Standard Life Aberdeen plc

Full Year Results 2020

Part 3 of 8

 

2. Board of Directors

 

			Stephen Bird - Chief Executive Officer			Stephanie Bruce - Chief Financial Officer
Appointed to the Board November 2018 Age 65 Nationality British Shares 89,369 Board committees: NC			Appointed to the Board July 2020 Age 54 Nationality British Shares 500,000*			Appointed to the Board June 2019 Age 52 Nationality British Shares 133,741*
Sir Douglas' wide-ranging international and financial experience is an important asset to the business as it delivers against its strategy. His strong track record of board leadership as a chairman helps to facilitate open and constructive boardroom discussion. Previously, Sir Douglas served as 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. Between 2005 and 2011 he also served as a non-executive director of BP plc. In other current roles, Sir Douglas is chairman of IP Group plc and serves as HM Treasury's Special Envoy for Financial and Professional Services to China's Belt and Road Initiative. He is also a member of the Monetary Authority of Singapore's international advisory panel, and of the board of the International Chamber of Commerce UK. Additionally, he is chairman of the Just Finance Foundation, non-executive director of the Centre for Policy Studies, member of the global advisory council of Motive Partners and board member of the Institute of International Finance. He also chairs the Corporate Board of Cancer Research UK and is a trustee of the Royal Marsden Cancer Charity. He holds a BAcc (Hons) from the University of Glasgow, a PMD from Harvard Business School and is a Member of the Institute of Chartered Accountants of Scotland.			Stephen brings an established track record of delivering exceptional value to clients, creating high-quality revenue and earnings growth in complex and competitive financial markets, as well as deep experience of business transformation during periods of technological disruption and competitive change. Stephen joined the Board in July 2020 as Chief Executive-Designate, and was formally appointed Chief Executive Officer in September 2020. 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, credit cards, mortgages, and operations and technology supporting these businesses. Prior to this, Stephen was chief executive for all of Citigroup's Asia Pacific business lines across 17 markets in the region, including India and China. Stephen joined Citigroup in 1998, and during his 21 years with the company he held a number of leadership roles in banking, operations and technology across its Asian and Latin American businesses. Before this, he held management positions in the UK at GE Capital - where he was director of UK operations from 1996 to 1998 - and at British Steel. He holds an MBA in Economics and Finance from University College Cardiff, where he is also an Honorary Fellow.			Stephanie was appointed Chief Financial Officer on joining the Board in June 2019. She is a highly experienced financial services practitioner with significant sector knowledge, both technical and commercial. She brings experience of working with boards and management teams of financial institutions in respect of financial and commercial management, reporting, risk and control frameworks and regulatory requirements. Before joining Standard Life Aberdeen, Stephanie was a partner at PwC, a member of the Assurance Executive and led the financial services assurance practice. Her responsibilities included client services, product development, operations and quality assurance across the UK business.  During her career, she has specialised in the financial services sector, working with organisations across asset management, insurance and banking, with national and international operations. Stephanie is an associate of the Association of Corporate Treasurers. She holds a Bachelor of Laws (LLB) from the University of Edinburgh. She is also a member of the Institute of Chartered Accountants of Scotland and served as the chair of its audit committee.

 

Jonathan Asquith - Non-executive Director and Senior Independent Director			John Devine - Non-executive Director			Melanie Gee - Non-executive Director
Appointed to the Board September 2019 Age 64 Nationality British Shares 70,000 Board committees: R NC			Appointed to the Board July 2016 Age 62   Nationality British Shares 28,399 Board committees: A NC RC			Appointed to the Board November 2015 Age 59   Nationality British Shares 67,500 Board committees: A NC
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 Northill Capital Services Limited and a number of its subsidiaries - Vantage Infrastructure Holdings, Securis Investment Partners and Capital Four Holding A/S. At the end of 2020 he stepped down as deputy chairman of 3i Group plc after nearly ten years as a board member. Previously, he has been chairman 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.			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, and in his role as Chair of our Audit Committee. John was appointed a Director of Standard Life plc in July 2016. From April 2015 until August 2016, he was non-executive Chairman of Standard Life Investments (Holdings) Limited. He is non-executive chairman of Credit Suisse International, 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 is a Fellow of the Chartered Institute of Public Finance and Accounting.			Melanie brings to the Board significant executive experience in creating successful businesses and leading teams of bankers in various roles. This experience was derived from her career in financial services, where she has specialised in advisory and corporate finance work. She has also had a particular focus on the evolution of cultures and working practices, and is able to draw on these insights as our designated non-executive Director for employee engagement. Melanie was appointed as a Director of Standard Life plc in November 2015. She is also a non-executive director and chair of the healthcare company Syncona Limited, a FTSE 250 company. She was appointed a managing director of Lazard and Co. Limited in 2008 and became a senior adviser in 2012. Previously Melanie held various roles with UBS, having been appointed a managing director in 1999 and served as a senior relationship director from 2006 to 2008. She was a non-executive director of The Weir Group PLC between 2011 and 2017 and the Drax Group plc between 2013 and 2016. She was also chair of Ridgeway Partners Holdings Ltd from 2019, and of its wholly-owned subsidiary Ridgeway Partners Limited from 2016, until 2020. She holds an MA in Mathematics from the University of Oxford.

 

Brian McBride - Non-executive Director			Martin Pike - Non-executive Director			Cathleen Raffaeli - Non-executive Director
Appointed to the Board May 2020 Age 65 Nationality British Shares Nil Board committees: R			Appointed to the Board September 2013 Age 59 Nationality British Shares 69,476 Board committees: RC NC A			Appointed to the Board August 2018 Age 64 Nationality American Shares 9,315 Board committees: R RC
Brian brings a wealth of digital experience and global leadership experience in both executive and non-executive directorship roles. His direct experience of developing digital strategies and solutions in consumer-facing businesses, in rapidly evolving markets, is of great benefit to the Board's discussions. Brian is currently chair of Trainline PLC, non-executive director of Kinnevik AB, and the lead non-executive director on the board of the UK Ministry of Defence. He is also a senior adviser to Scottish Equity Partners. In his executive career, Brian has worked for IBM, Crosfield Electronics and Dell before serving as chief executive officer of T-Mobile UK and then managing director of Amazon.co.uk. As a non-executive director, Brian has served on the boards of AO.com, the BBC, Celtic Football Club PLC, Computacenter PLC and S3 PLC, and as chair of ASOS PLC. He holds an MA (Hons) in Economic History and Politics from the University of Glasgow.			Martin provides broad commercial insight into strategy and risk to the Board, and to his role as Chair of our Risk and Capital Committee. He has particular knowledge of enterprise-wide risk management. His actuarial and strategic consultancy background brings a strong understanding of what drives success in the markets in which we operate. Martin was appointed as a Director of Standard Life plc in September 2013. He is also chairman and non-executive director of Faraday Underwriting Limited - where he sits on the audit and risk committee, and chairs the nomination and remuneration committee. In 2021 he was appointed chairman and non-executive director of AIG Life Limited, as well as becoming a member of its audit committee and chair of its remuneration committee. He joined R Watson and Sons, consulting actuaries, in 1983, and progressed his career with the firm to partner level. His senior roles included head of European insurance and financial services practice, Watson Wyatt from 2006 to 2009, vice president and global practice director of insurance and financial services, Watson Wyatt during 2009, and managing director of risk consulting & software for EMEA, Towers Watson from 2010 to 2013. Martin holds an MA in Mathematics from the University of Oxford. He is a Fellow of the Institute and Faculty of Actuaries and a Fellow of the Institute of Directors.			Cathi has strong experience in the financial technology sector and background in the platforms sector, as well as international board experience. She brings these insights to her role as non-executive chairman of the boards of Elevate Portfolio Services Limited and Standard Life Savings Limited. This 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.

 

Cecilia Reyes - Non-executive Director			Jutta af Rosenborg - Non-executive Director
Appointed to the Board October 2019 Age 62 Nationality Swiss and Philippine Shares Nil Board committees: R RC			Appointed to the Board August 2017 Age 62 Nationality Danish Shares 8,750 Board committees: R A
Cecilia brings great insight from operating in leadership positions in international financial markets. Her knowledge and many years of direct experience of risk management and insurance investment management are of great benefit to the work of the Board. Before joining the Board, Cecilia was with Zurich Insurance Group Ltd (Zurich) for 17 years where she was most recently its group chief risk officer, leading the global function comprising group risk management and responsible for its enterprise risk management framework. Prior to that, she was its group chief investment officer, responsible for the execution of the investment management value chain - including analysis, development and global implementation of the investment strategy for the group's investments. In both positions, she was a member of Zurich's executive committee. Cecilia started her career at Credit Suisse, following which she held senior positions at ING Barings, latterly as head of risk analysis, asset management. She is also the founder of Pioneer Management Services GmbH which seeks to develop a non-profit social enterprise. She holds a BSc from Ateneo de Manila University, an MBA from the University of Hawaii and a PhD (Finance) from the London Business School, University of London.			Jutta has extensive knowledge of international management and strategy, from sector operational roles in a number of listed companies. Her previous experience, which includes group finance and auditing, risk management and mergers and acquisitions, allows her to offer valuable perspectives to strategic discussions. Jutta was appointed a non-executive director of Aberdeen Asset Management PLC in January 2013. She is a non-executive director of JPMorgan European Investment Trust plc and chair of its audit committee. In addition, she is a non-executive director of NKT A/S and Nilfisk Holding A/S, and chairs the audit and remuneration committees of both organisations. She is also a member of the supervisory board of BBGI SICAV S.A, where she chairs the audit committee. Previously, she was the executive vice president, chief financial officer, of ALK Abelló A/S and was chairman of Det Danske Klasselotteri A/S. A qualified accountant, she holds a Master's degree in Business Economics and Auditing from Copenhagen Business School.
Key to Board committees R  Remuneration Committee RC  Risk and Capital Committee A  Audit Committee NC  Nomination and Governance Committee   Committee Chair * Shares include qualifying awards as described on page 83 of the Directors' remuneration report 2020.

 

3. Corporate governance

 

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 2020, 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 Corporate governance statement also explains the relevant compliance with the Disclosure Guidance and Transparency Sourcebook. The table on page 102 sets out where to find each of the disclosures required in the Directors' report in respect of Listing Rule 9.8.4 R.

1. Board leadership and company purpose

Company purpose and Business model

The Board supports the Company's purpose set out on pages 1 and 2 of the Strategic report, and oversees implementation of the Group's business model, which it has approved and which is set out on page 12. Pages 2 to 41 show how the business model supported the protection and generation of value in 2020, as well as underpinning our strategy for growth. The Board's consideration of current and future risks to the success of the Group is set out on pages 38 to 40, complemented by the report of the Risk and Capital Committee on pages 66 to 69.

Oversight of culture

The Board and the Nomination and Governance Committee play an important role in overseeing how the Group assesses and monitors the culture evident within the business and how the desired behaviours are embedded across the Group and contribute to its success. 'Building a culture of curiosity and ownership' and the activities to support it are covered on pages 22 and 23. The ELT reviewed the Group's internal culture document - the Blueprint - which was updated to reflect the input of Stephen Bird as incoming CEO - to make sure that it remained aligned with the Company's evolving purpose and strategy, and also some of the lessons learned from different ways of working during the pandemic, such as increased collaboration spaces being available when we are able to return to working in the office. The Nomination and Governance Committee has asked that measures are developed during 2021 to monitor and assess culture consistently across the Group. In addition, page 26 includes a summary of the charitable actions taken to support local communities during the pandemic.

Stakeholder engagement

Recognising their obligations under the Companies (Miscellaneous Reporting) Regulations 2018, 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. These matters include responsibilities with regard to the interests of employees, suppliers, customers, the community and the environment, all within the context of promoting the success of the Company. The table on pages 50 to 51 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. During 2020, the means to deliver effective engagement needed to be adjusted to reflect the impact of COVID-19, but was done so successfully.

Engaging with investors

The Investor Relations and Secretariat teams support the direct investor engagement activities of the Chairman, CEO, CFO and, as relevant, Committee chairs. During 2020, and within COVID-19 restrictions, there was a programme of domestic and international meetings with investors and analysts. The wide range of relevant issues discussed included CEO succession, progress on transformation, business strategy, financial performance, operational activities and corporate governance, including diversity and inclusion. The Chairman, CEO and CFO bring relevant feedback from this engagement to the attention of the Board. Following his appointment as CEO, Stephen Bird undertook a specific programme of engagement to meet with, and introduce himself to, major institutional investors. Prior to recommending the revised remuneration policy to shareholders at the 2020 Annual General Meeting, the Remuneration Committee Chairman also consulted extensively with major institutional investors regarding the design of the Company's executive remuneration plans.

The Board pays particular attention to the interests of the Company's 1.1 million individual shareholders who hold more than one third of the Company's issued shares. 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 410,000 shareholders receive all communications this way. The Company actively promotes self service via the share portal and over 450,000 shareholders have signed up to this service. Share portal participants can maintain their personal details and dividend instructions online, and view and download personal documents such as statements and tax documents. Shareholders have the option to hold their shares in the Standard Life Aberdeen Share Account where shares are held electronically in a secure environment and around 90% 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 the release of both the full year and half year financial results with the related transcript and webcast available on the Company's Investor Relations website www.standardlifeaberdeen.com/annualreport

The 2020 Annual General Meeting was held in Edinburgh on 12 May 2020. As a consequence of COVID-19 restrictions, no more than two people were permitted to assemble publicly and so shareholders were not able to attend in person. The meeting took place with the CEO and the Company Secretary present as members. Shareholders were invited to submit questions in advance of the meeting and the Chairman recorded a video presentation which addressed the main themes of the questions raised. The CEO also recorded a presentation providing a business update, including an overview of the COVID-19 response planning. Both videos were posted on the Company's website on the day of the AGM. The results were made available on the website the same day. 49% of the shares in issue were voted and all resolutions were supported although resolution 16 did not reach the necessary threshold to pass as a special resolution. Investor feedback made it clear that the lack of support was in relation to the interpretation that the proposed changes to the Company's Articles of Association would allow the Company to hold virtual-only meetings. To emphasise, neither the current nor proposed Articles would allow the Company to hold a virtual-only AGM. The proposed change was to allow electronic participation in a physical meeting.

Following on from failure to reach the level of support needed to pass the vote on the proposal to amend the Articles (resolution 16), the Board issued, as required by the Code, an updating regulatory announcement on 12 November 2020. The announcement summarised the engagement the Company had had with institutional investors on the specific matter and re-emphasised that it was not the Board's intention to move to hold a virtual-only AGM. Shareholders will be invited to vote on proposed revisions to the Articles at the 2021 AGM.

At present, we do not expect the COVID-19 restrictions to have eased sufficiently to allow shareholders to be able to attend this year's AGM in person. Instead shareholders will be able to view the AGM live by webcast. Questions can be submitted in advance or during the meeting and Directors will respond to as many questions as possible during the meeting. 

The AGM guide 2021 will be published online at www.standardlifeaberdeen.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.standardlifeaberdeen.com after the meeting.

Engaging with employees

Melanie Gee has continued as the designated NED to support workforce engagement. The Board Employee Engagement (BEE) annual plan is designed to access views from all employees across the business, including those located outside the U.K. During 2020, some of the direct engagement plans were disrupted by the need to comply with COVID-19 restrictions but the Board has continued to engage with employees directly and through regular meetings with relevant employee representatives via interactive video conference calls. The various BEE initiatives are covered below.

As the Viewpoints survey was undertaken in 2020, no additional all-employee BEE related surveys were issued. Follow-up to the 2019 survey on diversity and inclusion is included on page 22, and the outputs from the ESG survey continue to inform ESG initiatives.

The BEE group continued to operate and met four times in 2020. Employees attending these meetings included:

·  The UK employee representative forum

·  Representatives of all the employee networks (Unity, YPDN, Lighthouse, Balance, Armed Forces, Mind Matters)

·  Regional HR representatives to discuss local initiatives on employee engagement. During 2020, the BEE group heard about how local activities were targeted to take account of country-specific circumstances. The regions also shared local lockdown experiences with a view to helping each other.

·  The Diversity and Inclusion Team to discuss how they are taking forward employee engagement matters, including those arising from the Viewpoints survey

·  The Sustainability team, to consider how operational ESG and climate change initiatives and charitable initiatives are being taken forward, and how charitable initiatives were focused on local needs in the light of the COVID-19 pandemic

At these meetings, there was also general discussion of engagement themes and initiatives which the various representatives had been made aware of.

During 2020, Melanie also met the chairs of all of the employee networks on a 1:1 basis. At these meetings, the network chairs responded to her ask of 'one request' which the networks wanted the Board to be aware of from their perspective. The results of these meetings were reported to the Board and the Board was supportive of the resulting actions which included the NEDs giving further masterclasses on their careers and each network being able to present directly to the Board.

As a result of COVID-19, the planned programme of NED engagement dinners had to be changed and although only one physical dinner was held, in February, a 'virtual get together' was held in December, also attended by the Chairman, which looked back at the 2020 BEE programme and identified some objectives for 2021. At the NED engagement dinner in February 2020, the NED attendees heard from employees who support engagement activities in their teams.  They shared with the NEDs some of their ideas on communication and innovation.

In further BEE activities, there were three virtual Meet the NEDs sessions covering UK and EMEA, APAC and the Americas. These informal sessions were hosted by Melanie, accompanied by the Chairman and the NEDs, and employees took the opportunity to submit a wide variety of questions to the NEDs in advance of the meeting, and also raise questions during the meeting. While some of the questions were appropriate for the ELT rather than the NEDs, the NEDs committed to having the questions addressed and reported back to the attendees. Feedback from the Meet the NEDs sessions has been positive while recognising the constraints of the virtual process, and they complemented the physical or virtual 'Town Hall' sessions held by the CEO and the ELT throughout the year, all across the Group's operations.

The main general feedback themes which were escalated to the Board during 2020 included the need for continuing focus on comprehensive and quality communications to help employees understand the impact of COVID-19 on our offices; how they would be supported to carry out their roles and how employee interests were being considered in the ELT's initiatives.

At each Board meeting, Melanie gives a formal report on BEE activities, including the issues that have been raised through the discussions, and the Board considers how the ELT, in particular the Chief HR Officer, the Chief Brand, Marketing and Corporate Affairs Officer and the COO, are taking forward the points raised.

The BEE programme will continue in 2021, adjusted to take account of COVID-19.

Summary of Stakeholder engagement activities

Under s.172, the Directors consider their responsibilities to stakeholders in their discussions and decision-making.

 

Key stakeholders		Direct Board engagement	Indirect Board engagement	Outcomes
Clients	Read more on pages 14 to 19.	·  The CEO meets regularly with key clients (virtually when pandemic restrictions are in place) and reports to the Board on such meetings ·  The CEO has weekly calls with his opposite number at Phoenix Group, our largest client and reports thereon to the Board ·  The CEO takes part in key client pitches to hear directly from clients on their requirements (again virtually when pandemic restrictions are in place) ·  The Chairman meets with key clients at international conferences and industry membership boards where he represents the Group ·  The Board members feed into Board discussions feedback received directly from clients	·  The heads of the Growth Vectors report at Board meetings on key client engagement, support programmes and client strategies ·  Market share data and competitor activity are routinely reported to the Board ·  Analysis of successes and failures on client proposals is 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 creation of the Growth Vectors was designed to 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	Read more on pages 20 to 23.	·  Meet the NEDs town hall sessions and NED engagement dinners for a diverse mix of staff at all levels (when permitted) allow direct feedback in informal settings ·  Employee engagement NED in place and active with the employee diversity networks as well as with all employees through their representatives. Reports from the BEE NED are a standing report at each Board meeting. ·  Chairman and NEDs all mentor one or two CEO-1 or -2 level emerging talent ·  CEO and CFO 'Town Hall' sessions	·  CHRO reports to each Nomination and Governance Committee meeting on key hires and employee issues ·  CHRO produces a regular report for the Board drawing out key factors influencing staff turnover, morale and engagement ·  Viewpoints and Pulse surveys collect aggregate, regional, functional and business group trend data which is reported to the Board	·  Engagement feedback recognised in Board discussions on new ways of working ·  Engagement feedback is a key input to succession planning for key roles and design of reward

 

Key stakeholders		Direct Board engagement	Indirect Board engagement	Outcomes
Society	Business partners/ supply chain   Read more on pages 24 to 29.	·  CEO leads on relationships with key business partners and reports back to the Board ·  Risk and Capital Committee routinely reviews dependency on critical suppliers and how they are managed ·  Audit Committee leads on assessment of external audit performance and service provision ·  The Board received detailed papers supporting the outsourcing of a number of technology services, the renegotiation of the Group's contracts with FNZ in relation to the Platforms business and the revisions made to the Group's relationship with Phoenix	·  COO attends each Board meeting and reports on first line key supplier relationships and their role in transition and transformation activities ·  Supplier surveys undertaken ·  Tendering process include smaller level firms ·  Access and audit rights in place to key suppliers ·  Modern slavery compliance process in place ·  Procurement/payment principles in place ·  Certain key suppliers regularly discussed at Audit Committee, Risk and Capital Committee and Board	·  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 world-class operations ·  The Board sought assurance on the ability of key suppliers to continue to operate during the pandemic
	Communities   Read more on pages 24 to 29.	·  Chairman/NEDs/EDs present at relevant events and conferences ·  Chairman/EDs represent the Group on public policy and community organisations ·  Additional provision made for local charitable giving in COVID-19 circumstances	·  Stewardship/sustainability teams report regularly to the Board ·  Feedback on annual Stewardship and TCFD reports ·  Review of charitable giving strategy ·  ESG commercialisation presentations to the Board	·  Considered as input to the Group's culture and strategic drivers ·  Engagement drives the expression of our purpose
	Regulators/ policymakers/ governments Read more on pages 24 to 29.	·  Regular engagement with CEO, Chairman and Committee Chairs ·  FCA presents to the Board ·  'Dear Board/CEO' letters issued from regulators ·  Relevant engagement with regulators in overseas territories	·  Chief Risk Officer (CRO) updates at every Board meeting ·  Reports on the results of active participation through industry groups	·  Relevant Board decisions recognise regulatory impact and environment
Shareholders	Strategic partners   Read more on pages 30 to 37.	·  CEO has taken on detailed handling of the Phoenix relationship with regular meetings with his opposite number ·  ED representation on HDFC boards during 2020 ·  ED direct meetings with core supplier relationships	·  Specific updates in CEO report ·  As appropriate, reports to Board/ Committees from representative Directors ·  One ELT member serves on the Phoenix Board	·  The development of our business through our relationships with Strategic partners is a critical element of the Board's strategy
	Shareholders   Read more on pages 30 to 37.	·  Results, AGM presentations and Q&A ·  Chairman, CEO and CFO meetings with investors ·  Remuneration Committee Chair meetings with institutional investors ·  Chairman/CEO/CFO direct shareholder correspondence	·  Regular updates from the EDs/ Investor Relations Director/ Chairman/ Chairman of Remuneration Committee summarising the output from their programmes of engagement ·  Analyst/Investor reports distributed to the Board ·  As relevant, feedback from corporate brokers ·  Publication of Shareholder News ·  Dedicated mailbox and shareholder call centre team	·  Engagement supported various decisions including the proposed remuneration policy approved at the 2020 AGM

 

Speaking up

The workforce has the means to raise concerns in confidence and anonymously. The Audit Committee's oversight of the whistleblowing policy is covered in the Audit Committee report on page 64.

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. Given their short tenure, Stephen Bird and Stephanie Bruce do not currently have any NED roles. Keith Skeoch did not have any FTSE 100 non-executive roles but continued as a non-executive director of the Financial Reporting Council and was appointed Chairman of the Investment Association on 1 May 2020. Martin Gilbert was a non-executive director at Glencore plc. He was also appointed chair of Revolut on 1 January 2020, this additional appointment having been approved by the Board and recognising that his full-time role had been reduced by 20%. Proposed additional appointments of the NEDs are firstly discussed with the Chairman and then reported to the Nomination and Governance Committee prior to be being considered for approval. The register of the Board's collective outside appointments is reviewed annually by the Board. Directors' outside appointments are included in their biographies on pages 44 to 47.

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 Group's Outside Appointments and Conflicts of Interest policies.

In February 2021, the Board reviewed all previously authorised potential and actual conflicts of interest of the Directors and their connected persons, and concluded that the authorisations should remain in place until February 2022. Under the terms of the approval, conflicted Directors can be excluded from receiving information, taking part in discussions and making decisions that relate to the potential or actual conflict. The Board and relevant Committees follow this process when appropriate.

 

2. 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 2020, the Board's key activities included approving, overseeing and challenging:

·  The updated strategy and the 2021 to 2023 business plan to implement the strategy ·  Capital and management structures including the £400m share buy back programme ·  Oversight of culture, our standards and ethical behaviours ·  Dividend policy including the recommendation to pay the 2019 final dividend and approval of the 2020 interim dividend ·  Financial reporting, including the impact of the amortisation and impairment of intangibles acquired through acquisition ·  Risk management, including the Enterprise Risk Management (ERM) framework, risk strategy, risk appetite limits and internal controls and in particular how this was adapted for COVID-19 ·  Remuneration policy, recommending a revised policy to shareholders at the May 2020 AGM

·  Succession planning, in particular the CEO succession process ·  Significant corporate and other transactions including sales of shares in our Indian associate businesses, completing the sale of our Hong Kong insurance subsidiary, the agreement to acquire Tritax partners, the agreement to sell our Nordics direct real estate business and announcing the sale of Parmenion ·  The quarterly performance of the investment business ·  The ESG approach, both as an issuer and as an asset manager ·  Significant external communications ·  The work of the Board Committees ·  Appointments to the Board and to Board Committees ·  Matters escalated from subsidiary boards to the Board for approval

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 stock market and global economic conditions. There are also regular presentations from the key business functional leaders.

Chairman ·  Leads the Board and ensures that its principles and processes are maintained ·  Promotes high standards of corporate governance ·  Together with the Company Secretary, sets agendas for meetings of the Board ·  Ensures Board members receive accurate, timely and quality information on the Group and its activities ·  Encourages open debate and constructive discussion and decision-making ·  Leads the performance assessments and identification of training needs for the Board and individual Directors ·  Speaks on behalf of the Board and represents the Board to shareholders and other stakeholders

Chief Executive Officer (CEO) The CEO operates within authorities delegated by the Board to: ·  Develop strategic plans and structures for presentation to the Board ·  Make and implement operational decisions ·  Lead the other executive Director and the ELT in the day-to-day running of the Group ·  Report to the Board with relevant and timely information ·  Develop appropriate capital, corporate, management and succession structures to support the Group's objectives ·  Together with the Chairman, represent the Group to external stakeholders, including shareholders, customers, suppliers, regulatory and governmental authorities, and the local and wider communities

Senior Independent Director (SID) The SID is available to talk with our shareholders about any concerns that they may not have been able to resolve through the channels of the Chairman, the CEO or Chief Financial Officer, or where a shareholder considered these channels as inappropriate. The SID leads the annual review of the performance of the Chairman.

Non-executive Directors (NED) 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) ·  Board and Committee composition ·  Succession planning ·  Board appointments ·    Governance framework

Audit Committee (AC) ·  Financial Reporting ·  Internal audit ·  External audit ·  Whistleblowing ·  Financial crime ·    Regulatory financial reporting

Remuneration Committee (RC) ·  Development and Implementation of remuneration policy ·  Incentive design and setting of targets ·  Employee benefit structures

Risk and Capital Committee (RCC) ·  Risk management framework ·  Compliance reporting ·  Risk appetites and tolerances ·  Transactional risk assessments ·    Capital adequacy

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.

Growth vectors Support the CEO to deliver Growth across the business: ·  Investments ·  Adviser ·  Personal

Talent Support the CEO and Chief Human Resources Officer (CHRO) in developing leading talent management and succession planning.

World-class operations Support the CEO and Chief Operating Officer (COO) by overseeing global functions and the delivery of functional priorities.

Control Support the CEO in the first line management of risk, working closely with the Chief Risk Officer (CRO).

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.

You can read the Board Charter on our website www.standardlifeaberdeen.com

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 9 March 2021, the Board comprises the Chairman, eight independent non-executive Directors and two executive Directors. The Board is made up of six men (55%) and five women (45%) (2019: men 55%, women 45%).

The Chairman 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. None of the NEDs has served on the Board for more than nine years since the date of their first appointment. Following this review, the Board has concluded that all the current 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 2020. In this role, he is available to provide a sounding board to the Chairman and serve as an intermediary for the other Directors and the shareholders. He also led the process to review the Chairman's performance.

The roles of the Chairman and the CEO are separate and are summarised on page 53. 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.

You can read more about our Directors in their biographies in Section 2.

 

3. 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 equal opportunities 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

Diversity activities and progress to meet our targets are covered in the Investing in talent section of the Strategic report on page 22. The ELT's diversity policy in covered in the Directors' report on page 100.

Board changes during the period

Board changes during the year are covered in the Directors' report on page 98.

Board appointment process, terms of service and role

Board appointments are overseen by the Nomination and Governance Committee and you can read more about this on page 71.

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 further terms if the Board is satisfied with the non-executive Director's performance, independence and ongoing time commitment. There is no specified limit to the number of terms that a non-executive Director can serve. Taking account of their appointment dates to the predecessor boards where relevant, the current average length of service of the non-executive Directors is three years. For those NEDs who have already served two three-year terms, the Nomination and Governance Committee considers any factors which might reflect on their independence or time commitment prior to making any recommendation to the Board. During 2020, the Committee reviewed and supported the recommendation that Jutta af Rosenborg's appointment should be continued for a third term - taking account of her service on the board of AAM PLC prior to August 2017.

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. 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 2021 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.

External search consultants may be used to support Board appointments. MWM Consulting was engaged to support the appointment of Stephen Bird. The Group has additionally used the services of MWM Consulting to support other senior management searches.

Director election and re-election

At the 2021 AGM, all of the current Directors will retire. Stephen Bird, having been appointed since the previous AGM, will retire and stand for election. All the other Directors will stand for re-election.

As well as in Section 2, the AGM guide 2021 includes more background information about the Directors, including the reasons why the Chairman, following their annual reviews, believes that their individual skills and contribution supports their election or re-election.

You can read more about the Directors' outside appointments in their biographies in Section 2.

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, whose appointment and removal is a matter for the Board.

Board effectiveness

Review process

The Board commissions externally facilitated reviews regularly. As the 2018 and 2019 reviews were facilitated externally, the Nomination and Governance Committee agreed that the 2020 review should be conducted internally.

To carry out the review, the Company Secretary met with each Director individually and gathered their views on the Board's performance over the period and their recommendations on how its effectiveness could be strengthened. Progress on implementing the agreed actions from the 2019 review was also discussed. Following this, the Company Secretary prepared a draft report for initial review and discussion with the Chairman. The Board then reviewed and discussed the report.

Outcome

The Board recognised the relevant internal and external factors which it had needed to take account of during the year. These included living with and planning to move beyond COVID-19, regulatory uncertainty arising from matters such as the possible outcome of Brexit negotiations, regulatory change including transitioning away from LIBOR, increasing external expectations on the quality of external reporting, with a particular focus on enhancing ESG, culture and diversity reporting, and the challenges of managing virtual Board meetings, recognising that the Directors had not been able to gather in person since March 2020. Internally, the main factor was the CEO succession and the work Stephen Bird has been leading since his appointment.

Taking all of this into account, the Board believes that it performed effectively during 2020. Arising from the review the Board looks to see continued developments in these areas:

·  Increased informal Board interaction between meetings to compensate, partly, for not being able to come together physically at this time

·  An increased programme of virtual Board training sessions/deep dives to make sure the Board remains up to date on wider industry and market matters, using external commentators and experts as relevant

·  Creating more agenda time to discuss and measure ESG, Culture and Diversity and Inclusion, making sure they have a clear link to corporate strategy and its execution

·  Finding more time for the Board to discuss matters beyond fulfilling its statutory reporting and governance requirements

·  Continuing to strengthen regular Board reporting, with a particular focus on client and customer perception, key supplier relationships and the appropriate number of informative KPIs

Progress to implement the recommendations is monitored by the Company Secretary and the CEO's office and reported to the Nomination and Governance Committee.

Chairman

The review of Sir Douglas's performance as Chairman was led by the SID, Jonathan Asquith. It was based on feedback given in the Company Secretary's individual interviews with each Director as well as focused discussions between the SID and the other Directors.

Through these meetings, Jonathan Asquith sought feedback on: the Chairman's overall leadership role; his relationships with the EDs and the NEDs; Boardroom behaviours; and any development areas to take forward in 2021.

The Company Secretary summarised the feedback into a draft report which was reviewed and agreed by the SID and distributed to all Board members, except Sir Douglas. The Directors, led by Jonathan Asquith and without Sir Douglas being present, met to consider the report. They concluded that in his second year as Chairman, Sir Douglas had performed his role very effectively and shown strong leadership of the Board. He continued to bring his inclusive yet suitably challenging style to the Boardroom, encouraging, and allowing time for, all Board members to participate fully, and he continued to build strong relationships with the EDs while supporting the NEDs in challenging and holding the ELT to account. All the Directors were looking forward to continuing to work with him, individually and collectively, to deliver continued progress in 2021. Jonathan Asquith met with Sir Douglas to pass feedback from the review directly to him.

Directors

The Chairman met each Director individually to discuss their performance during 2020. These discussions considered individual training, development and engagement opportunities and any agreed development actions are taken forward by the individual Director together with the Company Secretary and the Chairman.

Director induction and development

The Chairman, 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 SMCR.

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 investments, regulatory reporting, ESG, conduct risk, risk and capital management, and financial reporting

·  Visits to business areas (when permitted by Government restrictions) 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, and 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. This process was particularly relevant in 2020 to support Stephen Bird's induction as CEO.

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:

·  Platform transformation

·  Finance transformation

·  Technology strategy

·  LIBOR transition

·  The activity of the ESG investment team and the broader Enabling ESG programme

·  Governance and oversight of investment risk

·  Cyber and operational resilience

·  External audit reform

4. 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 and presents an assessment of the Company's position and prospects. They also recognise their responsibility to establish procedures to manage risk and oversee the internal control framework. You can read their responsibilities statement on page 103. The reports from the Audit Committee and the Risk and Capital Committee Chairmen show how they 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 38 to 40.

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 system was in place throughout the year and up to the date of approval of the Annual report and accounts 2020.

A review of SLA's risk management and internal control systems was carried out drawing on inputs across the three lines of defence. This did not include associates and joint ventures as they do not fall within these systems. The first line conducted Risk Control Self-Assessments (RCSAs) throughout 2020; Risk & Compliance undertook a review of the effectiveness of the Enterprise Risk Management Framework (ERMF) (including RCSAs) and how internal controls were operating within the first line; and, Internal Audit produced a Control Environment Assessment using SLA's risk taxonomy. Collectively these provided a view of the firm's control environment from each of the three lines of defence. The impacts of COVID-19 on SLA's operations (with most staff having worked from home since the start of the pandemic) were reflected in the review.

Following this review, the Board concluded that the system of internal control was effective, and that there had been no significant failings or weaknesses during the period.

Additionally, with regard to regular financial reporting and preparing consolidated accounts, the Finance function sets formal requirements for financial reporting, defines the process and detailed controls for the IFRS consolidation, reviews and challenges submissions and receives formal sign-off on financial reporting from business unit finance heads. In addition, the Finance function runs the Technical Review Committee and the Financial Reporting Executive Review Group which review external technical developments and detailed reporting disclosure and accounting policy issues.

The Board's going concern statement is on page 102 and the Board's viability statement is on page 37.

5. Remuneration

The Directors' remuneration report (DRR) on pages 73 to 95 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 87 of the DRR and in the Reward section of the Directors' report on page 100. The Board believes that its remuneration policies and practices are designed to support strategy and long-term sustainable success. You can read about the policies and practices in the DRR.

Other information

You can find details of the following, as required by 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 and, sometimes, at the offices of one of our overseas locations. 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 had planned to hold eight formal meetings and a focused strategy meeting in 2020. As the COVID-19 pandemic grew, the Board held additional update calls. When there were recommendations to be decided on, these were structured as formal Board meetings. There were also additional calls which were not constituted as formal Board meetings, but when the Board was able to hear from and question SMEs from the risk, operations, client and HR teams to understand how the organisation was responding to the pandemic. The Board was keen to find the balance between overseeing how the ELT was operating at this time and allowing the ELT time to focus on delivering priorities e.g. the means for the workforce to be able to work from home.

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 Chairman or to the Company Secretary. If necessary, they can follow up with the Chairman 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 met once during 2020.

The Chairman is not a member of the Audit, Risk and Capital, or Remuneration Committees. He may attend meetings of all Committees, by invitation, in order to keep abreast of their discussions. The table below reflects the composition of the Board and Board Committees during 2020 and records the number of meetings and members' attendance.

	Board	Group Audit Committee	Nomination and Governance Committee	Remuneration Committee	Risk and Capital Committee
Chairman
Sir Douglas Flint	12/12	--	5/5	-	-
Executive Directors
Stephanie Bruce	12/12	-	-	-	-
Stephen Bird4	5/5	-	-	-	-
Non-executive Directors
Jonathan Asquith	12/12	-	5/5	10/10	-
Brian McBride1	9/9	-	-	5/5	-
John Devine2	12/12	6/6	5/5	5/5	9/9
Melanie Gee3	12/12	6/6	5/5	-	4/4
Martin Pike	12/12	6/6	5/5	-	9/9
Cathleen Raffaeli	12/12	-	-	9/10	9/9
Cecilia Reyes	12/12	-	-	10/10	9/9
Jutta af Rosenborg	12/12	6/6	-	9/10	-
Former members
Keith Skeoch (stood down on 31 August 2020)	8/8	-	-	-	-
Martin Gilbert (stood down on 14 May 2020)	4/4	-	-	-	-

¹    Brian McBride was appointed to the Board and Remuneration Committee on 1 May 2020.

²    John Devine stood down from the Remuneration Committee after the 2020 AGM.

³    Melanie Gee stood down from the Risk and Capital Committee after the 2020 AGM.

⁴    Stephen Bird was appointed to the Board on 1 July 2020.

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 chairmen 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 Chairman of the Audit Committee on any whistleblowing incidents which have been escalated to him. The Committees operate within specific terms of reference approved by the Board and kept under review by each Committee.

These terms of reference are published within the Board Charter on our website at www.standardlifeaberdeen.com/annualreport

 

All Board Committees are authorised to engage the services of external advisers at the Company's expense, whenever they consider this necessary.

Committee reports

This statement includes reports from the chairmen 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 in Section 3.4.

The Committee Chairmen are happy to engage with you on their reports. Please contact them via [email protected]

 

 

3.1 Audit Committee report

The Audit Committee assists the Board in discharging its responsibilities for financial reporting, internal control and the relationship with the External auditors.

I am pleased to present my report as Audit Committee Chairman.

A major role of the Committee in 2020 was to consider the impact of COVID-19 on financial reporting, particularly on the Half year results 2020, and internal controls.

During the year the Committee also:

·  Considered the carrying value of intangible assets, in particular asset management goodwill and customer relationship intangibles

·  Considered reports from the Chief Internal Auditor

·  Reviewed CRD IV reporting

·  Received reports on compliance with the FCA Client Assets Sourcebook (CASS) rules in the Company's CASS permissioned regulated legal entities

The Committee also continued to focus on the quality of financial reporting.

The report is structured in four parts:

1.     Governance

2.     Report on the year

3.     Internal audit

4.     External audit

 

 

 

 

John Devine

Chairman, Audit Committee

3.1.1 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 2020, please see the table on page 57.

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. John Devine is a member of the Chartered Institute of Public Finance and Accounting. Jutta af Rosenborg is also a qualified accountant. Martin Pike is a fellow of the Institute and Faculty of Actuaries. The Committee members are also members of audit committees related to their other NED roles.

Invitations to attend Committee meetings are extended on a regular basis to the Chairman, the Chief Executive Officer, the Chief Financial Officer, the Group Financial Controller, the Chief Internal Auditor and the Group Chief Risk Officer.

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 Auditor. 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 key Group prudential returns and disclosures

·  Internal controls over financial reporting and procedures to prevent money laundering, financial crime, bribery and corruption

·  Outcomes of investigations resulting from whistleblowing

·  The appointment or dismissal of the Chief Internal Auditor, 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 Chairman 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 Chairman met regularly with the Chief Internal Auditor and the Head of Financial Crime to discuss their work, findings and current developments.

Committee effectiveness

The Committee reviews its remit and effectiveness each year. The 2020 review was conducted internally by the Company Secretary interviewing each of the Committee members. As well as general observations, the key performance areas considered were:

·  The coverage of the Committee's duties in the meeting agendas

·  How effectively agenda items were presented and discussed

·  The quality and level of detail in the papers

·  How well the Committee met its objectives in terms of making decisions and reporting to the Board

The Committee members did not raise any material issues or concerns regarding the above areas or the overall effectiveness of the Committee during 2020. They were very supportive of the Chair's effective role in leading the Committee through the volume of technical papers. The Committee members always aim to find the right balance in their discussion time to make sure that, while they cover technical financial and regulatory reporting to the appropriate level, they are also able to spend enough time considering all of the other matters under their remit. The Committee also recognised the ongoing external changes in relation to audit reform and the provision of audit services and will consider any changes/best practice that may arise from this.

3.1.2 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 2019 ·  Strategic report and financial highlights 2019 ·  Financial reporting judgements ·  Liaison with the Remuneration Committee on targets and measures ·  External auditors' review of Full year results ·  Financial crime and Whistleblowing
Apr-Jun	·  Internal audit findings ·  CASS reporting update ·  Pillar 3 regulatory reporting ·  Initial financial reporting matters for Half year 2020 ·  Financial crime and Whistleblowing
Jul-Sep	·  Half year results 2020 ·  External auditors' review of Half year results ·  External auditors' audit strategy, including fees ·  Internal audit findings ·  Financial crime and Whistleblowing ·  MiFID II reporting updates
Oct-Dec	·  Initial financial reporting matters for Full year 2020 ·  Non-audit services policy ·  The Internal audit plan and charter ·  Internal audit findings ·  Effectiveness of the External auditors and related non-audit services ·  Financial crime and Whistleblowing ·  Risk management and internal control system annual review

The indicative proportion of time spent on the business of the Committee is illustrated below:

 

Diagram removed for the purposes of this announcement.  However it can be viewed in full in the pdf document

Detail of work

The focus of work in respect of 2020 is described below.

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 2020 Group financial statements. This year there were no new accounting standards which had a significant impact on the Group accounting policies.

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 2020, the Committee reviewed the Annual report and accounts 2019 and the Half year results 2020. For both periods it received written and/or oral reports from the Chief Financial Officer, the Company Secretary, the Chief Internal Auditor 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 discussed the impact of COVID-19 on the Annual report and accounts 2020 and Half year results 2020 production process, and supported the steps put in place by management to ensure that controls were maintained and that the timetables remained appropriate for a remote working environment.

Accounting estimates and judgements

The Audit Committee considered all estimates and judgements that Directors understood could be material to the 2020 financial statements. The Committee also focused on disclosure of these key accounting estimates and judgements.

Significant accounting estimates, judgements and assumptions for the year ended 31 December 2020	How the Audit Committee addressed these significant accounting estimates and assumptions
Intangible assets including goodwill
For all intangible assets including goodwill, an assessment is made at each reporting date as to whether there is an indication that the intangible has become impaired. At half year 2020 we determined that an impairment of goodwill was required. Significant judgement was required to determine the recoverable amount of the asset management cash-generating unit which determined the goodwill impairment. Impairment triggers are used to assess whether there are indicators of impairment for other intangibles. The intangibles with material judgements are the customer relationship and investment management contract intangibles. At half year 2020 we determined that an impairment of the segregated and similar customer relationship intangible was required. The determination of the recoverable amount for this segregated and similar intangible required assumptions relating to future fee revenue and expenses.	The half year 2020 impairment review of asset management goodwill resulted in the recognition of an impairment of £915m. The Committee spent time at two meetings reviewing and challenging assumptions relating to the fair value, less costs of disposal, of the asset management cash-generating unit. The Committee considered a number of different valuation approaches, and discussed that the key assumptions relating to the earnings multiple valuation approach were projected forecasts of maintainable earnings, price to earnings multiples, and premiums for control and discounts for lack of liquidity. The Committee considered these assumptions were within the range of reasonable outcomes. See Note 15 for further details. The Committee also considered analysis provided by management on impairment triggers relating to the customer relationship and investment management contract intangibles. The Committee agreed with management that there were no indicators of impairment for these intangibles, other than in relation to the segregated and similar customer relationship intangible where an impairment of £134m was recognised. The Committee challenged the assumptions underlying the value in use for this intangible and concluded that they were reasonable and that related sensitivities were appropriately disclosed. See Note 15.

 

Significant accounting estimates, judgements and assumptions for the year ended 31 December 2020	How the Audit Committee addressed these significant accounting estimates and assumptions
UK defined benefit pension plan
In compiling a set of financial statements, it is necessary to make some judgements and estimates about outcomes that are dependent on future events. This is particularly relevant to the defined benefit pension plan surplus which is inherently dependent on how long people live and future economic outcomes. For the UK defined benefit pension plan, the Committee reviewed the assumptions for mortality, discount rate and inflation.	The Committee considered the proposed assumptions taking into account market data and information from pension scheme advisors. In relation to inflation the Committee considered the long-term gap between the Retail Price Index (RPI) and the Consumer Price Index (CPI), as pensions in payment are generally linked to CPI, taking into account recent government announcements relating to the future of RPI. The Committee also considered reporting from the External auditors and related benchmarking of the pension scheme assumptions. Note 34 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 34 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.
Investments in associates
During 2020 the Group's associate Phoenix issued new shares relating to the acquisition of ReAssure Group plc, which resulted in the Group's holding in Phoenix of 19.97% becoming 14.4% of the enlarged group. Determining whether Phoenix should continue to be classified as an associate was a critical accounting policy judgement during 2020.   As detailed in the 2019 Audit Committee report, HDFC Life was considered to be an associate whilst our shareholding gave us the right to appoint a director to the HDFC Life Board.   In relation to the Phoenix associate, judgements were also required relating to the recoverable amount and carrying value of the investment.	The Committee considered whether Phoenix should continue to be classified as an associate, and concluded that this classification remained appropriate, notwithstanding that the holding was significantly less than 20%. The classification as an associate was based on significant influence from the contractual relationships with Phoenix, including the licencing to Phoenix of the Standard Life brand, and the Group's Board representation on the Phoenix board. The Committee noted that if the holding was considered an investment rather an associate we would no longer report our share of Phoenix's profits but would instead account for Phoenix as an investment at fair value. The Committee noted that following the sale of HDFC Life shares on 3 December 2020 we no longer had the right to appoint a director to the HDFC Life Board and therefore accounting as an investment was appropriate, giving rise to a significant increase in the carrying value (to fair value) and a significant gain in the 2020 income statement. In relation to Phoenix, the Committee noted that at year end 2020 the market value was above the carrying value and therefore that there were no indicators of impairment. See Note 16 for further information. The Committee also discussed the implications of the announcement on 23 February 2021 relating to the simplification and extension of the strategic partnership with Phoenix. The Committee agreed that following the changes to the commercial agreements, in particular in relation to the licensing of the 'Standard Life' brand, Phoenix should no longer be accounted for as an associate with effect from 23 February 2021, and should instead be accounted for as an investment at fair value. Note 47 relating to events after the reporting date provides further details.

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 the financial reporting team's continued aim to draft the Annual report and accounts to be 'fair, balanced and understandable'. A focus in 2020 was ensuring that the Strategic report appropriately explained risks relating to and impact of the COVID-19 virus.

Standard Life Aberdeen's principles

To create clarity around what Standard Life Aberdeen means when it talks of being fair, balanced and understandable, a set of principles was developed, which can also act as an organisational definition for each aspect:

Fair '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 business and economic realities'	·  The narrative contained in the Annual report and accounts is honest and accurate ·  The key messages in the narrative in the Strategic report and 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 'We are fully disclosing our successes, the challenges we have faced in the 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 stakeholders'	·  The Annual report and accounts presents both successes and challenges experienced during the year and, as appropriate, reflects those expected in the future ·  The level of prominence we give to successes in the year versus 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 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 reasonably informed knowledge of financial statements and our industry would understand'	·  There is a clear and easy to understand framework to the Annual report and accounts ·  The layout is clear and consistent and the language used is simple and easy to understand (industry specific terms are defined where appropriate) ·  There is a consistent tone across and good linkage between all sections in a manner that reflects a complete story and clear signposting to 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, Communications and Strategy.

·  Fair, balanced and understandable guidance was provided to all key stakeholders involved in the Annual report and accounts production process

·  We, as an 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 2020 were reviewed by the Audit Committee at three meetings. The Committee complemented its knowledge with that of executive management and the Internal and External auditors. An interactive process allowed each draft to embrace contributions.

·  Our 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 why we use 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 profit before tax is a key profit APM. The Committee considered whether the allocation of items to adjusted 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 restructuring costs, the Committee specifically reviewed the proposed treatments and ensured that the Annual report and accounts provided appropriate disclosures.

We agreed to recommend to the Board that the Annual report and accounts 2020, 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

In H1 2020 the Group published its Standard Life Aberdeen plc Pillar 3 report under CRD IV. The Committee reviewed the Pillar 3 report and reviewed and discussed papers which set out the control and verification processes followed in the compilation of the report.

The Committee also considered disclosures relating to CRD IV results included in the Strategic report section 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 the Group'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 control environment around financial reporting will continue to be monitored closely.

Financial crime and 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 receives regular updates from the Head of Financial Crime who reports on compliance with the Group's Anti-Financial Crime and Anti-Bribery policy, and any other activities associated with financial crime, including fraud risk. During 2020, the Committee reviewed the output of an internal audit on the anti-financial crime framework and it has continued to oversee the progress to implement the report's recommendations.

The Committee Chairman 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 Chairman reports to the Board on the updates the Committee receives.

3.1.3 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. An exercise was undertaken during the year to benchmark Internal audit resources, with increased consideration of how audit assurance activity across the Group is aligned and coordinated, avoiding gaps and overlaps. 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 annually, but 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. As a result of COVID-19, the audit plan year was adjusted to support a full programme of COVID-19 related audit work, ahead of a transition to a revised plan. Key areas of focus over the year were operational resilience, conduct and the Group's Transformation programme. 

The Committee formally assess the effectiveness of the function via a scorecard, which is aligned to the Group's objectives, along with assessing its independence and quality assurance practices. Independent external reviews are also undertaken at regular intervals. These have been positive and allow the function to continue to measure itself against best practice. Regular reporting is provided to the Committee to illustrate plan progress, and the status of implementation of recommendations. The Committee's review of 2020 was positive and supports the continuous evolution and enhancement of the function.

The Internal Audit function completed its functional transformation programme in March 2020, subsequently launching an updated strategy focusing on quality, delivery, people, and stakeholders, underpinned by a number of pillars including digital.

The Chief Internal Auditor reports to the Committee Chairman. During the year, regular dialogue takes place, at least monthly, between the Committee Chairman and the Chief Internal Auditor.

3.1.4 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 2021 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. The audit was last subject to a tender for the financial year ended 31 December 2017.

The Senior Statutory Auditor is Jonathan Mills, who, having been appointed since 1 January 2017, is completing his fourth audit as the lead audit partner. Recognising the rotational requirements for the lead audit partner for financial year 2022, the Committee has been meeting with potential candidates to succeed him, and agreeing a plan with KPMG on how to evolve the audit team to ensure a smooth handover.

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'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. There is a 70% fee cap on non-audit services to audit clients 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 reports 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 2020 was £5.2m (2019: KPMG £4.8m). In addition £2.3m (2019: £2.1m) 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 whole Committee is required.

Non-audit fees amounted to £0.8m (2019: £1.2m) all of which related to other assurance services. Other assurance services in 2020 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 8 of the Group financial statements.

The ratio of non-audit fees to audit and audit related assurance fees is 11% (2019: 17%). The total of audit related assurance fees (£2.3m) and non-audit fees (£0.8m) is £3.1m, and the ratio of these audit related assurance fees and non-audit fees to audit fees is 59% (2019: 69%). 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. This was particularly relevant in 2020 as both the Finance team and the External audit team had to overcome the challenges of remote working.

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. We requested a formal report from KPMG of the applicability of the findings to Standard Life Aberdeen both in respect of generally identified failings and failings specific to individual audits. We were satisfied insofar as the issues might be applicable to Standard Life Aberdeen'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 Chairman had at least monthly 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 next paragraph for more detail.

The Committee discussed with KPMG how remote working would impact their audit and were satisfied that there would be no impact on audit quality.

We have discussed the accuracy of financial reporting with KPMG both as regards accounting errors that will 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 £25m (2019: £31m). This equates to approximately 2.7% of normalised profit before tax (as set out in the KPMG independent auditors' report) and 5% of adjusted profit before tax. 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, we supported that audit testing would be performed to a lower materiality threshold for individual reporting units. Further, KPMG agreed to draw the Committee's attention to all identified uncorrected misstatements greater than £1.25m (2019: £1.6m). The aggregated net difference between the reported pre-tax profit and the auditor's judgement of pre-tax profit was less than £3m which was significantly 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 us that the audit complies with their independent review procedures.

3.2 Risk and Capital Committee report

I am pleased to present my report as Chairman of the Risk and Capital Committee.

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.

The overall risk environment for the Group remains at an elevated level as a result of the combination of the difficult market environment and our ongoing business transformation activity.

A key area of focus for the Committee during 2020 was our response to managing the impacts of the global COVID-19 pandemic on our clients, people and business. We successfully established new ways of working to support our customers and the delivery of our business plan and we managed the impacts of the difficult economic environment. In light of the ongoing uncertainty in the political landscape over the year, the Committee monitored developments in relation to the negotiations for the UK's future relationship with the EU and reviewed Standard Life Aberdeen's preparations for a disorderly Brexit scenario which ensured that we would continue to be able to provide our clients with continuity of service, whatever the final outcome.

Throughout 2020 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

·  Key components of the Group's ICAAP and the Group's capital and liquidity

·  Management of the risks arising from the firm's third party relationships

·  Key risks arising from the transformation activity across the Group

·  Work to develop our approach to managing cyber resilience in line with the US National Institute of Standards and Technology (NIST) framework

·  Our Conduct Risk Framework and the implementation of the Senior Managers and Certification Regime across the UK business

·  The Group's exposure to climate change and management of related risks and opportunities

Furthermore the Committee has closely monitored developments from our regulators across the world as they have responded to the challenges brought about by the COVID-19 pandemic and progressed the regulatory agenda including in the areas of operational resilience, liquidity and third party risk management.

Further details on this and other activities carried out by the Committee during the year can be found in the report that follows.

 

 

 

Martin Pike

Chairman, 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 2020, please see the table on page 57.

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, the Chief Investment Officer, Chief Operating 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 Chairman of the Committee. The Committee's members have also held regular private meetings with the Chief Risk Officer and the Chief Internal Auditor and have been given additional access to management and subject matter experts outside of the Committee meetings in order to support them in gaining an in-depth understanding of specific topics.

Key responsibilities

The Company's purpose results in exposure to a range of risks and uncertainties. Understanding and actively managing the sources and scale of these risks and uncertainties 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 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 suitability 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 other corporate transactions

·  Regulatory compliance across the Group

Further detail on the work performed in each of these areas is set out in the report below.

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.

 

The Committee's work in 2020

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 considered by the Committee are:

·  The 'Views on Risk' report which provides a holistic assessment from the Chief Risk Officer of the key risks and uncertainties faced by the Group's businesses and the actions being taken to manage these

·  Ongoing activity to enhance and develop Standard Life Aberdeen's ERM framework, for example the Risk Appetite and Policy frameworks

·  Performance of the Group's ICAAP processes in accordance with the Capital Requirements Directive including the firm's stress and scenario testing programme. The ICAAP supports the Committee in understanding changes to the risk profile of the Group and the capital position over the course of the year.

·  Minutes from those non-executive risk committees that operate in Standard Life Aberdeen plc's directly-held subsidiaries

Through these recurring activities the Committee was able to challenge management's assessment of risks and to 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 2020. This included consideration of:

Jan-Mar	·  Advice provided to the Remuneration Committee regarding the delivery of performance in 2019 relative to risk appetites ·  Findings included in the 2019 Internal controls report issued for Aberdeen Standard Investments ·  Cyber risk and cyber security related matters ·  Standard Life Aberdeen's preparations for a disorderly Brexit ·  The FCA Focus on Non-financial Misconduct and reviewing Standard Life Aberdeen's approach and activity in relation to the FCA's 5 Conduct Questions ·  Aberdeen Standard Investments' approach to fund governance ·  Monitoring of risks related to overall transformation and integration activities ·  Aberdeen Standard Investments' Investment Platform Integration Plan ·  Review of Standard Life Aberdeen's principal risks and risk disclosures for the Annual report and accounts
Apr-Jun	·  Proposed changes to the risk appetite framework ·  Aberdeen Standard Investments' approach to Assessment of Value ·  Managing and monitoring conflicts of interest ·  Aberdeen Standard Investments' product and solutions pipeline and governance ·  Planning and preparations for the post lockdown return to office ·  Fund liquidity 2020 regulatory change ·  LIBOR transition ·  Review of the remit of the Risk & Compliance function ·  The liquidity risk framework ·  The Senior Managers and Certification Regime
Jul-Sep	·  The management of IT obsolescence ·  Aberdeen Standard Investments' portfolio advisory proposition ·  Climate risk in funds ·  Procurement transformation programme ·  Cyber resilience ·  Review of the roll-out of the Tripartite process to Aberdeen Standard Investments' full fund range
Oct-Dec	·  Aberdeen Standard Investments' disposal of holdings in boohoo as a result of further concerns being raised on the supply chain ·  Heng An Standard Life (HASL) product risks ·  The risk assessment and due diligence in respect to the proposed acquisition of Tritax Partners ·  Assessment of political and reputational risks ·  Annual update on operational resilience ·  Operational disruption risk from a major cloud service provider or a major outsource arrangement ·  Review of Standard Life Aberdeen wind-down plan and triggers ·  FNZ global framework agreement ·  The 2021 combined second and third line assurance plan ·  Update on the Investment Firm Prudential Regulatory Regime

After each meeting, the Committee Chairman reports to the Board, summarising the key points from the Committee's discussions and any specific recommendations.

Risk exposures and risk strategy

Standard Life Aberdeen's risk appetite framework provides a common framework to enable 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, including 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 reviewed and proposed updates to the risk appetite framework to ensure that the risk appetites and risk limits reflected changes to the risk profile in view of the external environment and ongoing transformation of the business. In particular additional metrics for Operational Risk and Third Party Management were created to strengthen our management of impacts caused by the COVID-19 pandemic.

Through reviewing this reporting the Committee supports the Board by monitoring risks relative to applicable risk appetites 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:

·  Risks that have emerged as a result of the global COVID-19 pandemic

·  Risks associated with the delivery of the business plan

·  Climate risk in funds

·  Enhancements to components of the Group's risk appetite framework

·  The Standard Life Aberdeen ICAAP report

·  Steps taken to strengthen the conduct risk framework

·  The management of cyber risk across the Group

·  The approach to management of the Group's liquidity risk framework

Stress testing and scenario analysis performed in 2020 also supported the Committee in understanding, monitoring and managing the risk and capital profile of the business under stressed conditions. This provided a forward-looking assessment of resilience to potentially significant adverse events affecting key risk exposures and comprised:

·  Individual stresses - looking at stresses to a range of financial variables in isolation

·  Combined stress scenarios - looking at simultaneous stresses impacting on economic conditions, flows and idiosyncratic factors specific to the Group

·  Reverse stress testing - considering extreme but plausible events, including as a result of operational, conduct or reputational risks, that have the potential to cause the business to become unviable

The Committee reviewed the results of the stress testing and scenario analysis that was performed. This included reviewing the results of three scenarios which were explored as part of the reverse stress testing exercise: a market shock with adverse impacts on our strategic investments; a significant breakdown in a key strategic relationship and the outage of a key payment mechanism.

Based on the results of the stress testing and scenario analysis, the Committee concluded there was no requirement for the business to reduce its risk exposures and that the business was resilient to extreme events as a result of the robust controls, monitoring and triggers in place to identify events quickly and the range of management actions available to help mitigate their effects.

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 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 setting 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.

The Committee also receives regular reporting from the Chief Internal Auditor which provides an independent assessment of the internal control environment relating to the operation of the 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 plan 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 developments in connection to Brexit, COVID-19, Operational Resilience, Environmental Social & Governance Risks, LIBOR transition and the Investment Firm Prudential Regulatory Regime.

 

Governance arrangements

The Committee has continued to rely on 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 Aberdeen Standard Investments Life and Pensions Limited, Standard Life Savings Limited and Elevate Portfolio Services Limited.

The Committee receives updates and minutes from these committees in order to maintain awareness and oversight of risks across the Group. The Committee also reviews the terms of reference for these committees in order to ensure their remit is suitably aligned. In addition to the Committee reviewing reporting from the subsidiary risk committees, arrangements also exist for the Committee's Chairman to attend those subsidiary risk committees on request.

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 ensure 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 annually. The 2020 review was conducted internally by the Company Secretary meeting with each of the Committee members. As well as general observations, the key performance areas considered were:

·  The coverage of the Committee's duties in the meeting agendas

·  How effectively agenda items were presented and discussed

·  The support the Committee received from the second line of the three lines of defence model

·  The quality and level of detail in the papers

·  How well the Committee met its objectives in terms of making decisions and reporting to the Board

The Committee members did not raise any material issues or concerns regarding the above areas or the overall effectiveness of the Committee during 2020. The Committee was encouraged by the move of the investment risk team to come under the CRO's remit and were keen to learn more about the work of the investment risk team. Acknowledging the amount of time the Committee spends on regulatory risk, the Committee would welcome the opportunity to spend more time on the inter-connectedness of the holistic business risks the Company runs and manages, as the agendas allow. The Committee would also encourage the Risk Team to make more use of two-way secondment opportunities with business colleagues, so that both the risk team and the business learn from each other, and this business-partnering approach could further strengthen the quality of the information presented to the Committee. The Committee members were supportive of the Chairman's role in managing the challenging number of matters which fall in the Committee's remit.

 

3.3 Nomination and Governance Committee report

The Committee's key governance priorities this year were to support the Board to deliver the CEO succession and to maintain our board governance processes during this time of uncertainty brought about by COVID-19.

Governance Framework

We have continued to review our governance framework against the Code principles and provisions. The Committee did not make any fundamental changes to our governance framework in 2020 but we did approve an updated Board Matters Reserved schedule where we have further clarified the relationship between the SLA plc and subsidiary boards.

Employee engagement

Melanie Gee has continued in her role as the non-executive Director (NED) taking forward employee engagement and you can read about those activities during the year on page 49. Although we had to make some changes to our engagement plans during 2020 as a result of COVID-19, Melanie's direct communication with our employees continues to be both effective and well received.

Board evaluation

Having commissioned externally facilitated reviews in 2018 and 2019, we carried out our Board review internally in 2020 and you can read about the process and its outcomes on page 55.

Culture

Continuing to build on the transformation work across the business, the Committee has received updates on the work to oversee the Group's culture and considered the ELT's initiatives to embed it throughout the organisation.

CEO succession

As I covered in my Chairman's report, Keith Skeoch retired as the Group's CEO on 1 September and was succeeded by Stephen Bird. You can read later in this statement about the Committee's oversight of the succession process.

Board developments and diversity

We have welcomed new Directors and said farewell to long-serving Directors over the year. As I have covered already in my Chairman's statement, I am particularly pleased to have welcomed Stephen Bird and Brian McBride to the Board and to thank Keith Skeoch and Martin Gilbert for their many years of service.

The Board continues to emphasise the importance of strong governance and I look forward to updating you on this in future reports.

 

 

Sir Douglas Flint

Chairman and Chairman of the Nomination and Governance Committee

Membership

The members of the Committee are the Chairman and a number of the independent non-executive Directors. For their names, the number of meetings and committee member attendance during 2020, please see the table on page 57.

Keith Skeoch and Stephen Bird, in their CEO role, were invited to Committee meetings to discuss relevant topics, such as the role and membership of the ELT, talent development and management succession.

The Committee's role is to support the composition and effectiveness of the Board, and oversee the Group's activities to strengthen its talent pipeline. It also oversees the ongoing development and implementation of the Group's governance framework.

In this report and other parts of the corporate governance statement you can read about the Committee's role in relation to its key responsibilities.

Key responsibilities:

·  Identifying and recommending Directors to be appointed to the Board and the Board Committees

·  Reviewing and assisting in the development and implementation of the Company's culture, diversity and inclusion activities

·  Reviewing Board diversity, skills and experience

·  Supporting the process and output of the Board's effectiveness review

·  Overseeing succession planning, leadership and talent management development and diversity levels throughout the Group

·  Considering how the Group should comply with developing 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 2020

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 2019 ARA ·  Considered the diversity and inclusion 2020 priorities ·  Reviewed the Board Charter and Committees' terms of reference ·  Recommended the appointment of Brian McBride ·  Agreed the NED mentoring programme for the GLG
Apr-Jun	·  Reviewed the recommendations to shareholders to re/elect Directors at the AGM ·  Reviewed the continued appointment of Jutta af Rosenborg at the end of her second three-year term ·  Received the half year update on the Culture, Diversity and Inclusion action plans ·  Recommended the CEO succession process ·  Reviewed ELT succession planning ·  Reviewed progress on the recommendations from the 2019 Board effectiveness review ·  Reviewed the revised approach to 2021 ESG external reporting, including the Stewardship Code
Oct-Dec	·  Received the full-year update on the Culture, Diversity and Inclusion action plans ·  Approved the process for the 2020 Board Effectiveness Review ·  Reviewed ELT and senior leadership succession planning ·  Agreed the revised schedule of Matters reserved for the Board ·  Reviewed progress on Talent and Change development activities

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

Board appointments

When seeking to make Board appointments, the Committee identifies 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 NEDs. In addition, it also recognises the skills which the Board will need as it moves forward to oversee the implementation of its approved strategy and takes account of the Group's commitments to achieve and maintain its published Board diversity target.

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 then makes recommendations to the Board on any proposed appointment, subject always to the satisfactory completion of all background checks and regulatory notifications or approvals. The other Board members are also offered the opportunity to meet the recommended candidates. Part of this includes considering the external commitments of candidates to assess their ability to meet the necessary time commitment and whether there are any conflict of interests to address.

The Committee also oversees the process to recommend continued appointments, but members of the Committee do not take part in discussions when their own performance - or continued appointment - is being considered. Jutta af Rosenborg's continued appointment was reviewed during the year. This was her third term of appointment, taking account of her service on the Aberdeen Asset Management PLC Board and the Committee agreed that she continued to meet all independence and time commitment expectations.

Succession planning and talent management activities

The Committee regularly reviews the results of succession planning activities, including key person and retention risk, and talent development programmes across the Group.

In particular, the Committee discussed the future leadership and talent needs of the Group and how the current programmes would be revised to take account of the skills and expertise required by the Board and the ELT. The programmes recognise the changing shape of the Group, and also identify both the talent available within the Group and the need for external recruitment. The Talent and Change agenda is led by the CHRO, with input from the CEO and supported by the Global Head of Talent and Change. The programmes cover effective performance management, early careers, talent acquisition organisation design, core capabilities and behaviours.

During 2020, the Committee established a NED mentoring programme which allows each NED to get to know two or three members of the next generation of talent - the Global Leadership Group - through individual meetings which take place over the course of the year and evolve based on the needs of each individual being mentored.

Also during 2020, the non-executive Directors held specific private discussions on Board and executive succession, the results of which fed into the overall plan.

 

Chief Executive Officer succession

As a result of the ongoing transformation strategy, the Committee recognised the need to plan for change and that the next stage of the Company's evolution put a focus on accelerating delivery from global growth capabilities. Together with Keith Skeoch, the Committee spent time considering the executive leadership and succession planning needed to continue the delivery of this next phase of the Group's strategy. In light of this, and the fact that working practices would need to be reshaped in the aftermath of the pandemic, the Board and Keith agreed that the time was right to hand over to his successor to enable that successor to plan and execute the necessary changes from the outset. With that agreement, the Committee oversaw the process to recruit a new CEO to succeed him. As a first step, the Committee agreed that the skills required of a new CEO included:

·  A leader who put the well-being of clients at the heart of what we do and appreciated the criticality of organisational culture in developing the business

·  An influential strategic visionary leader who would be viewed as highly credible, particularly with the City and regulators

·  A strong financial services and global markets background

·  A proven track record in business transformation, in particular to embed digital delivery

·  A proven global track record of business success, including expansion across Asia and North America

·  Someone ideally experienced in developing strong relationships with institutional and wholesale clients

·  Someone who understood the need to deliver strong returns for shareholders

To allow all the non-executive Directors to be involved directly in the selection process the Committee established an Appointments Committee, chaired by the Chairman and comprising all of the non-executive Directors. The Appointments Committee began by considering both internal and external successors - from the global long-list drawn up by MWM - who fitted the above profile. Stephen Bird was identified as the leading candidate with the relevant skill set and who had delivered high performance and results during his career to date.

Taking account of the need to comply with COVID-19 restrictions, the selection process then had the following stages:

·  Stephen was invited to meet individually with the members of the Appointments Committee, who challenged him on how he would deliver against the agreed role profile

·  This was followed by further meetings of the Appointments Committee to discuss and review the views of its members

·  The process to secure regulatory approval for Stephen's candidacy from the PRA and the FCA was begun

·  The Remuneration Committee considered the reward package appropriate for the role

The Appointments Committee met three times during the process, reviewed the output from each of the above stages, and, taking account of the recommendation from the Remuneration Committee, agreed to recommend to the Board that Stephen should be appointed to succeed Keith Skeoch as CEO. Stephen's across-the-board eligibility was unanimously endorsed by the Board and was reinforced by his enthusiasm for the role and the ambition he demonstrated to harness the talent within the Group to deliver for all stakeholders. Stephen's appointment as Director and CEO designate was announced on 1 July 2020, subject to regulatory approval, which was obtained.

Board evaluation

The Committee has a key role in supporting the Board evaluation process. You can read about the 2020 review on page 55. During the year, the Committee reviewed the progress to implement the recommendations of the 2019 review.

Diversity and inclusion

The Board's diversity statement is on page 54. The Committee has a key role in supporting this through its oversight of diversity and inclusion activities. The Global Head of Diversity and Inclusion attends the Committee at least twice a year to report on progress on delivering against our action plans and initiatives.

Culture

During the year the Committee also received updates on the initiatives on corporate culture. These included recognising the ongoing work to link the Company's Blueprint into daily activity. Colleagues across the Group were building the elements of the Blueprint into their individual objectives; it was forming the structure for CEO regular reporting; and its messages were being reinforced through all communications.

Committee effectiveness

The Committee reviews its remit and effectiveness each year. The 2020 review was conducted internally by the Company Secretary interviewing each of the Committee members. As well as general observations, the key performance areas considered were:

·  The coverage of the Committee's duties in the meeting agendas

·  How effectively agenda items were presented and discussed;

·  The quality and level of detail in the papers

·  How well the Committee met its objectives in terms of making decisions and reporting to the Board

The Committee members did not raise any material issues or concerns regarding the above areas or the overall effectiveness of the Committee during 2020. Looking at the Committee's work to oversee talent and succession, the Committee was supportive of the framework developments which had been put in place. However, moving forward in 2021 to deliver their duties, they would be keen to see more evidence of the programmes starting to deliver the next generation of talent, a group which the Committee would be keen to help to develop. Also, recognising the pragmatic challenges of measuring and delivering relevant information, the Committee was keen to spend more time discussing the impact of diversity and culture related matters across the Group.

3.4 Directors' remuneration report

Remuneration Committee Chairman's statement

This report sets out what the Directors of Standard Life Aberdeen were paid in 2020 and how we will pay them in 2021, 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:

·  The annual statement from the Chairman of the Remuneration Committee

·  An overview of the 2020 remuneration outcomes and how we proposed to implement the remuneration policy in 2021

·  The annual remuneration report, which sets out in detail how the remuneration policy was implemented in 2020

·  A summary of our Directors' Remuneration Policy on pages 92 to 95. The policy was approved at the 2020 AGM. No changes are proposed and so there will be no resolution for a vote on the Directors' Remuneration Policy at the 2021 AGM.

Approval

The Directors' remuneration report was approved by the Board and signed on its behalf by

 

 

Jonathan Asquith

Chairman, Remuneration Committee

9 March 2021

Report contents

	Page
At a glance - 2020 remuneration policy implementation	77
2021 Remuneration policy implementation	78
2020 annual remuneration report	79
Shareholdings and outstanding share awards	82
Executive Directors' remuneration in context	85
Remuneration for non-executive Directors and the Chairman	88
The Remuneration Committee	90
Summary of our remuneration policy	92

Dear Shareholder

On behalf of the Board I am pleased to present the Directors' Remuneration Report for the year ended 31 December 2020. This report sets out what the Directors of Standard Life Aberdeen were paid in 2020 and how we will pay them in 2021, together with an explanation of how the Remuneration Committee reached its recommendations.

Executive Summary

2020 has been a year of change for Standard Life Aberdeen which has taken place against the background of the extraordinary societal and economic impact of COVID-19 and considerable market volatility.

Our new Directors' Remuneration Policy was submitted at the 2020 AGM and approved by shareholders with 92% of the vote. I would like to thank shareholders for the strong level of support given to the policy and their continued dialogue on remuneration matters. The policy was designed to drive delivery of our strategy through a simple and transparent structure for executive remuneration with a focus on sustainable long-term performance.

During 2020, with integration following the merger between Standard Life and Aberdeen Asset Management well progressed, we launched the next phase of evolution of the Group aimed at developing and expanding its revenue base. To lead this next phase Stephen Bird was appointed to the role of Chief Executive Officer (CEO) Designate on 1 July 2020 and was appointed to CEO effective 1 September 2020, replacing Keith Skeoch. The remuneration aspects of this transition were handled in conformity with the new Directors' Remuneration Policy.

This was also the year in which Martin Gilbert, previously joint Chief Executive Officer of the Group, stepped down from the Board and subsequently retired in line with the arrangements announced in 2019.

2020 also brought changes on the non-executive Director front. Brian McBride joined the Board as a non-executive Director and we were happy to welcome him as a member of the Remuneration Committee from 1 May 2020.

In this year of challenge and change, the business has experienced a decline in revenues and adjusted profits, while we have continued to drive forward our strategic agenda. Combined with the executive Director changes, this performance has shaped the remuneration agenda for the year. Year-end processes have incorporated a careful consideration of remuneration outcomes in the context of broader stakeholder interests and the complex political, regulatory and social background engendered by the pandemic. Our pay decisions have focused on encouraging and rewarding contributions to the success and sustainability of our business in a uniquely challenging environment. Aside from the measurement of performance in relation to their personal objectives, the annual bonuses of all those serving as executive Directors for any part of the year have been assessed against the performance criteria and targets set for the business scorecard at the start of the year.

Changes to the executive team and Board succession during 2020

On 30 June 2020 it was announced that Stephen Bird would be appointed as a Director of the Group and as Chief Executive Officer Designate (subject to regulatory approval) with effect from 1 July 2020. As detailed in that announcement Stephen Bird's remuneration package comprises:

·  Base salary of £875,000

·  Cash in lieu of pension of 18% of base salary and other benefits in line with the Directors' Remuneration Policy

·  Annual bonus opportunity of up to 250% of salary subject to performance and applicable deferrals (pro-rated in 2020 to reflect his joining the Company part way through the performance year)

·  Long-Term Incentive Share Plan (LTIP) award of shares to the value of 350% of salary. Stephen's first LTIP award for the period 2020 to 2022 was granted on 14 August 2020 as reported on page 84. It was reduced pro-rata to reflect his joining part way through the performance period. The award will vest (subject to meeting applicable performance conditions) at the end of the period and is required to be held for an additional 2 years.

 

The structure and quantum of the CEO's remuneration package is consistent with our Directors' Remuneration Policy and falls below the maximum permitted under those rules. In calibrating his package the Committee considered what it would take to attract the unique skillset and talent required to guide our business through its next phase of development and benchmarked the outcome against the remuneration arrangements for similar roles in asset management peer group companies.

The package adopted differed from that of his predecessor in two key respects. First, the basic salary was returned to a level appropriate for a single CEO; at the time of his departure Keith Skeoch's salary was still based on the reduced level introduced when he moved from being sole CEO of Standard Life to Co-CEO of Standard Life Aberdeen following the merger in 2017. Second, while the total maximum variable pay opportunity (comprising annual bonus and LTIP) of 600% of salary remained unchanged, the Committee shifted the balance between the components from 300%:300% to 250%:350% to increase its focus on long-term performance.

Keith Skeoch's 12 month notice period commenced on 1 July 2020. He stepped down from the Board on 1 September 2020 when regulatory approval for Stephen Bird's appointment was received. Keith will serve as non-executive Chairman of Aberdeen Standard Investments Research Institute until the end of his notice period and during this time will continue to receive his base salary of £615,000 per annum as well as his benefits and allowances in line with the terms of his Executive Service Agreement. His bonus for the 2020 performance year has been pro-rated to 1 September 2020. He is not eligible for any further bonus or LTIP awards. His unvested deferred bonus and LTIP awards will continue to vest in line with the relevant plan rules on the original vesting dates and subject to the applicable performance measures. He will be subject to a post-employment shareholding requirement for two years post cessation of employment of 500% of salary.

Martin Gilbert stepped down from the Board on 12 May 2020 and retired from the Company on 30 September 2020. The terms of his retirement were agreed at the time of announcement of his departure in October 2019. Reflecting his reduction to a four day week from 1 January 2020 he received a base salary of £480,000 per annum and benefits and allowances, which included a pension of 20% of salary, until his departure. His bonus for the 2020 performance year has been pro-rated for time served to 30 September 2020. He was not eligible to receive a 2020 long-term incentive award. He is not eligible for any further bonus or LTIP awards. His unvested deferred bonus will continue to vest in line with the relevant plan rules on the original vesting dates and subject to the applicable performance measures. He will be subject to a post-employment shareholding requirement for one year post cessation of employment of 300% of salary. This is in line with the policy in place at the time of announcement of his departure.

Our performance in 2020 and alignment with remuneration

Against a difficult market background in 2020, the business has experienced a decline in revenues which, alongside a reduced cost base (which still remains high in relation to income), resulted in a fall in adjusted profit before tax. Notwithstanding this, considerable momentum was gained from realigning the business around our three growth vectors, and reduced net outflows, climbing consultant ratings and improved investment performance in the year all set the stage for future growth, while major milestones in our transformation were also met.

How our remuneration policy was applied in 2020

Annual bonus

The 2020 executive Director bonus plan was designed in line with our Remuneration Policy to reward management for the efficient and timely execution of a stretching 12 month plan agreed with the Board, with a majority focus (75%) on financial performance targets. Non-financial performance objectives (20%) made up most of the balance, concentrating on the achievement of desired outcomes in our relationships with our customers and our people. The remaining 5% was reserved to reward the achievement of specific personal targets set for each of the executive Directors.

By the time that Stephen Bird joined us, the market disruptions caused by the pandemic had impacted income and changed the outlook for new business for the year, reducing substantially the chances of meeting a number of the financial and other targets set out in the annual bonus scorecard for the previous management team. He nonetheless elected, as a matter of principle, to be judged by the same scorecard as his new colleagues rather than insisting on a bespoke arrangement; as a result he received a bonus in line with the other Executive Directors despite delivering on all of the personal objectives agreed with the Board at the time of his recruitment. 

The Remuneration Committee approved the following outcomes based on performance against targets:

Executive Director	Final outcome (% of max)1	Final outcome (% of pro-rated salary)	2020 total bonus (£000s)
Stephen Bird2	48%	120%	527
Keith Skeoch2	48%	144%	590
Stephanie Bruce	47%	70%	379
Martin Gilbert3	47%	96%	344

¹     The same measures and scoring for both the financial (75%) and non-financial (20%) metrics were applied to all executive Directors irrespective of the time period they worked during the year.

²     Annual salary has been pro-rated to reflect the period of time spent on the Board.

³     Annual salary has been pro-rated to the date of departure.

The key achievements are set out on pages 79 and 80 and summarised below, together with the range of factors considered by the Remuneration Committee in approving these outcomes.

Financial performance (75%)

·  There has been strong investment performance for our clients and customers, as well as effective execution in realisation of value from strategic shareholdings

·  The balance of financial metrics in the scorecard has, however, resulted in performance behind target

·  In particular, revenue weakness has driven poor results against cost/income ratio targets and shortfalls in annual profit progress in some areas of strategic importance

This has resulted in an overall assessment of 34.21% out of a maximum of 75% on financial measures.

Non-financial performance (25%)

The non-financial measures included objectives around relationships with our People (10%) and our Customers (10%), both of which are important to the sustainability of our business.

·  We made good progress in People objectives under our employee engagement target but fell short of our diversity targets

·  Customer performance was assessed at threshold, reflecting positive movements in year on year client surveys within what are now the Advisor and Personal Vectors, but targets were not achieved for the Investments Vector

This has resulted in an overall assessment of 8.75% out of a maximum of 20% on non-financial measures.

Details on the Committee's assessment of individual performance against personal objectives, which make up the final 5% of the bonus opportunity, are provided on page 80.

Remuneration Committee assessment

In addition to considering the achievement against the targets under our annual bonus scorecard, the Committee reviewed the individual components which contributed to the delivery of this performance. The Committee also considered the alignment of scorecard outcomes with the experience of a range of stakeholders. This review was undertaken by the Committee to assess whether the awards generated by the scorecard were fair in the broader performance and risk context. The Committee considered:

·  The outcome from the perspective of overall company performance including one-off items. The Committee considered that the categories, targets and measurements embedded in the scorecard appropriately captured performance against the Board's plan without the need for discretionary adjustment.

·  The impact of the COVID-19 pandemic. This was reflected in reduced revenues for 2020, which directly impacted award outcomes via the scorecard. Note that aside from adapting some personal objectives, no remuneration measures or targets were adjusted as a result of the pandemic; nor was any application made for government support to mitigate the effects of COVID-19, while in the background the company increased its charitable giving and community engagement to support others affected by the pandemic.

·  Input from the Risk and Capital Committee and the Audit Committee. There were no items raised by these committees which warranted Remuneration Committee intervention in executive Director outcomes for 2020.

·  The mixed shareholder experience during 2020; our 1 year total shareholder return is ahead of all but one of our UK peers, but remains behind the majority of our overseas peers (using the same peer group that applied to the Executive Director 2020 Long Term Incentive Plan). There was a steadily improving share price performance after March 2020.

·  The context of incentive funding across the workforce which has reduced from the prior year and been awarded in line with our performance driven policy for variable pay

The Remuneration Committee took these and other considerations into account in its review and concluded that it would not be appropriate to exercise its discretion to amend the outcomes of the scorecard or override in any other way the annual bonus process.

2020 LTIP Award

The first awards under the LTIP plan to Keith Skeoch and Stephanie Bruce were made following the approval of the remuneration policy at the 2020 AGM in May 2020. An LTIP award was made to Stephen Bird after he joined the Company in August 2020. Details of all awards are set out on page 84. Prior to making the awards in May 2020, the Committee reviewed the award levels in the context of share price performance. The Committee determined that there was no requirement to adjust the award size of the 2020 LTIP from the level disclosed in our 2019 annual report. The Committee retains discretion to review award levels at the end of the period; this is to ensure that outcomes appropriately reflect performance and the experience of stakeholders, and to allow consideration as to whether unjustifiable windfall gains may have accrued to participants.

Coinciding with the publication of these accounts, the Group issued today an RNS announcement dealing with future changes to the reporting of Adjusted Profit and Adjusted Profit per Share. The Committee reviewed the impact of these changes on remuneration measures and targets set for in-flight incentive arrangements and determined that it was appropriate to change both the per Share measure and the associated performance targets of those schemes which currently use Adjusted Diluted Earnings per Share as a performance indicator. The revised measure selected as that most adjacent to the original test was Adjusted Diluted Capital Generation per Share (see definition on page 222 and detail on page 78). In accordance with the rules of the various schemes, the underlying principle applied in setting the revised measures and targets was that they should be neither more nor less difficult to achieve than the original targets. Details of the restated targets can be found on page 84.

Stephanie Bruce - One-Off Deferred Award

The Remuneration Committee assessed the performance condition around the vesting of the first tranche of the one-off deferred award made to Stephanie Bruce on her appointment as Chief Financial Officer (CFO) in 2019 and approved the vesting level at 100% of maximum. Further detail is included on page 82. As part of the due diligence process around this determination, the Remuneration Committee received an independent report from the Chief Internal Auditor prior to making their assessment, in line with previous undertakings to shareholders.

Keith Skeoch - Vesting of the 2018 Executive LTIP

Keith Skeoch participated in the 2018 Executive LTIP, the outcome of which was dependent on the achievement of stretching performance conditions by reference to adjusted profit and net flows targets. On assessment of performance against these conditions, it was determined that the award did not meet the required thresholds against either of these measures and the award lapsed in full. Further details of the 2018 Executive LTIP can be found on page 82.

Policy implementation in 2021

This year the Committee has decided not to increase the salaries for the executive Directors or the fees for the non-executive Directors or the Chairman. This follows a Company-wide decision not to carry out a salary review at the beginning of 2021.

In line with the previous practice, we will continue to set stretching 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 2021 annual bonus is detailed on page 78 and the targets, which are commercially sensitive, will be disclosed at the end of this performance year in the Annual report and accounts 2021. The scorecard retains the structure of focusing 75% of opportunity on the achievement of financial targets and 25% on the delivery of non-financial and personal objectives around people, customers, innovation and similar areas.

The threshold and maximum performance targets for the proposed grants under the 2021 Executive LTIP plan are detailed on page 78.  In light of the change announced in future reporting of Adjusted Diluted Profit per Share we have changed the earnings based metric for the 2021 grants from that used in 2020.

To help you navigate the report effectively, I would like to draw your attention to the sections on pages 77 and 78 which summarise both the outcomes for 2020 and also how the remuneration policy will be implemented in 2021. 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 and welcome your feedback.

At a glance - 2020 remuneration policy implementation

2020 Outcome of the financial and non-financial performance metrics

The following charts show performance against the target range for each of the financial and non-financial metrics which govern the annual bonus. Further detail on the assessment of the performance conditions can be found on pages 79 and 80.

Diagram removed for the purposes of this announcement.  However it can be viewed in full in the pdf document

           

2020 annual bonus scorecard outcome

The following table sets out the final outcome for the 2020 annual bonus, including the personal performance assessment (noting that the same measures and scoring for both the financial and non-financial metrics have been applied to executive Directors irrespective of the periods during which they worked during the year). A detailed breakdown of performance can be found on pages 79 and 80.

	Bonus Scorecard Outcome				Total Bonus Outcome
	Financial metrics (maximum 75%)	Non-financial metrics (maximum 20%)	Personal performance (maximum 5%)	Board approved outcome (% of maximum)	Annual salary (£000s)	Period worked in 2020 (days basis)	Maximum opportunity (% of salary)	Total award (% of salary)1	Total award (£000s)
Stephen Bird2	34.21%	8.75%	5.00%	47.96%	875	50%	250%	120%	527
Keith Skeoch3			5.00%	47.96%	615	67%	300%	144%	590
Stephanie Bruce			4.00%	46.96%	538	100%	150%	70%	379
Martin Gilbert4			4.00%	46.96%	480	75%	204%	96%	344

¹     The % is applied to the pro-rated salary for Stephen Bird, Keith Skeoch and Martin Gilbert.

²     Stephen Bird's total opportunity for 2020 was 250% of salary. His award has been pro-rated to reflect his joining date of 1 July 2020.

³     Keith Skeoch stepped down from the Board on 1 September 2020. His award has been pro-rated to reflect the period of time he served on the Board.

⁴     Martin Gilbert's total opportunity for 2020 was 204% of salary. His award has been pro-rated to reflect his leaving date of 30 September 2020.

Long-term incentive award outcome in 2020

Keith Skeoch was granted an LTIP award in 2018 under the Executive LTIP, with a performance period ending 31 December 2020. Performance did not meet the minimum threshold required to vest and the award lapsed in full. More detail is set out on page 82.

Total remuneration outcomes in 2020

The chart below shows the remuneration outcomes for each executive Director in 2020 based on performance compared to the maximum opportunity.

Diagram removed for the purposes of this announcement.  However it can be viewed in full in the pdf document

2021 remuneration policy implementation

 

This section sets out how we propose to implement our remuneration policy in 2021 including the performance measures that will be used to determine outcomes under the annual bonus and the LTIP. A summary of our Directors' Remuneration Policy can be found on pages 92 - 95. The policy for the Chairman's fees and those of the non-executive Directors is set out on page 89.

Salary

No changes proposed.

Pension

No change proposed. A pension of 18% of base salary applies, in line with the maximum available to the wider UK workforce.

2021 annual bonus

At the beginning of each year the Remuneration Committee sets the performance measures for the annual bonus based on strategic priorities. For 2021, 75% of the measures are based on financial performance, with the remainder based on non-financial performance. The Remuneration Committee retains an appropriate level of flexibility to apply discretion to ensure that remuneration outcomes reflect a holistic view of overall performance. The discretionary assessment will incorporate, inter alia, consideration of compliance, conduct and culture.

The following table sets out the performance scorecard to be used based on the Company's strategic priorities:

Focus area	Weighting	Example performance metrics to be used to assess 2021 bonus
Financial	75%	Investment Performance, Adjusted profit before tax, Net flows, Transformation
Non-financial	20%	Performance against People, Customer and ESG objectives
Individual objectives	5%	Key individual deliverables

Due to commercial sensitivity, actual targets and ranges will be disclosed at the end of the performance period.

 

The 2021 LTIP award

Under the Remuneration Policy, LTIP awards are subject to at least two performance metrics which are linked to the achievement of the Company's long-term strategic priorities and the creation of long-term shareholder value, with at least one being absolute in nature and one being a relative metric. Due to changes to the accounting for Adjusted Earnings per Share and their effect on the 2020 LTIP target measure of Compound Annual Growth Rate (CAGR) in Adjusted Diluted Earnings per Share, the Committee has decided to move to a new measure for the absolute element of the LTIP metrics for 2021. The new metric of CAGR in Adjusted Diluted Capital Generation per Share (page 222) captures a broad measure of the rate of increase in the company's ability to generate capital to sustain investment and dividend flows. Adjusted Capital Generation comprises Adjusted Profit after Tax (excluding the Group's share of profit after tax of associates and joint ventures) plus dividends from associates/joint

ventures/significant listed investments less returns relating to pension schemes in surplus; it is closely aligned to the measurement of management's performance in generating sustainable increases in shareholder value from its growth vectors and strategic relationships, while excluding mark-to-market changes in the fair value of significant listed investments, which are beyond management's direct control. The nominal performance targets for this measure are higher than for its predecessor, reflecting the elevated growth in returns expected from the key operating elements of the Group's business.

The Remuneration Committee proposes to grant awards in the form of nil-cost options under the LTIP plan. Targets for the award will be measured for the three-year period ended 31 December 2023 and are set as follows:

Performance measure	Weighting	Threshold performance (25% vesting)	Stretch performance (100% vesting)1
CAGR in Adjusted Diluted Capital Generation per Share	50%	8%	20%
Relative TSR2	50%	Equal to the median company	Equal to, or in excess of, the upper quartile company

¹    Straight-line vesting occurs between threshold and maximum.

²    Relative TSR will be calculated using a 90-day average share price, both at the beginning and at the end of the performance period. The 90-day averaging will commence 45 days prior to the beginning and also 45 days prior to the end of the performance period. The calculation will be performed on a local currency basis.

The proposed peer group¹ to be used for the relative TSR measure consists of the below global asset management peers:

Affiliated Managers	Jupiter Fund Management	Janus Henderson Group
Alliance Bernstein	Man Group	St James's Place
Ameriprise Financial	Schroders	M&G
Amundi	DWS Group	Quilter
Ashmore Group	Franklin Resources	T Rowe Price Group
SEI Investments	Invesco

¹   This peer group will be subject to re-evaluation throughout the performance period to adjust for the effects of corporate events such as mergers and acquisitions, with substitutes introduced where necessary to maintain the approximate size and comparability of the group.

²   Eaton Vance, which is in a sale process, has been removed from the peer group for 2021 awards. No other changes are proposed to the peer group from 2020.

Following the same logic that led the Committee to select the new performance measure of CAGR in Adjusted Diluted Capital Generation per Share for 50% of the 2021 LTIP, the Committee also decided to use its discretion to redefine the equivalent condition in the in-flight 2020 LTIP. This change, of which further details are available (page 84), was implemented on the basis that the new targets set (subject to rounding) would be no less difficult to achieve than those set at the time that plan was agreed.

 

Total opportunity under the remuneration policy in 2021 (unchanged from 2020)

Diagram removed for the purposes of this announcement.  However it can be viewed in full in the pdf document

 

Directors' Remuneration in 2020

This section reports remuneration awarded and paid at the end of 2020 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 2020:

Executive Directors		Basic salary for year £000s	Taxable benefits in year £000s1	Bonus paid in cash2  £000s	Bonus deferred £000s3	Long-term incentives with performance period ending  during the year £000s4,5	Pension allowance paid in year £000s	Other payments £000s	Fixed pay sub-total £000s	Variable sub-total £000s	Total remuneration  for the year £000s
Stephen Bird6	2020	438	-	263.5	263.5	-	79	-	517	527	1,044
	2019	-	-	-	-	-	-	-	-	-	-
Keith Skeoch7	2020	406	1	295.0	295.0	0	78	-	485	590	1,075
	2019	600	1	187.5	562.4	0	120	1	722	750	1,472
Stephanie Bruce	2020	535	1	189.5	189.5	-	101	-	637	379	1,016
	2019	308	-	61.5	184.5	-	62	-	370	246	616
Martin Gilbert8	2020	360	-	172.0	172.0	-	72	-	432	344	776
	2019	600	1	124.6	373.7	-	120	-	721	498	1,219

¹    This includes the taxable value of all benefits paid in respect of the relevant year. Included for 2020 are medical premiums at a cost to the group of £606 for all executive Directors.

²    This figure shows the annual cash bonus paid in respect of the year. In 2020 50% of the annual bonus award will be delivered in cash in line with current policy. In 2019 25% of the total bonus award was paid in cash under the 2019 Directors' Remuneration Policy.

³    This figure shows the annual deferred bonus awarded in respect of the year. In 2020 50% of the annual bonus award will be deferred into shares in line with current policy. In 2019 75% of the total bonus award was deferred into shares under the 2019 Directors' Remuneration Policy.

⁴    For 2019, awards granted under the 2017 Executive LTIP lapsed in full as threshold performance was not achieved.

⁵    For 2020, awards granted under the 2018 Executive LTIP lapsed in full as threshold performance was not achieved.

⁶    Stephen Bird was appointed on1 July 2020 - all figures reflect amounts paid/awarded since the date of appointment.

⁷    Keith Skeoch stepped down from the Board on 1 September 2020 and remained eligible for an award under the annual bonus plan until that date. The values shown represent the emoluments paid for the period spent on the Board to 1 September 2020.

⁸    Martin Gilbert stepped down from the Board on12 May 2020 and retired from the company on 30 September 2020. He remained eligible for an award under the annual bonus plan to the date of retirement. The values shown represent the emoluments paid to 30 September 2020.

Base salary (audited)

Keith Skeoch and Stephanie Bruce received a 2.5% salary increase effective 1 April 2020 in line with the wider workforce. Stephen Bird joined on 1 July 2020 on a salary of £875,000. From 1 January 2020, Martin's working commitment to the Company reduced to 4 days a week and, accordingly, his salary reduced by 20% to £480,000 per annum. This was in line with the terms of his retirement.

Pension (audited)

Under the Directors' Remuneration Policy approved at the 2020 AGM, with effect from 1 June 2020 the executive Directors received a cash allowance in lieu of pension contributions of 18% of base salary. The only exception to this was Martin Gilbert, who continued to receive 20% as agreed under the terms of his retirement.

Annual Bonus Plan

The following section contains details on the targets and the Remuneration Committee's assessment of outcomes for the period 1 January 2020 to 31 December 2020 against each of the elements of the executive Director bonus scorecard.

Financial performance metrics - 75% of total scorecard outcome

	Weighting (% of max opportunity)	Threshold (25% of maximum)	Target (50% of maximum)	Stretch (100% of maximum)	Actual	Result (% of max opportunity)
Positioning for growth (45%)
Investment performance - % AUM > benchmark average of 3 year and 5 year for all asset classes	15%	>50%	60%	>70%	67%	12.75%
Fee based revenue (£m)	15%	1,373	1,449	1,601	1,425	6.32%
Cost/income ratio excluding JVs/Associates %	15%	84.2%	81.1%	78.7%	84.6%	0.00%
Delivering for our shareholders (30%)
Value creation measured as IFRS gain on sale (PBT) from strategic shareholdings (£m)1	10%	380	570	760	803	10.00%
Annual profit progress on key areas - Wealth and Platforms (£m)2	10%	15	23	30	7	0.00%
Delivery of transformation synergies (£m)	10%	315	350	385	351	5.14%

¹     £760m target is IFRS gain on sale before tax.

²     Platforms includes Wrap and Elevate. Wealth includes Aberdeen Standard Capital, Parmenion, Focus, threesixty, Advice (including Digital and SLCM). Profit progress defined as the increase in year on year adjusted profit before tax between 2019 and 2020.

Non-financial performance metrics - 20% of total scorecard outcome

	Weighting (% of max opportunity)	Threshold (25% of maximum)	Target (50% of maximum)	Stretch (100% of maximum)	Actual	Result (% of max opportunity)
Investing in our people (10%)
Diversity of leadership and the wider workforce (measured at 31 December 2020): % female representation in CEO -1 and CEO-2	2.5%	33%	37%	>=39%	37%	1.25%
% female representation in Global workforce	2.5%	46%	47%	>=49%	45%	0.00%
People engagement: outcome of the Viewpoints full company survey	5%	61%	64%	67%	72%	5.00%
Investing in our customers (10%)	Highlights from assessment
Customer Advocacy: improvement from baseline	-    Little demonstrable progress overall in customer satisfaction indices in Investments and failure to achieve top 10 ASI NMG Brand Net Promotor score -    Within the businesses now positioned under the Advisor and Personal vectors, client surveys evidenced positive year-on-year movement. In addition to core surveys, additional steps were taken to enhance these through the pandemic with timely questions reflecting real-time circumstances.					2.50%

Personal performance metrics - 5% of total scorecard outcome

	Highlights from assessment	Result (% of max)
Stephen Bird	-    Facilitation of a smooth transition from his predecessor. -    Strong performance in addressing organisational re-design (including reconfiguration of the firm around growth vectors), brand re-positioning and cost transformation and the pursuit of top line growth. This was achieved against a backdrop of pandemic restrictions, industry and market disruptions. -    Focussed on generating clarity of vision and ambition around the strategic direction of travel, as well as openness on challenges faced in delivery, both internally and externally. -    Close attention to the people agenda, developing the senior executive group and building strong support from them, as well as amongst the wider workforce, for the momentum being created. This was alongside establishment of a strong working relationship with the Board. -    Progress with Investments towards redesigning how we build around the customer and enhance opportunities through strategic relationships.	5%
Keith Skeoch	-    Facilitation of a smooth transition to his successor. -    Took a leading role in developing an inclusive and diverse senior executive group. The success of this was evidenced through the resilient response to the pandemic restrictions. -    Successful transformation to remote working which facilitated good progress on completion of the Group's integrated operating model. -    Enhancement of the value derived from the Group's strategic and non-strategic associated company stakes through positive engagement with Phoenix and HDFC to facilitate further market transactions and realisation of value. -    Enhanced public profile as a trusted industry spokesperson as Chairman of the Investment Association and interim chair of the FRC.	5%
Stephanie Bruce	-    Support for the new CEO and development of the three year strategic plan and a stretch plan for 2021 which demonstrates a significant inflection to growth in revenues and earnings.   -    Effective management of the finance transformation program to support strategic changes in Company structure and focus on cost and efficiency targets. -    Development of the return on capital framework to support evaluation of growth pathways. -    Lead role in working with Phoenix, evaluating costs and benefits of deal configurations which laid the groundwork for the agreement to sell the Standard Life Brand and acquire the Wrap SIPP and Onshore Bond portfolios concluded in February 2021.	4%
Martin Gilbert	-    Strong role in succession planning and transition of client relationships and industry body and governmental relationships as well as day to day operational management. -    Brand ambassador for SLA/ASI representing the organisation publicly until his date of departure.	4%

Before approving the level of performance in 2020, the Remuneration Committee sought the views of the Audit Committee on material accounting, reporting and disclosure matters that it considered during the year and the Risk and Capital Committee on the management of risk within the business. When reflecting on whether the formulaic outcome could be considered fair in the context of the overall results, the Remuneration Committee took into account the feedback received as well as factors including the impact of the COVID-19 pandemic, shareholder experience and pay for the wider workforce. A final determination was made that no adjustment should be made to the bonus outcomes set out above as a result of this review.

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.

Keith Skeoch stepped down from the Board with effect from 1 September 2020 but remains employed in the role of non-executive Chairman of Aberdeen Standard Investments Research Institute until the end of his notice period on 30 June 2021, at which point he will leave the Company. Details of his pro-rata remuneration until stepping down from the Board are included in the table on page 79. He continues to be eligible for his salary, benefits and pension from 1 September 2020 until his termination date of 30 June 2021 (totalling £605k). Entitlement to an annual bonus ceased on 31 August 2020.

As Keith is retiring from the Company, he will be treated as a good leaver for the purpose of outstanding incentive awards. In line with the respective plan rules, the following treatment will apply:

·  Legacy awards under the Standard Life Executive LTIP: The 2018 LTIP award has not met the required performance thresholds and the award lapsed in full as set out on page 82. There are no other unvested awards under this plan.

·  Deferred awards under the EIP: Keith holds outstanding deferred awards under the 2018 EIP (138,107 shares) and the 2019 EIP (273,160 shares). The total shares do not include shares to be awarded in lieu of dividend equivalents. These awards will vest at the original vesting dates subject to performance against the Underpin conditions (further details of which can be found in previous Directors' remuneration reports). Vested awards will be subject to a holding period until the fifth anniversary of grant and will accrue dividend equivalents.

·  Award under the 2020 LTIP: the 2020 LTIP award will be pro-rated for time in service to 30 June 2021, and therefore a maximum of 429,045 shares will be capable of vesting subject to performance at the end of the performance period. The maximum number of shares does not include shares to be awarded in lieu of dividend equivalents. Vested awards will be subject to a two-year holding period at the end of the performance period and will accrue dividend equivalents.

·  Deferred awards to be granted in respect of the 2020 annual bonus (as detailed on page 79) will vest in equal tranches on the first, second and third anniversary of grant.

Martin Gilbert retired from the Company on 30 September 2020, having stepped down from the Board on 12 May 2020. Other than the payments made to Martin until the point he left the Company (as detailed on page 79), no other payments were made.

As Martin retired from the Company, he was treated as a good leaver for the purpose of outstanding incentive awards. In line with the respective plan rules, the following treatment will apply:

·  Legacy awards under the Aberdeen Asset Management Deferred Share Plan (436,083 shares). Unvested awards will vest in full at the normal vesting date. The dividend equivalent value for these shares will be settled in cash at vesting in accordance with the relevant plan rules.

·  Deferred awards under the EIP: Martin holds outstanding deferred awards under the 2018 EIP (138,107 shares) and the 2019 EIP (181,483 shares). The total shares do not include shares to be awarded in lieu of dividend equivalents. These awards will vest at the normal time, subject to performance against the Underpin conditions. Vested awards will be subject to a holding period until the fifth anniversary of grant and will accrue dividend equivalents.

·  Deferred awards to be granted in respect of the 2020 annual bonus (as detailed on page 79) will vest in equal tranches on the first, second and third anniversary of grant.

Executive Directors' external appointments

Subject to the Board's approval, executive Directors are able to accept a limited number of external appointments to the boards of other organisations and can retain any fees paid for these services. Significant executive Director appointments held during the year are:

Executive Director	Role and organisation	2020 Fees
Stephen Bird	Not applicable	-
Keith Skeoch	Non-executive Director Financial Reporting Council1	£nil
	Director and Chair of the Investment Association2	£nil
	Member of Takeover Panel3	£nil
Stephanie Bruce	Board and council member of ICAS4	£nil
Martin Gilbert5	Non-executive Director, Glencore plc Non-executive Director, Old Oak Holdings Limited6 Chairman, Revolut7	US$108,197
		£17,486
		£49,590

¹     Stepped down from position on 31 July 2020.

²     Served as Deputy Chair up until 30 April 2020 then appointed to Chair from 1 May 2020.

³     Commenced position on 1 May 2020.

⁴     Stepped down from position on 24 April 2020.

⁵     All values have been pro-rated up to 12 May 2020 (the date that Martin stepped down from the Board).

⁶     Appointed 9 March 2020.

⁷     Appointed 1 January 2020.

Shareholdings and outstanding share awards

This section reports our executive Directors' interests in shares.

Vesting of the 2018 Executive LTIP

Keith Skeoch participated in the 2018 Executive LTIP, the outcome of which was dependent on the achievement of stretching performance conditions by reference to adjusted profit and net flows targets over the three-year period ending 31 December 2020. On assessment of performance against these conditions, it was determined that the award did not meet the required thresholds against either of these measures and the award lapsed in full.

 

The table below sets out the adjusted performance targets for Executive LTIP awards granted in 2018:

Performance condition	Performance measurement period	Threshold	Maximum	Actual	% Vesting
Cumulative Group adjusted profit before tax1	1 January 2018 to 31 December 2020	£2,160m	£2,920m	£1,872m	0%
Cumulative Group net flows		£36.5bn	£67.9bn	£(55.7)bn	0%

¹    These are the performance targets after the adjustments in 2018 following the transaction with Phoenix (details of which were provided to shareholders at the time of the adjustment). Further adjustments were made to this target in 2019 as a result of the Lloyds Banking Group withdrawal and in 2019 and 2020 for associate and joint venture share reduction changes. These adjustments resulted in a reduction in the threshold and maximum targets of £135m and £185m respectively.

Vesting of the first tranche of the CFO Deferred Award

The first anniversary of the award was 3 June 2020 and vesting of the first tranche was determined based on performance up to that date. The award had a maximum value at grant of £750,000.

As set out in the announcement made on 30 April 2019 relating to this award, efficiency targets of £350m had previously been disclosed by the Company, of which £230m was still to be realised as of 31 December 2018. The award was structured such that two-thirds would vest to the extent that £175m (baseline target) of the remaining £230m was achieved by 3 June 2022 with the final third vesting if the full £230m was met or exceeded by that date.

The Award is considered for vesting in three tranches on the first, second and third anniversary of the grant of the Award. The vesting level for the first anniversary and second anniversary tranches is based on an assessment made by the Remuneration Committee of the progress made towards the achievement of the efficiency targets, including whether or not the baseline target will be met. The vesting level of the third anniversary tranche will be adjusted by the Remuneration Committee to ensure that the overall vesting of the award is commensurate with the final achievement against the efficiency targets.

The Remuneration Committee reviewed progress made towards the £175m (baseline target) and £230m (maximum target) in June 2020, prior to approving the vesting level of the first tranche of the award. At 31 December 2019, actions had been taken which benefited operating expenses by £234m (2018: £120m) (as published in our 2019 ARA). Progress towards the baseline target therefore represented £114m at 31 December 2019, with further benefits expected in 2020. When the Remuneration Committee undertook its assessment of whether the first tranche of the award should vest in June 2020, this level of efficiency achievement was reported and agreed by the Remuneration Committee to be 'on track' for the purposes of assessing vesting of the first tranche of the award. At the same time, the Remuneration Committee noted the likelihood that the baseline target would be surpassed and the target of £230m (for full vesting) would be achieved by 3 June 2022. Performance was assessed by the Committee with input from the Chief Internal Auditor.

The Remuneration Committee approved the vesting level of the first tranche of the one-off award at 100% and this vested on 22 June 2020. The first tranche of the award remains subject to malus and clawback provisions in line with the Remuneration Policy.

Directors' interests in shares (audited)

Our shareholding requirements for executive Directors are detailed on page 93. The Directors' Remuneration Policy requires executive Directors to accumulate and maintain a material long-term investment in Standard Life Aberdeen 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 requirement.

The following table shows the total number of Standard Life Aberdeen plc shares held by the executive Directors and their connected persons:

	Total number of shares owned at 1 January 2020	Shares acquired during the period 1 January 2020 to 31 December 2020	Total number of shares owned at 31 December 2020	Shares acquired between 31 December 2020 and 8 March 2021
Stephen Bird1	-	500,000	500,000	-
Keith Skeoch2	2,435,226	122,143	2,557,369	Not applicable
Stephanie Bruce	-	133,741	133,741	-
Martin Gilbert3	431,161	-	431,161	Not applicable

¹     Reflects position from start date of 1 July 2020 until 31 December 2020.

²     Reflects position until stepping down from the Board on 1 September 2020.

³     Reflects position until stepping down from the Board on 12 May 2020.

The following table shows the number of qualifying awards included in assessing achievement towards the shareholding requirement, as at 31 December 2020. Qualifying awards include 50% of the value of awards held by the executive Directors that have vested but not been exercised (as a proxy for the economic exposure after payment of tax due on the exercise of the awards).

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 Stephanie Bruce, who were appointed during 2020 and 2019 respectively, have not yet met the shareholding requirement. Keith Skeoch and Martin Gilbert complied with the requirements until they stepped down from the Board and are now subject to the post cessation shareholding requirements as detailed below.

	Qualifying awards
	Number of shares available as unrestricted vested deferred awards	Number of shares under option under long-term incentive plans which are no longer subject to performance conditions	Total qualifying holding (shares held from table above and 50% of qualifying awards)	Value1 of holding	Shareholding requirement (as % salary)	Basic Salary	Total of the value of shares held (from table above and 50% of the value of qualifying awards at 31 December 2020) as a % of salary	Shareholding requirement met?
Stephen Bird2	-	-	500,000	£1,406,500	350%	£875,000	161%	No
Keith Skeoch3	-	-	2,557,369	£7,193,879	500%	£615,000	1,170%	Yes
Stephanie Bruce	-	-	133,741	£376,213	300%	£538,125	70%	No
Martin Gilbert4	1,529,596	-	1,195,959	£3,364,233	300%	£480,000	701%	Yes

¹     The closing market price at 31 December 2020 used to determine the value of each holding was 281.30 pence.

²   Reflects position from start date of 1 July 2020 until 31 December 2020.

³   Reflects position until stepping down from the Board on 1 September 2020.

⁴   Reflects position until stepping down from the Board on 12 May 2020.

During 2021 the Committee will be reviewing the processes in place in order to ensure maximum enforceability of the post-employment shareholding requirement.

As set out on page 93, under the Directors' Remuneration Policy an executive Director is required to hold shares up to the value of their shareholding requirement for 24 months post departure from the Board. Accordingly, Keith Skeoch is required to hold 500% of his final basic salary in shares until 31 August 2022.

In line with the previous shareholding policy, which was in place at the time of the announcement relating to Martin Gilbert's departure, Martin Gilbert is required to hold 300% of his final basic salary in shares until 30 September 2021.

This table shows the total number of share options, with and without performance conditions, held at 31 December 2020:    

	Unvested options with performance measures1	Unvested options without performance measures2	Vested but unexercised options at 31 December 20203	Total options at 31 December 2020	Exercised during the year4	Aggregate gains made on awards exercised during the year5
Stephen Bird	945,765	-	-	945,765	-	-
Keith Skeoch	2,032,456	102,833	-	2,135,289	329,705	£730,496
Stephanie Bruce	778,775	7,944	-	786,719	103,859	£275,538
Martin Gilbert	319,590	436,083	1,529,596	2,285,269	-	-

¹     Includes: LTIP awards made in 2018 (awards subject to performance targets over the three-year period ending 31 December 2020), 2019 deferred bonus awards and the 2020 LTIP awards granted in 2020 disclosed below (awards subject to performance targets over the three-year period ending 31 December 2022), excluding, in each case, shares to be awarded in lieu of dividend equivalents.

²   This comprises deferred bonus awards (including unvested awards under the Aberdeen Variable Pay plans). It does not include shares to be awarded in lieu of dividend equivalents. Also included are options granted under the Standard Life Sharesave Plan.

³   This comprises awards made under the Aberdeen Variable Pay plans which are now exercisable.

⁴   For Keith Skeoch this comprises of awards made under the LTIP in 2015 and deferred bonus awards, for Stephanie Bruce this comprises the first tranche of the one-off award granted in 2019. Includes dividend equivalent shares awarded in accordance with the plan rules.

⁵   The aggregate gains have been calculated using the share price at the date of exercise of each underlying award. The range for the year of Standard Life Aberdeen plc shares was 170.30 pence to 336.90 pence.

 

Awards granted in 2020 (audited)

The table below shows the key details of the LTIP and EIP deferred awards granted in 2020:

Participant	Type of award	Basis of award	% of salary	Face value at grant	Number of shares awarded	% payable for threshold performance	Details on performance conditions
Stephen Bird	Nil-cost option	LTIP1	350%	£2,553,946	945,765	25%	Awards are subject to performance against targets measured over three years as set out on page 84 of the Annual report and accounts 2019 and subject to the restatement below
Keith Skeoch	Nil-cost option	LTIP2	300%	£1,845,000	859,658
Stephanie Bruce	Nil-cost option	LTIP2	200%	£1,076,250	501,467
Keith Skeoch	Nil-cost option	Deferred Bonus3	Not applicable	£562,410	273,160	Not applicable	EIP deferred awards are subject to performance Underpins measured over three years as set out on page 87 of the Annual report and accounts 2019
Stephanie Bruce	Nil-cost option			£184,466	89,594
Martin Gilbert	Nil-cost option			£373,656	181,483

¹           The share price used for the LTIP award was 270.04p. The award was reduced pro-rata to reflect the fact Stephen Bird joined part way through the performance period.

²    The share price used for the LTIP awards was 214.62p.

³    The share price used for the deferred bonus awards was 205.89p.

2020 LTIP Target Restatement

Coinciding with the publication of these accounts, the Group issued an RNS announcement dealing with future changes to the reporting of Adjusted Profit and Adjusted Diluted Profit per Share. The Committee reviewed the impact of these changes on remuneration measures and targets set for in-flight incentive arrangements and determined that it was appropriate to change both the per Share measure and the associated performance targets of those schemes which currently use CAGR in Adjusted Diluted Earnings per Share as a performance indicator. The revised measure selected as that most adjacent to the original test was CAGR in Adjusted Diluted Capital Generation per Share (see definition on page 222 and detail on page 78). In accordance with the rules of the various schemes, the underlying principle applied in setting the revised measures and targets was that (subject to rounding) they should be neither more nor less difficult to achieve than the original targets. The Remuneration Committee considered the projections that underpinned the targets set for CAGR in Adjusted Diluted Earnings per Share (as then defined) when the performance conditions for the 2020 LTIP awards were agreed, and how the new measure would have been expected to perform based upon the same assumptions. Based on this analysis it set the threshold and maximum levels for CAGR in Adjusted Diluted Capital Generation per Share of 11% and 23% respectively (previous measure 5% and 15%). As with the previous measure, performance below threshold will result in a nil vesting, rising to 25% of opportunity at threshold and 100% of opportunity at or above maximum; straight line vesting will continue to be applied between threshold and maximum.

Details of the 2020 awards made to Directors can be found on page 84 of the Annual report and accounts 2019. The table below shows the original performance targets for the 2020 LTIP award and the amended performance targets. The higher target range in this section compared to that set for the 2021 LTIP reflects, inter alia, the substantial completion of the company's share buyback plan in 2020.

Performance Measures1	Original Target: Adjusted diluted EPS Compound Annual Growth Rate (CAGR)	Amended Target: CAGR in Adjusted Diluted Capital Generation per Share
Threshold target (25% vesting)	5%	11%
Maximum (100% vesting)	15%	23%

¹     No change has been made to the original Relative TSR target which is set out on page 84 of the Annual report and accounts 2019.

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 2020, the Company's standing against these dilution limits was: 1.07% where the guideline is no more than 5% in any 10 years under all discretionary share plans in which the executive Directors participate and 1.55% 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, Standard Life Investments LTIP, the Restricted Stock Plan, the deferred elements of the Standard Life annual bonus plan and the Aberdeen Asset Management deferred plans. On 31 December 2020 the trusts held 67,735,805 shares acquired to satisfy these awards. Of these shares, 9,309,281 are committed to satisfying vested but unexercised awards. The percentage of share capital held by the employee trusts is 3.09% 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 Standard Life (Employee) Share Plan which allows eligible employees to buy Standard Life Aberdeen plc shares directly from earnings. A similar tax-approved plan is used in Ireland. At 31 December 2020, 1,949 individuals in the UK and Ireland were actively making monthly contributions averaging £69. At 31 December 2020, 2,424 individuals were Standard Life Aberdeen plc shareholders through participation in the Plan.

·  The Sharesave Plan which was offered in 2020 to eligible employees in the UK. This plan allows UK tax resident employees to save towards the exercise of options over Standard Life Aberdeen 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 2020, 2,298 individuals were saving towards one or more of the Sharesave offers.

Executive Directors' Remuneration in Context

Pay compared to performance

The graph shows the difference in the total shareholder return at 31 December 2020 if, on 1 January 2010, £100 had been invested in Standard Life Aberdeen plc and in the FTSE 100 respectively. It is assumed dividends are reinvested in both. The FTSE 100 has been chosen as Standard Life Aberdeen plc is a member of this FTSE grouping.

Diagram removed for the purposes of this announcement.  However it can be viewed in full in the pdf document

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 31 December	Chief Executive Officer	Chief Executive Officer single figure of total remuneration (£000s)	Bonus outcome/ Annual incentive rates against maximum opportunity (%)	Long-term incentive plan vesting rates against maximum opportunity (%)
2020	Stephen Bird	1,044	48	-
	Keith Skeoch	1,075	48	-
2019	Keith Skeoch	1,472	21	-
20181	Keith Skeoch	1,089	10	-
	Martin Gilbert	1,089	10	-
20171	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
2013	David Nish	4,206	75	64
2012	David Nish	5,564	88	100
2011	David Nish	2,601	77	63.5

¹     Co-CEO.

 

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:

	2020	% change	2019
Remuneration payable to all Group employees (£m)1	625	-3.25%	646
Dividends paid in respect of financial year (£m)	313	-36.5%	493
Share buybacks and return of capital (£m)2	359	-30.29%	515
Adjusted profit before tax (£m)	487	-16.61%	584

¹     In addition staff costs and other employee-related costs of £91m (2019: £131m) are included in restructuring and corporate transaction expenses. See Note 7 of the Group financial statements for further information.

²     Excludes unsettled purchases of shares, expenses and the irrevocable contractual obligation with a third party to purchase the Company's own shares. See Note 26 of the Group financial statements for further information on the buybacks.

 

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 earned between the year ended 31 December 2019 and the year ended 31 December 2020 for the executive Directors, along with any percentage change in fees for the non-executive Directors, compared to the average UK-based Group employee. The Remuneration Committee considers this the most appropriate comparison given the location of the executive Directors and that the Group does not operate a harmonised salary and benefits structure across its global operations.

Percentage change in remuneration between 2019 and 2020		% Base salary/fee1	Annual bonus outcome1	% Benefits1
Executive Directors2,3	Stephen Bird	-	-	-
	Keith Skeoch	-32%	-21%	0%
	Stephanie Bruce	74%	54%	100%
	Martin Gilbert	-40%	-31%	-100%
Non-executive Directors4,5	Sir Douglas Flint6	0%	-	2,600%
	Jonathan Asquith	202%	-	-
	John Devine	-2%	-	-100%
	Melanie Gee	-3%	-	-100%
	Brian McBride	-	-	-
	Martin Pike	-3%	-	-100%
	Cathleen Raffaeli	0%	-	-100%
	Jutta af Rosenborg	0%	-	-
	Cecilia Reyes	292%	-	-
	UK-based employees	2.5%	-52.5%	17%

¹   The data in the table has been calculated in accordance with reporting requirements and reflects the percentage change in base salary, bonus outcome and benefits on an earned basis for executive Directors and non-executive Directors. This is compared to the average UK-based Group employee.

²   Stephen Bird was appointed 1 July 2020; Keith Skeoch stepped down from the Board on 1 September 2020; Stephanie Bruce was appointed to the Board on 1 June 2019; Martin Gilbert stepped down from the Board on 12 May 2020 and retired from the company on 30 September 2020. Details of any changes in base salary for executive Directors calculated on a full time year-on-year basis can be found on page 79.

³   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.

⁴   Remuneration for non-executive Directors and the Chairman is disclosed on page 88.

⁵   Jonathan Asquith was appointed to the Board on 1 September 2019, Cecilia Reynes was appointed to the Board on 1 October 2019. Details of any changes to the fees paid to non-executive Directors and the Chairman on a full time year-on-year basis can be found on page 93 of the of the Annual report and accounts 2019.

⁶   Sir Douglas Flint is eligible for life assurance of 4x his annual fee. For 2019 this figure relates to the period 19 December-31 December 2019 which was the relevant period that cover was in place. He received a full year of this benefit in 2020.

Pay ratio

The table below sets out the ratio of CEO pay (based on Stephen Bird's pay from the date of his appointment on 1 July 2020 plus Keith Skeoch's pro-rata pay up to 30 June 2020) to the median, 25th and 75th percentile total remuneration of full-time equivalent UK employees in accordance with legislation published by the Government in 2018. We have identified the relevant employees for comparison using our gender pay gap data set (snapshot data from 5 April 2020) and updated the figures for remuneration received in respect of the 2020 performance year ending 31 December 2020 (methodology B). 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 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 in the 25^th and 75^th percentile were considered representative of the quartiles and the trends seen across the Company on remuneration in respect of both the salary and bonus. The individual in the 50^th percentile was replaced by the next identified in that quartile as bonus was considered to be higher than representative for the quartile. Benefits figures were based on the medical premium paid by the Company on behalf of employees. All individuals identified were full time employees so no adjustment to annualise total compensation was required.

The ratio has increased from 2019, which reflects the outcome of the Committee's assessment of performance in each of the relevant years as well as greater differentiation for performance and reward which was applied across the organisation in 2020. The Committee is comfortable that the pay ratio reflects the pay and progression policies across the Company. Further detail on workforce pay is set out below.

	Year	Method	25th percentile	50th percentile	75th percentile
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  (£000s)	Total pay (£000s)
CEO remuneration1	741	1,847
25th percentile employee	32	38
50th percentile employee	51	61
75th percentile employee	85	102

¹     Values shown include Stephen Bird's pay from the date of his appointment on 1 July 2020 plus Keith Skeoch's pro-rata pay up to 30 June 2020.

How pay was set across the wider workforce in 2020

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 increases.

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. A Company-wide decision was made not to carry out a salary review at the end of 2020 and the same approach was applied to executive Directors.

In 2020, all employees were eligible to be considered for performance related variable remuneration but not all employees received a bonus. Entitlement to be considered for performance related variable remuneration is designed to reward delivery of results over appropriate time horizons and includes deferred variable compensation at a suitable level for the employee's role. Variable remuneration for employees, including executive Directors, is determined as a total pool.

As part of transformation of our performance culture, in 2020 variable remuneration has been directed to those who have made an outstanding contribution in the key areas of driving improved fund performance and client service, managing through the global pandemic and delivering on our transformation objectives. This has created the required momentum in these areas in 2020 to position our business to deliver against our plan in 2021.

The Group engaged with its employees in 2020 through the annual Viewpoints full company survey. The survey included an opportunity for employees to provide feedback to the Board on pay and benefit matters. The CEO has engaged directly with employees in relation to the 2020 remuneration cycle. The areas discussed in these communications include: economic factors, employee expectations, congruence of pay across the workforce and market data.

The Group operates a Compensation Committee comprising the Chief HR 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.

 

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 2020. 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 31 December £000s	Taxable benefits in year ended  31 December  £000s1	Total remuneration for the year ended 31 December £000s
Sir Douglas Flint2	2020	475	27	502
	2019	475	1	476
Jonathan Asquith	2020	139	-	139
	2019	46	-	46
John Devine	2020	128	-	128
	2019	131	3	134
Melanie Gee	2020	113	-	113
	2019	117	4	121
Brian McBride3,4	2020	76	-	76
	2019	-	-	-
Martin Pike	2020	124	-	124
	2019	128	3	131
Cathleen Raffaeli5	2020	149	-	149
	2019	149	3	152
Jutta af Rosenborg	2020	94	-	94
	2019	94	-	94
Cecilia Reyes	2020	94	-	94
	2019	24	-	24

¹     We have reviewed the approach to disclosure of taxable benefits for non-executive Directors in 2020. This has resulted in removal of certain expenses, in line with reporting requirements.

²     Sir Douglas Flint is eligible for life assurance of 4x his annual fee. For 2020 this figure relates to the full year.

³     Appointed to the Board with effect from 1 May 2020.

⁴     Total fees include subsidiary Board fees of £30,000 per annum as a member of the Standard Life Savings Limited and Elevate Portfolio Services Limited Boards.

⁵     Total fees include subsidiary Board fees of £55,000 per annum 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 remuneration policy, and can be found on page 104 of the Annual report and accounts 2019.

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 (details of which can be found on page 238) and at the 2020 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
John Devine	4 July 2016	AGM 2017
Melanie Gee	1 November 2015	AGM 2016
Brian McBride	1 May 2020	AGM 2020
Martin Pike	27 September 2013	AGM 2014
Cathleen Raffaeli	1 August 2018	AGM 2019
Jutta af Rosenborg	14 August 2017	AGM 2018
Cecilia Reyes	1 October 2019	AGM 2020

 

Implementation of policy for non-executive Directors in 2021

The following table sets out Standard Life Aberdeen plc non-executive Director fees to be paid in 2021. No increases were made to the level of fees from 2020.

Role	2021 fees1	2020 fees
Chairman's fees2	£475,000	£475,000
Non-executive Director fee3	£73,500	£73,500
Additional fees:
Senior Independent Director	£25,000	£25,000
Chairman of the Audit Committee	£30,000	£30,000
Chairman of the Risk and Capital Committee	£30,000	£30,000
Chairman of the Remuneration Committee	£30,000	£30,000
Committee membership (Audit, Risk and Capital, Remuneration and Nomination Committees)	£10,000	£10,000
Employee engagement4	£15,000	£15,000

¹     The core fee of £73,500 paid to each non-executive Director (including the Chairman) is expected to total £662k for 2021 (2020: £662k). This is within the maximum £1,000,000 permitted under Article 87 of Standard Life Aberdeen plc's articles of association. Total fees including additional duties are expected to amount to £1,407k for 2021 (2020: £1,408k).

²     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 insurance benefits with effect from December 2019.

³     For non-executive Directors, individual fees are constructed by taking the core fee and adding extra fees for being the Senior Independent Director, chairman or member of committees and/or subsidiary boards where a greater responsibility and time commitment is required.

⁴     This fee was introduced in 2019. Details on the role responsibilities are set out on page 79 of the Annual report and accounts 2018.

Non-executive Directors' interests in shares (audited)

The following table shows the total number of Standard Life Aberdeen plc shares held by each of the non-executive Directors and their connected persons:

	Total number of shares owned at 1 January 2020 or date of appointment if later	Shares acquired during the period 1 January 2020 to 31 December 2020	Total number of shares owned at 31 December 2020 or date of cessation if earlier2
Sir Douglas Flint	89,024	345	89,369
Jonathan Asquith	20,000	50,000	70,000
John Devine	28,399	-	28,399
Melanie Gee	67,500	-	67,500
Brian McBride1	-	-	-
Martin Pike	69,476	-	69,476
Cathleen Raffaeli	9,315	-	9,315
Jutta af Rosenborg	8,750	-	8,750
Cecilia Reyes	-	-	-

¹    Appointed 1 May 2020.

²    There were no changes to the number of shares held by Directors between 31 December 2020 and 8 March 2021.

Sir Douglas Flint, as Chairman, is subject to a shareholding guideline of 100% of the value of his annual fee in Standard Life Aberdeen plc shares to be reached within four years of appointment.

The Remuneration Committee

Membership

During 2020 the Remuneration Committee was made up of independent non-executive Directors. For their names, the number of meetings and committee member attendance during 2020, please see the table on page 57.

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 2020

Jan-Mar	·  Development of 2020 Directors' Remuneration Policy ·  Review stakeholder commentary on draft Remuneration Policy ·  2019 Directors' remuneration report ·  2019 bonus payments and 2017 LTIP outcomes ·  2020 annual bonus scorecard targets and 2020 LTIP targets ·  Review remuneration outcomes for executive Directors and the Material Risk Taker population
Apr-Jun	·  Review of COVID-19 impact on remuneration ·  Update on the external environment and feedback from AGM ·  Remuneration decisions for the Executive Leadership Team and other senior employees within Remuneration Committee's remit ·  Review of Stephen Bird appointment and Keith Skeoch departure
Jul-Sep	·  Consider anticipated impact of regulatory changes on remuneration ·  Mid-year review of performance against target for annual bonus and LTIP awards
Oct-Dec	·  Review of Group Remuneration Policy ·  Material Risk Takers and related 2020 disclosures ·  Update on the regulatory position of Standard Life Aberdeen and the Remuneration Committee's Terms of Reference ·  Review gender pay gap data ·  Review 2021 remuneration proposals

External advisers

During the year, the Remuneration Committee took advice from Deloitte LLP (a member of the Remuneration Consultants Group) who were appointed by the Remuneration Committee in 2017. The Remuneration Committee is satisfied that the advice given is objective and independent.

A representative from Deloitte LLP 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 of the meetings, the Remuneration Committee's Chairman seeks advice on remuneration matters on an ongoing basis. As well as advising the Remuneration Committee, Deloitte LLP also provided tax, accounting support, risk management and consultancy services to the Company during the year. Deloitte Total Rewards and Benefits is an investment adviser to the trustees of the Standard Life Staff Pension Scheme.

Fees paid to Deloitte LLP during 2020 for professional advice to the Remuneration Committee were £171,165.

Where appropriate, the Remuneration Committee receives input from the Chairman, Chief Executive Officer, Chief Financial Officer, Chief HR Officer, Global Head of Reward, Chief Risk Officer, and the Head of Stewardship and ESG Investments. This input never relates to their own remuneration. The Remuneration Committee also receives input from the Risk and Capital Committee and Audit Committee.

Remuneration Committee effectiveness

The Committee reviews its remit and effectiveness each year. The 2020 review was conducted internally by the Company Secretary, who interviewed each of the Committee members. As well as general observations, the four key performance areas considered were:

·  The coverage of the Committee's duties in the meeting agendas

·  How effectively agenda items were presented and discussed

·  The quality and level of detail in the papers

·  How well the Committee met its objectives in terms of making decisions and reporting to the Board

The Committee members did not raise any material issues or concerns regarding the above areas or the overall effectiveness of the Committee during 2020. They were very supportive of the Chair's effective role in leading the Committee through its sometimes challenging discussions. The main area where the Committee wanted to see continued improvement in 2021 was in relation to the clarity of the presentation of some of the more technical and regulatory-related remuneration matters. In addition to overseeing the annual remuneration cycle, Committee members would like to spend more time in their meetings considering the structure and elements of the future remuneration principles and strategy across the Group, and how they might support the executive team in their implementation.

Shareholder voting

We remain committed to ongoing shareholder dialogue and take an active interest in voting outcomes.

The remuneration policy was subject to a vote at the 2020 AGM on 12 May 2020 and the following table sets out the outcome.

Policy 2020 AGM	For	Against	Withheld
% of total votes	91.66%	8.34%
No. of votes cast	1,003,905,073	91,323,405	10,346,991

The Directors' remuneration report was subject to a vote at the 2020 AGM on 12 May 2020 and the following table sets out the outcome.

2019 Directors' remuneration report	For	Against	Withheld
% of total votes	98.05%	1.95%
No. of votes cast	1,067,884,391	21,284,114	16,406,965

 

 

Summary of the Directors' Remuneration Policy

This section sets out the remuneration policy which was approved by shareholders at the 2020 AGM and how it will be implemented in 2021. Given the changes to the Board during the year, summaries of the relevant extracts from the remuneration policy for new appointments and for service contracts and loss of office have also been provided.

Remuneration policy summary - executive Directors

Purpose and link to strategy	Operation	Implementation in 2021
Base salary
To provide a core reward for undertaking the role, commensurate with the individual's role, responsibilities and experience.	Normally reviewed annually, taking into account a range of factors including: (i) the individual's skills, performance and experience; (ii) increases for the broader employee population; (iii) external market data and other relevant external factors; (iv) the size and responsibility of the role; and (v) the complexity of the business and geographical scope.	No changes are proposed to base salaries this year. Stephen Bird: £875,000 Stephanie Bruce: £538,125
Pension
To provide a competitive, flexible retirement benefit in a way that does not create an unacceptable level of financial risk or cost to the Company.	Maximum employer contribution aligned to those available to the wider workforce in the relevant jurisdiction. The current maximum employer contribution available to the UK wider workforce is 18% of salary.	Stephen Bird: 18% of salary Stephanie Bruce: 18% of salary
Benefits
To provide market competitive and cost effective benefits.	Benefits include (i) private healthcare; (ii) death in service protection; (iii) income protection (iv) reimbursement of membership fees of professional bodies; and (v) eligibility for the all employee share plan. Executive Directors are also eligible to participate in the Company's flexible benefits programme and are provided with a health screening assessment.	Benefits to be provided as per policy.
Annual Bonus
To reward the delivery of the Company's business plan in a range of financial and non-financial areas and to align executives' interests to those of shareholders and our clients.	The maximum award opportunity is up to 300% of salary. Annual performance is assessed against a range of key financial (at least 75% weighting), non-financial and personal performance measures (no more than 10% weighting). At least 50% of any award will be deferred into shares vesting in equal tranches over a three-year period. A retention period may be applied. Deferred awards accrue dividend equivalents. Awards subject to clawback for a period of five years from the date of the award. Any unvested awards will be subject to malus during the deferral period.	Stephen Bird: 250% of salary Stephanie Bruce: 150% of salary Details on the performance metrics for to 2021 annual bonus are set out on page 78. Due to commercial sensitivity, actual targets and ranges will be disclosed at the end of the performance period.

 

Purpose and link to strategy	Operation	Implementation in 2021
Long-Term Incentive Plan
To align with our shareholders and promote sustainability by rewarding the delivery of long-term growth in shareholder value.	The maximum award opportunity is up to 500% of salary. Combined incentive opportunity capped at 700% of salary. Awards are subject to a three-year performance period, with a subsequent two-year holding period. Performance targets are set annually for each three-year cycle by the Remuneration Committee. Awards are subject to at least two performance metrics which are linked to the achievement of the Company's long-term strategic priorities and the creation of long-term shareholder value, with at least one being absolute in nature and one being a relative metric. Awards accrue dividend equivalents over the performance and holding period. Awards will be subject to clawback for a period of five years from the date of the award. Any unvested awards will be subject to malus during the deferral period.	Stephen Bird: 350% of salary Stephanie Bruce: 200% of salary Details on performance metrics for 2021 LTIP awards are set out on page 78.
Share ownership
To ensure appropriate long-term alignment with the interest of our shareholders.	Executive Directors are required to build up a substantial interest in Company shares. For new joiners the shareholding requirement aligns with the higher of maximum LTIP opportunity or 200%. The shareholding requirement for Stephanie Bruce remained at 300% of salary in line with the policy in place at the time of her recruitment. The post cessation of employment share ownership policy for executive Directors requires shares up to the value of the shareholding requirement to be held for a period of two years following departure from the Board.	Stephen Bird: 350% of salary Stephanie Bruce: 300% of salary
Other Features
Malus and clawback Malus and clawback provisions apply to annual bonus and LTIP awards. Under the malus and clawback provisions, the Remuneration Committee has the ability to reduce awards that have not yet vested (malus) and can require repayment of an award (clawback) for a period of up to five years from the date of award. The circumstances in which malus or clawback would apply, include but are not limited to: -      A material misstatement of the Company's audited financial statements -      Any failure of risk management, fraud or other material financial irregularity -      Material corporate failure -      An error in the information or assumptions on which the relevant award was paid/granted or vests, as a result of erroneous or misleading data or otherwise -      Serious misconduct by a participant or otherwise

The Remuneration Committee believes that the Remuneration Policy takes into account the factors under Provision 40 of the Corporate Governance Code (details of which can be found in the 2019 Directors' Remuneration Report).

Scenario charts

The following chart illustrates how much the current executive Directors could receive under a range of different scenarios along with a comparison to our current policy:

 

Diagram removed for the purposes of this announcement.  However it can be viewed in full in the pdf document

Outcomes for the 2021 scenario chart are based on the following:

·  Minimum - fixed pay, comprising salary and pension effective 1 April 2021 (18% of salary), and benefits (the value of taxable benefits are as shown in the Single Total Figure of Remuneration table for 2020 on page 79)

·  Target - fixed pay, 50% of the maximum bonus award, 50% of LTIP vesting

·  Maximum - fixed pay, 100% of maximum bonus award, 100% of LTIP vesting

·  Maximum + share price growth assumes share price growth of 50% for the LTIP element

Remuneration policy extract - Remuneration policy for new executive Director appointments

Area	Policy
Principles	In determining remuneration arrangements for new executive appointments to the Board (including internal promotions), the Remuneration Committee applies the following principles: -      The Committee takes into consideration all relevant factors, including the calibre of the individual, local market practice and existing arrangements for other executive Directors, adhering to the underlying principle that any arrangements should reflect the best interests of the company and its shareholders -      Remuneration arrangements for new appointments will typically align with the remuneration policy In the case of internal promotions, the Committee will honour existing commitments entered into before promotion
Components and approach	The remuneration package offered to new appointments will not exceed the maximum level of variable remuneration of 700% of salary. This limit excludes buyout awards which are in line with the policy as set out below. In considering which elements to include, and in determining the approach for all relevant elements, the Committee will take into account a number of different factors, including (but not limited to) typical market practice and existing arrangements for other executive Directors and internal relativities.
Buyouts	To facilitate recruitment, the Committee may make an award to buy out remuneration terms forfeited on leaving a previous employer. Awards will be made in accordance with regulatory guidance. The buyout award will reflect the foregone award in amount and terms (including any deferral or retention period) as closely as possible.

 

Remuneration policy extract - Service Contracts and loss of office for executive Directors

Area	Policy
Notice period	-      Six months by the executive Director -      Up to 12 months by the employer to the executive Director Executive Directors may be required to work during the notice period or take a period of 'garden leave' or may be provided with pay in lieu of notice if not required to work the full notice period.
Termination payments	Any payment in lieu of notice will be made up of up to 12 months' salary, pension contributions and the value of other contractual benefits. The payment may be made in phased instalments.
Non-compete clauses	Apply during the contract and for up to 12 months after leaving, at the Company's choice.
Treatment of incentive awards	For the purpose of awards under the annual bonus, long-term incentive plan and Executive Incentive Plan, approved leavers are defined as those whose office or employment comes to an end because of death, ill-health, injury or disability, redundancy, or retirement with the agreement of the employing company; the sale of the individual's employing company or business out of the Group or any other reasons at the discretion of the Committee. Annual bonus plan Leavers during the award year For approved leavers, rights to awards under the annual bonus will typically be pro-rated for the period of employment to the date of termination, and will be paid at the normal time in the normal manner, unless in very limited circumstances (such as death), the Committee determines that payments should be accelerated. For other leavers, rights to awards under the annual bonus will be forfeit. Leavers during the deferral period For approved leavers, outstanding deferred awards under the annual bonus will typically vest and be released at the scheduled vesting date. The Committee retains the discretion to apply time pro-rating (over the deferral period) for approved leavers and to accelerate the vesting and/or release of awards if it considers it appropriate. For other leavers, rights to deferred awards will be forfeited. Awards under the Long-Term Incentive Plan Leavers during the performance period For approved leavers, outstanding awards under the LTIP will typically be pro-rated for time in service to termination as a proportion of the performance period and will be released at the scheduled vesting date subject to performance. Subsequent holding periods will also apply. The Committee retains the discretion to dis-apply time pro-rating for approved leavers. For other leavers, rights to outstanding awards will be forfeited. Leavers during the holding period Vested awards subject only to a holding period will be retained and released at the scheduled date. Legacy awards under the Executive Incentive Plan Leavers during the deferral period Outstanding deferred awards under the EIP will typically be paid at the normal time, subject to performance against the Underpin performance conditions. The Committee retains the discretion to apply time pro-rating (over the deferral period) for approved leavers and to accelerate the vesting and/or release of awards if it considers it appropriate. For other leavers, rights to deferred awards will be forfeited. Legacy awards under the Aberdeen Deferred Share Plans A good leaver is defined as someone whose employment comes to an end because of death, ill-health, injury, disability, redundancy or retirement, sale of the employing company or business or any other reason at the discretion of the Committee. Unvested awards granted to good leavers will typically vest in full at the normal vesting date, unless the Committee decides that they should vest on termination. For other leavers, rights to deferred awards will be forfeited.
Other payments	The Committee reserves the right to make any other payments (including appropriate legal fees) in connection with an executive Directors' cessation of office or employment where the payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by way of settlement of any claim arising in connection with the cessation of that executive Directors' office or employment.
Change of control	Outstanding awards will be treated in line with the terms of the respective plans.