MIFIDPRU 8.6 Disclosure
(Based on audited financial statements for the year ending 2022)
Scope and purpose
This disclosure relates to DB Investment Partners Ltd (“DBIP” or the “Firm”), which is classified as a small and non- interconnected (SNI) MIFIDPRU Investment Firm and is required under MIFIDPRU 8.6 to disclose information relating to remuneration policies and practices. For the financial year 2022, DBIP was in its formation phase, and as such was subject to the Deutsche Bank ("DB") compensation framework and therefore all disclosures detailed below have been made in relation to the wider DB compensation framework. Future disclosures for the purposes of MIFIDPRU 8.6 will be made in accordance with DBIP policies and practices.
Decision-making Procedures and Compensation Governance
DB has a robust governance structure enabling it to operate within the clear parameters of the DB compensation strategy and policy. DBIP is subject to the remuneration decisions made by the DB group ("Group") management board ("DB Group Management Board"), which is supported by a specific remuneration committee, the Senior Executive Compensation Committee ("SECC"), which is a delegated committee established by the DB Group Management Board. In order to maintain its independence, only representatives from infrastructure and control functions who are not aligned to any of the business divisions are members of the SECC. In 2022, the SECC's membership comprised the Global Head of Human Resources and Chief Financial Officer as Co-Chairpersons, the Global Head of Compliance, the Global Head of Performance & Reward as well as an additional representative from both Finance and Risk as voting members. The Compensation Officer, the Deputy Compensation Officer and an additional representative from Finance participated as nonvoting members. In line with their responsibilities, the Group's control functions are involved in the design and application of the bank’s remuneration systems and in determining the total amount of variable compensation (“VC”). This includes assessing the impact of employees’ behaviour and the business-related risks, performance criteria, granting of remuneration and severance as well as ex-post risk adjustments.
Objectives of Financial Incentives
DB recognises that its compensation framework and financial incentives play a vital role in supporting its strategic objectives. It enables the bank to attract and retain the individuals required to achieve the bank’s objectives. DB's compensation and benefits strategy is aligned to its business strategy, risk strategy, and to its corporate values and beliefs as outlined below.
Five key objectives of our compensation strategy
- To support the delivery of the bank's client-focused, global bank strategy by attracting and retaining talent across its full range of diverse business models and country locations
- To support the long-term, sustainable performance and development of the bank and a corresponding risk strategy
- To promote and support long-term performance based on cost discipline and efficiency
- To ensure that the bank's compensation practices are safe, by way of risk-adjusting performance outcomes, preventing inappropriate risk taking, ensuring sustained compatibility with capital and liquidity planning, and complying with regulation
- To apply and promote the bank's corporate values of Integrity, sustainable performance, client centricity, innovation, discipline and partnership
Core remuneration principles
- Align compensation to shareholder interests and sustained bank-wide profitability, taking account of risk, including environmental, social and governance (ESG) risk
- Apply a gender-neutral, simple and transparent compensation design
- Maximize sustainable performance, both at the employee and the bank-wide level
- Attract and retain the best talent
- Calibrate compensation to reflect different divisions and levels of responsibility
- Ensure compliance with regulatory requirements
Approach to and Characteristics of Compensation
The compensation framework emphasises an appropriate balance between fixed pay (“FP”) and VC – together forming Total Compensation (“TC”). It aligns incentives for sustainable performance at all levels of DB whilst ensuring the transparency of compensation decisions and their impact on shareholders and employees. The underlying principles of the compensation framework are applied to all employees equally, irrespective of differences in seniority, tenure, gender or ethnicity. The Group has assigned a Reference Total Compensation (“RTC”) to eligible employees that describes a reference value for their role. This value provides employees with orientation on their FP and VC. Actual individual TC can be at, above or below the RTC, depending on VC decisions.
FP is used to compensate employees for their skills, experience and competencies, commensurate with the requirements, size and scope of their role. VC reflects affordability and performance at Group, divisional, and individual level. VC generally consists of two elements – a Group VC component ("Group VC Component") and an individual VC component ("Individual VC Component"). The Group VC Component is based on one of the overarching goals of the compensation framework – to ensure an explicit link between VC and the performance of the Group. The Individual VC Component is delivered either in the form of Individual VC or as a recognition award (which provides the opportunity to acknowledge and reward outstanding contributions made by employees of lower seniority levels). An employee’s eligibility to receive either of these VC elements depends on division, region, profession, and corporate title. In case of negative performance contributions or misconduct, an employee’s VC can be reduced accordingly and can go down to zero. VC is granted and paid out subject to Group affordability. Under the compensation framework, there continues to be no guarantee of VC in an existing employment relationship. Such arrangements are utilised only on a very limited basis for new hires in the first year of employment and are subject to the bank’s standard deferral requirements. Employee benefits complement TC and are considered FP from a regulatory perspective, as they have no direct link to performance or discretion. Pension expenses represent the main element of the bank’s benefits portfolio globally.
Determination of performance-based variable compensation
The Group puts a strong focus on its governance related to compensation decision-making processes. A robust set of rule-based principles for compensation decisions with close links to the performance of both business and individual are applied, taking into account both financial and non-financial criteria. All compensation decisions are made within the boundaries of regulatory requirements with these requirements forming the overarching framework for determining compensation at DB. As DBIP was only operational for 1 month in the year ending 31st December 2022, the compensation was determined with reference to DB's performance, capital and liquidity reserves.
The total amount of VC for any given performance year is derived from an assessment of the Group’s profitability, solvency, and liquidity position, and the determination of VC pools for divisions and infrastructure functions based on their performance in support of achieving the bank’s strategic objectives. At the level of the individual employee, the "Variable Compensation Guiding Principles" have been established, which detail the factors and metrics that have to be taken into account when making Individual VC decisions. Managers must fully appreciate the risk-taking activities of individuals to ensure that VC allocations are balanced and risk-taking is not inappropriately incentivised. The factors and metrics to be considered under the Variable Compensation Guiding Principles include, but are not limited to, (i) business delivery i.e. quantitative and qualitative financial, risk- adjusted and non-financial performance metrics and (ii) behaviour i.e. culture, conduct and control considerations such as qualitative inputs from control functions or disciplinary sanctions.
Remuneration for year ending 31st December 2022
The below figures show the total remuneration awarded by DBIP to its staff from the date of its FCA authorisation (1st December 2022) to 31st December 2022.
|in £000 (unless stated otherwise)2
1 The table may contain marginal rounding differences; FTE (full-time equivalent) as of December 31, 2022.
2 FX conversion rate is as on 31.12.2022 EUR 1 = GBP 0.88672