DWS as a global asset manager pursues to be the investment partner of choice for our clients, employer of choice for our employees and deliver shareholder value. Appropriate compensation plays an integral role in the successful delivery of these strategic objectives of DWS.
Attracting and retaining the most capable employees globally is central to our compensation strategy. The cornerstone to this is the concept of pay for performance, within a sound risk management and governance framework, and with due consideration of market factors and societal values. As we seek to align compensation to evolving internal and external expectations, reward structures are reviewed, and enhanced as needed, on a regular basis.
Within DWS, employees’ Total Compensation is made up of Fixed Pay and Variable Compensation, DWS ensures an appropriate relationship between Fixed Pay and Variable Compensation across all groups of employees. Total Compensation structures reflect the Divisional and Regional compensation structures, internal relativities, and market data and assist in seeking consistency across DWS. Fixed Pay is the key and primary element of compensation for the majority of DWS Employees and reflects the value of the individual role and function within the organisation. Variable Compensation is a discretionary compensation element that enables DWS to provide additional reward to employees for their performance and behaviours. An employee’s Corporate Title as well as functional, regional and entity specifics determine which Variable Compensation elements are applicable for a given employee and the conditions under which they apply.
Decisions on variable compensations are taken in consideration of the risk-adjusted performance and the long-term health of the investment managing companies and DWS Group. The compensation structures are designed not to provide incentives for excessive risk-taking. This especially applies to employees who have a material impact on the risk profile (Material Risk Takers) and who have been identified as such in accordance with the respective regulatory requirements, in particular AIFMD, UCITS and their implementations into national laws.
DWS applies a robust methodology when determining Variable Compensation, that reflects the risk-adjusted performance (which includes ex-ante and ex-post risk adjustments) and is primarily driven by (i) DWS affordability, i.e. what “can” DWS award in alignment with DWS risk profile and other regulatory requirements, and (ii) performance, i.e. what “should” DWS award in order to provide an appropriate compensation for performance, while protecting the long-term health of the franchise.
DWS affordability is assessed by the DWS Compensation Committee to determine that key parameters are within the projected fulfilment of regulatory and strategic goals and effects on the DWS risk profile and profitability in line with the strategic targets.
At the level of the individual employee, DWS has established “Variable Compensation Guiding Principles”, which detail the factors and metrics that must be taken into account by managers when making individual variable compensation decisions. The factors and metrics to be considered include, but are not limited to, divisional risk-adjusted financial and non-financial performance, culture and behavioral considerations, disciplinary sanctions, individual performance and retention considerations.
The DWS Compensation Committee was established by the DWS Executive Board and it is mandated to develop and design sustainable compensation frameworks and operating principles and to prepare recommendations on total compensation levels, and ensure appropriate compensation and benefits governance and oversight for DWS. The DWS Compensation Committee establishes quantitative and qualitative factors to assess performance as a basis for compensation related decisions and makes appropriate recommendations to the Executive Board regarding the annual Variable Compensation pool and its allocation across the DWS Divisions. Voting members of the DWS Compensation Committee are: the Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Control Officer (CCO), Chief Operating Officer (COO), Co-Head of Investment Group and the Global Head of HR.
Further details on our remuneration system are frequently disclosed in the respective Annual Report of the investment product.