The following disclosures are made in accordance with the Financial Conduct Authority Prudential Sourcebook for Investment Firms Chapter 8 (“MIFIDPRU 8”) for R.J. O’Brien Limited (the “Company”), a SNI MIFIDPRU investment firm with head office at 100 Cheapside, London EC2V 6DT. The Company operates on a riskless model; it acts on either a purely agency or matched principal basis; there is no proprietary trading, and no capital is exposed; no client assets are held on its balance sheet.
These remuneration disclosures are based on the fiscal year ending 31 December 2022. The information provided herein will be updated no less than on an annual basis.
Remuneration Policy Framework
The Company’s Remuneration Policy (the “Policy”) complies with MIFIDPRU regulatory requirements and promotes a sound and effective risk management. In line with the Remuneration Policy, the Company works to attract and retain high-performing talent, and the Policy also outlines the Company’s efforts to provide performance-driven variable incentives while effectively managing risks. The Company has implemented the Policy fully, in accordance with its terms and applicable MIFIDPRU 8 disclosure requirements, such that the staff members who are high performers, align actions to Company values, and allow the Company to achieve its long-term, strategic objectives, will be recognised for their outstanding performance and rewarded accordingly through remuneration. Conversely, the Policy also sets forth the terms and controls on which remuneration may be reduced for any potential misconduct and/or malus.
The Policy is reviewed annually by the Remuneration Committee and subject to an annual internal audit review which is in line with the MIFIDPRU requirements.
These disclosures highlight key terms of the Policy in compliance with the requirements of MIFIDPRU 8 and the full details of the Policy can be found here.
The company distributes remuneration in cash to every staff and employees including fixed as well as variable performance linked payment. The Company have three concurrent variable payment execution schemes depending upon an employee’s role. These schemes are designed to reward employees for their performance and contribution towards the company, the market and clients, and achieving their individual goals during a financial year of operation.
Two of these schemes, applicable to back office and front office staff, variable pay is at the discretion of the Company. In applying that discretion, the Company considers:
- Company and Group Performance whereby performance is based on certain targets, profitability and capital position.
- Business Unit Performance whereby performance for the respective unit is compared to defined benchmarks (quantitative and qualitative) set forth the applicable financial year.
- Individual Performance whereby individuals are scored against a number of categories (including compliance with internal rules, expected conduct and define corporate culture). The assessments are then used to influence (positively or negatively) the exercise of discretion in setting levels of awards and any involved variable payment.
Discretionary variable pay is made from a bonus pool, the size of which is dependent upon the Company’s Board’s consideration of the financial success of the Company, the Company’s projected performance; and overall profitability and capital position of the wider group of Company affiliates, as well as its own growth strategies and projections.
Variable pay under the Company’s third scheme applies to front office brokers and is based on productivity of the broker through payment of a percentage of the revenue such broker, or team, generated for the Company. The intention in this scheme is to motivate and reward revenue generation. A broker’s contract will detail the payment terms under this scheme.
As well as encouraging and rewarding those who contribute to its continued success, the Company believes that no one should benefit from wrongdoing as also reflected by the FCA in its approach to remuneration in a regulated environment. The Policy sets forth the terms for an ex-post risk adjustment to variable remuneration. “Ex-post risk adjustment” is the potential reduction, following the outcome of a specific risk event and/or a poor performance/misconduct, in the amount of variable remuneration to which an employee or broker would otherwise have been entitled. It includes:
- Reducing current year awards;
- The application of “malus” – for instance, reducing or cancelling a future or deferred award; and
- Claw back, or recouping already paid awards.
In the event that any action or inaction by anyone working for the Company has a material impact on the below categories, the Company will consider adjusting a person’s variable remuneration, whether past, present or future.
The Company will look at all of the circumstances surrounding any in/action that have a materially negative effect in primarily the following areas:
- Impact to customers, counterparties and/or the wider market;
- Impact of a failure on its relationships with its other stakeholders, including shareholders, employees, creditors, the taxpayer and regulators;
- Cost of fines and other regulatory actions;
- Direct and indirect financial losses attributable to the relevant failure;
- Involved in failure to systems and/or controls; and
- Reputational damage.
The Company will consider an ex-post risk adjustment to anyone whose failure, deliberate or accidental, contributed to, or failed to prevent, the cause of damage. Ex-post risk adjustment can be applied collectively at bonus pool level, to groups of employees and to individuals.
Remuneration Governance and Reporting
The Company’s Remuneration Committee (“RemCo”) is accountable for the oversight and implementation of the Remuneration Policy. The RemCo is chaired by an independent non-executive director and includes other members of management who are not Board directors as well as Audit Committee Members.
The RemCo governs the remuneration policy and checks that it complies with regulation and are consistent with the promotion of the Company’s effective risk management, its business objectives and values. In addition, the RemCo reviews remuneration policy and controls to ensure they do not encourage any risk-taking that exceeds the Company’s tolerated level of risk, or have other unintended detrimental consequences. It also takes into account various factor such as the firm’s past and projected profits, and its capital and liquidity position.
The RemCo will be directly involved in any decision to effect ex-post risk adjustment to variable remuneration that might be proposed by the Company in accordance with FCA regulation and internal policy.
The RemCo supports the Company’s Board of Directors and reports into its Audit Committee, which also reviews the Remuneration Policy.
The RemCo meets no less than on an annual basis.
Annual Quantitative Remuneration Disclosure
A summary of remuneration awarded for the fiscal year ending 31 December 2022 can be below. As shown, the Company identified 27 out if its 122 staff to meet the criteria set out in the FCA’s MIFIDPRU Remuneration Code on Material Risk Taker (“MRT”) identification. The table breaks out total fixed remuneration and total variable remuneration received by staff during the Reference Period between MRT staff members collectively and all other staff members collectively.
|Remuneration for Period ending 31 December 2022||Non MRTs||MRTs|
|Number of staff and Brokers||95||27|
|Total fixed remuneration||£5,694,607.30||£2,702,635.93|
|Total variable remuneration||£1,370,836.28||£9,106,773.83|