Annual Report 2017

Rothschild & Co | Annual Report 2017

Corporate governance

1.2.7.1.4 SIGNIFICANT ACCOUNTING JUDGEMENTS CONSIDERED

In reviewing the annual and half-year accounts, the Audit Committee takes

particular note of the significant accounting judgements and estimates

that have been made in the accounts’ preparation. These accounting

judgements and estimates are set out in the notes to the consolidated

financial statements on pages 145 to 176.

At meetings to consider the accounts, the Audit Committee receives a report

from management that explains the judgements and estimates made and

this report is considered at the respective Audit Committee meeting.

Furthermore, the Group’s external auditors submit their report to the Audit

Committee on the accounts, which includes their consideration of the main

accounting judgements and estimates, as well as other matters to report.

In their formal report to the Group’s shareholders, the Group’s external

auditors include the key audit matters that were addressed in the context

of their audit of the consolidated financial statements.

In conducting its review process, the Audit Committee ensures that the

matters reported by management and by the Group’s external auditors

are consistent, after allowing for variations in emphasis.

1.2.7.2 REMUNERATION AND NOMINATION COMMITTEE

1.2.7.2.1 COMPOSITION

As at 31 December 2017, the Remuneration and Nomination Committee

was composed of four members: Mr. Sylvain Héfès (Chairman), Mr. André

Lévy-Lang (independent member), Mr. Peter Smith (independent member)

and Ms. Luisa Todini (independent member).

1.2.7.2.2 RESPONSIBILITIES

The Remuneration and Nomination Committee is mainly responsible for:

• setting the principles and parameters of remuneration policy for the

Group as a whole and periodically reviewing the policy’s adequacy and

effectiveness taking into account all factors which it deems necessary

including the Group’s strategy from time to time;

• supervising and reviewing the broad policy framework for the

remuneration arrangements within the Group and principles applicable

to all staff members whose professional activities have a material

impact on the risk profile of the Group (the “Regulated Persons”)

(1)

;

• supervising the remuneration paid/awarded to members of the

Compliance and Risk divisions and, where appropriate, the employment

and remuneration arrangements of members of the Group Executive

Committee;

• identifying Regulated Persons as we define them in each of Rothschild

& Co, Rothschild & Compagnie Banque SCS and its subsidiaries,

N M Rothschild & Sons Limited and its subsidiaries for the purposes

of the French Prudential and Control Authority, and the United Kingdom

Financial Conduct Authority and Prudential Regulatory Authority as

appropriate;

• participating in the selection and nomination process of members

of the Supervisory Board, as provided by the Afep-Medef Code;

• reviewing the nature and scale of the Group’s short and long-term

incentive performance arrangements to ensure that they encourage

enhanced performance and reward individuals in a fair and responsible

manner for their contribution to the success of the Group in light of an

assessment of the Group’s financial situation and future prospects;

• discussing and reviewing with the Company’s Managing Partner the

determination and quantum of the total bonus pool; and

• undertaking any other remuneration-related obligations placed upon the

Remuneration and Nomination Committee by either the lead regulator or

a local regulator.

1.2.7.2.3 ACTIVITY

The Remuneration and Nomination Committee meets at least two times a

year or more frequently if so required. As a result of the change of year end

from 31 March to 31 December, a new meeting schedule has been adopted

to reflect this change.

As from the change of year end from 31 March to 31 December, the

December meeting is to review the Rothschild Martin Maurel sub-group’s

compensation and the February meeting is to review the Group entities’

compensation.

During the nine months to 31 December 2017, the Remuneration and

Nomination Committee met five times, with an average attendance rate

of 80% for all meetings.

In advance of each meeting, every member receives a file containing all

the documentation, notes and reports relating to each item on the agenda.

The meetings of the Remuneration and Nomination Committee were mainly

convened to set and to periodically review the principles and parameters

of its remuneration policies and their adequacy and effectiveness, review

developments in remuneration regulations and ensure that the Company’s

Managing Partner and business divisions are in compliance.

In addition, the Remuneration and Nomination Committee reviews the

proposals submitted by business divisions regarding fixed and variable

compensation with absolute discretion to adjust fixed compensation

proposals, bonus pools and individual payments, and to supervise

and review the broad policy framework for the remuneration of

senior employees, including the Regulated Persons across the

Rothschild & Co Group.

No Group employee is permitted to participate in discussions or decisions

relating to his or her remuneration.

The Chairman of the Supervisory Board, the Chairman, the Executive Deputy

Chairman and the Managing Partners of the Company’s Managing Partner,

the Group Human Resources Director and the Group Chief Financial Officer are

permanent attendees at the meetings of the Remuneration and Nomination

Committee.

In addition, as regards the meetings of the Remuneration and Nomination

Committee to review the proposals submitted by business divisions

regarding fixed and variable compensation, the Heads of Group business

divisions attend the meetings for part of the meeting to present their own

business division.

(1) The criteria used to identify Regulated Persons are notably set out in the following regulations: (i) the third iteration of the Capital Requirements Directive (CRD III) and associated guidelines, and (ii)

the qualitative role base criteria set out in the EBA Regulatory Technical Standard (RTS) for identifying material risk takers (Commission Delegated Regulation 604/2014).