employee 46 55
50(th) percentile employee 66 78
75(th) percentile employee 80 113
Remuneration for non-executive Directors and the Chairman
Single total figure of remuneration - non-executive Directors (audited)
The following table sets out the single total figure of remuneration for each
of the non-executive Directors who served as a Director at any time during the
financial year ending 31 December 2023. Non-executive Directors do not
participate in bonus or long-term incentive plans and do not receive pension
funding.
Non-executive Directors Fees for year ended Taxable benefits in Total remuneration
31 December
year ended
for the year ended
£000s
31 December
31 December
£000s
£000s
Sir Douglas Flint(1) 2023 475 - 475
2022 475 - 475
Jonathan Asquith 2023 139 - 139
2022 139 - 139
Catherine Bradley(2) 2023 131 - 131
2022 109 - 109
John Devine 2023 131 - 131
2022 131 - 131
Hannah Grove(3) 2023 159 - 159
2022 126 - 126
Pam Kaur(4) 2023 109 - 109
2022 63 - 63
Brian McBride(5) 2023 33 - 33
2022 105 - 105
Michael O'Brien(4) 2023 109 - 109
2022 63 - 63
Cathleen Raffaeli(6) 2023 166 - 166
2022 164 - 164
1. Sir Douglas Flint is eligible for life assurance of 4x his annual fee.
This is a non-taxable benefit.
2. Catherine Bradley was appointed to the Board effective 4 January 2022,
appointed to the Nomination and Governance Committee and as Chair of the Audit
Committee effective 18 May 2022 and appointed to the Risk and Capital
Committee effective 1 October 2022.
3. The subsidiary Board fees for a member of the Standard Life Savings
Limited and Elevate Portfolio Services Limited Boards increased from £37,500
to £50,000 p.a. effective 1 August 2023. Total fees include subsidiary Board
fees of £50,000 p.a. (previously £37,500 p.a.) as a member of the Standard
Life Savings Limited and Elevate Portfolio Services Limited Boards and Board
Employee Engagement fee of £15,000 p.a. Hannah Grove was also appointed to
the Remuneration Committee effective 1 October 2022.
4. Pam Kaur and Michael O'Brien were appointed to the Board and the Audit
and Risk and Capital Committees effective 1 June 2022.
5. Brian McBride stepped down from the Board effective 10 May 2023.
6. The subsidiary Board fees as Chair of the Standard Life Savings Limited
and Elevate Portfolio Services Limited Boards increased from £55,000 p.a. to
£60,000 p.a. effective 1 August 2023.Total fees include subsidiary Board fees
of £60,000 p.a. (previously £55,000 p.a.) as Chair of the Standard Life
Savings Limited and Elevate Portfolio Services Limited Boards.
The non-executive Directors, including the Chairman, have letters of
appointment that set out their duties and responsibilities. The key terms are
set out in the Policy which can be found in the 2022 Annual report and
accounts on pages 120 - 130. The service agreements/letters of appointment for
Directors are available to shareholders to view on request from the Company
Secretary at the Company's registered address (which can be found in the
Shareholder information section) and will be accessible for the 2024 AGM.
Details of the date of appointment to the Board and date of election by
shareholders are set out below:
Chairman/ non-executive Director Initial appointment to the Board Initial election by shareholders
Chairman
Sir Douglas Flint 1 November 2018 AGM 2019
Senior Independent Director
Jonathan Asquith 1 September 2019 AGM 2020
Non-executive Directors
Catherine Bradley 4 January 2022 AGM 2022
John Devine 4 July 2016 AGM 2017
Hannah Grove 1 September 2021 AGM 2022
Brian McBride 1 May 2020 AGM 2020
Cathleen Raffaeli 1 August 2018 AGM 2019
Pam Kaur 1 June 2022 AGM 2022
Michael O'Brien 1 June 2022 AGM 2022
Implementation of policy for non-executive Directors in 2024
The following table sets out abrdn non-executive Director fees to be paid in
2024. Fees for 2024 remain at the current level.
Role 2024 fees 2023 fees
Chairman's fees(1) £475,000 £475,000
Non-executive Director fee(2) £73,500 £73,500
Additional fees:
Senior Independent Director £25,000 £25,000
Chair of the Audit Committee £30,000 £30,000
Chair of the Risk and Capital Committee £30,000 £30,000
Chair of the Remuneration Committee £30,000 £30,000
Committee membership (Audit, Risk and Capital and Remuneration Committees) £17,500 £17,500
Committee membership (Nomination Committee) £10,000 £10,000
Employee engagement £15,000 £15,000
1. The Chairman's fees are inclusive of the non-executive Directors' core
fees and no additional fees are paid to the Chairman where he chairs, or is a
member of, other committees/boards. The Chairman is eligible to receive life
assurance, which is a non-taxable benefit.
2. For non-executive Directors, individual fees are constructed by taking
the core fee and adding extra fees for being the Senior Independent Director,
chair or member of committees and/or subsidiary boards where a greater
responsibility and time commitment is required.
Non-executive Directors' interests in shares (audited)
The following table shows the total number of abrdn plc shares held by each of
the non-executive Directors and their connected persons:
Total number of shares owned Shares acquired during the period Total number of shares owned at
at 1 January 2023 or date of appointment if later
1 January 2023 to
31 December 2023 or date of cessation if earlier
31 December 2023
Sir Douglas Flint 200,000 - 200,000
Jonathan Asquith 153,714 52,150 205,864
Catherine Bradley 12,181 - 12,181
John Devine 28,399 24,514 52,913
Hannah Grove 33,000 - 33,000
Pam Kaur - - -
Brian McBride(1) - - -
Michael O'Brien - 173,780 173,780
Cathleen Raffaeli 9,315 - 9,315
1. Stepped down from the Board effective 10 May 2023.
Sir Douglas Flint, as Chairman, is subject to a shareholding guideline of 100%
of the value of his annual fee in abrdn plc shares to be reached within four
years of appointment. The total investment cost of Sir Douglas Flint's
shareholding was £495k, equivalent to 104% of his annual fee.
The Remuneration Committee
Membership
During 2023, the Remuneration Committee was made up of independent
non-executive Directors. For their names, the number of meetings and committee
member attendance during 2023, please see the table on page 96.
The role of the Remuneration Committee
To consider and make recommendations to the Board in respect of the total
remuneration policy across the Company, including:
- Rewards for the executive Directors, senior employees and the Chairman.
- The design and targets for any employee share plan.
- The design and targets for annual cash bonus plans throughout the Company.
- Changes to employee benefit structures (including pensions) throughout the
Company.
The Remuneration Committee's work in 2023
Jan-Mar - 2022 Directors' remuneration report and Policy.
- Approve performance for the 2022 bonus targets and 2020 LTIP targets.
- Set 2023 annual bonus scorecard targets and 2023 LTIP targets.
- Updates from the Risk and Audit Committees on relevant matters for the
Committee's consideration when determining pay outcomes.
- Approve Stephanie Bruce's exit remuneration arrangements.
- Review remuneration outcomes for executive Directors and the Material Risk
Taker population.
- Review and update the Group Remuneration Policy to reflect regulatory
changes.
Apr-Jun - Approve Jason Windsor's remuneration package.
- Update on external market trends.
- Review regulatory remuneration disclosures and documentation.
- Agree pay ratios with regard to the relevant regulations.
- Remuneration decisions for senior employees within the Remuneration
Committee's remit.
Jul-Sep - Mid-year review of performance against targets for annual bonus and
in-flight LTIP awards for the executive Directors.
- Update the Remuneration Committee and Compensation Committee's Terms of
Reference.
Oct-Dec - Review gender pay gap data.
- Review Group Remuneration Policy for 2024 implementation.
- Review bonus pool allocation principles and approve overall funding.
- Review 2023 remuneration proposals.
At various points throughout the year the Remuneration Committee also:
- Made remuneration decisions for the executive leadership team and other
senior employees within the Remuneration Committee's remit, including
approving the design of one-off incentive plans linked to transformation
projects.
- Received updates relating to regulatory changes and market best practice.
- Reviewed minutes of subsidiary Committee meetings and their governance
documents.
External advisers
During the year, the Remuneration Committee took advice from PwC LLP (a member
of the Remuneration Consultants Group (RCG)) who were appointed by the
Remuneration Committee after a retender process was conducted in 2022, as
disclosed in the 2022 Annual report and accounts on page 118. As PwC LLP is a
member of the RCG, the Remuneration Committee is satisfied that the advice
given from PwC LLP during the year was objective and independent. The
remuneration advisors do not have connections with abrdn that might impair
their independence.
A representative from our external adviser attends, by invitation, all
Remuneration Committee meetings to provide information and updates on external
developments affecting remuneration as well as specific matters raised by the
Remuneration Committee. Outside the meetings, the Remuneration Committee's
Chair seeks advice on remuneration matters on an ongoing basis. As well as
advising the Remuneration Committee, PwC LLP also provided tax, accounting
support, risk management, consultancy and assurance services to the Company
during the year.
Fees paid to PwC LLP during 2023 for professional advice to the Remuneration
Committee were £130,250.
Where appropriate, the Remuneration Committee receives input from the
Chairman, Chief Executive Officer, Chief Financial Officer, Chief People
Officer, Global Head of Reward and the Chief Risk Officer. This input never
relates to their own remuneration. The Remuneration Committee also receives
input from the Risk and Capital Committee and the Audit Committee.
Remuneration Committee effectiveness
The Remuneration Committee reviews its remit and effectiveness each year.
Following the externally facilitated review in 2022, the 2023 review was
conducted internally, on behalf of the Board, by the Company Secretary. As
part of the review the views of the Board were sought on the performance of
the Remuneration Committee and how Directors felt they were updated on its
activities following each meeting. This was supplemented by any matters a
Director wished to raise as part of their year-end 1:1 discussion with the
Chairman.
The review concluded that the Remuneration Committee continued to operate
effectively during 2023 with no material issues or concerns raised. The main
areas in which the Remuneration Committee looked to see continued improvement
in 2024 were in relation to the insight and brevity of materials presented and
avoiding duplication across agendas of this Committee and others. More
information about the process involved, and its outcomes, can be found on page
94.
Shareholder voting
We remain committed to ongoing shareholder dialogue and take an active
interest in voting outcomes.
The Policy was last subject to a vote at the 2023 AGM on 10 May 2023 and the
following table sets out the outcome.
Policy 2023 AGM For Against Withheld
% of total votes 94.29% 5.71%
No. of votes cast 675,020,934 40,860,480 189,168,584
The Directors' remuneration report was subject to a vote at the 2023 AGM on 10
May 2023 and the following table sets out the outcome.
2022 Directors' remuneration report For Against Withheld
% of total votes 93.76% 6.24%
No. of votes cast 666,444,586 44,325,192 194,280,220
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