def write(self, symbol, data):
pandas = False
# Check for overlapping data
if isinstance(data, list):
start = data[0][‘index’]
end = data[-1][‘index’]
elif isinstance(data, pd.DataFrame):
start = data.index[0].to_datetime()
end = data.index[-1].to_datetime()
pandas = True
else:
raise UnhandledDtypeException(“Can’t persist type %s to tickstore” % type(data))
self._assert_nonoverlapping_data(symbol, to_dt(start), to_dt(end))
if pandas:
buckets = self._pandas_to_buckets(data, symbol)
else:
buckets = self._to_buckets(data, symbol)
self._write(buckets)
M
a
n
G
r
o
u
p
p
l
c
A
n
n
u
a
l
R
e
p
o
r
t
2
0
2
0
//Talent meets tech
Powering our performance
Man Group plc
Annual Report 2020
def write(self, symbol, data):
pandas = False
# Check for overlapping data
if isinstance(data, list):
start = data[0][‘index’]
end = data[-1][‘index’]
elif isinstance(data, pd.DataFrame):
start = data.index[0].to_datetime()
end = data.index[-1].to_datetime()
pandas = True
else:
raise UnhandledDtypeException(“Can’t persist type %s to tickstore” % type(data))
self._assert_nonoverlapping_data(symbol, to_dt(start), to_dt(end))
if pandas:
else:
buckets = self._pandas_to_buckets(data, symbol)
buckets = self._to_buckets(data, symbol)
self._write(buckets)
Contents
Strategic report
At a glance
Chair’s statement
Our business model
Our market
Our strategy
Chief Executive Officer’s review
Key performance indicators
Chief Financial Officer’s review
Risk management
Our sustainable business model
Governance report
Chair’s governance overview
Board of Directors
Senior Executive Committee
Corporate governance
Audit and Risk Committee report
Nomination Committee report
Directors’ Remuneration report
Directors’ report
Directors’ responsibility statement
Financial statements
Independent auditor’s report
Group income statement
Group statement of
comprehensive income
Group balance sheet
Group cash flow statement
Group statement of changes
in equity
Notes to the Group financial
statements
Five year record
Alternative performance measures
Shareholder information
Shareholder information
Glossary
2
6
10
12
14
16
22
24
30
40
62
64
66
67
80
86
90
118
120
122
130
130
131
132
133
135
165
166
170
172
The strategic report was approved by
the Board and signed on its behalf by:
Luke Ellis
Chief Executive Officer
Man Group is a technology-
empowered active investment
management firm with
1,400+
employees
from
50+
countries.
We offer
80+
alternative and long-only
investment strategies
and trade in
750+
markets around the world
Our purpose
We are an active investment management
firm focused on delivering outperformance
for our clients and the millions of individuals
they represent.
We seek to position ourselves for continued
growth and to set ourselves apart from
the trends affecting the traditional asset
management industry by:
Powering performance with cutting-edge technology
Go to page 4
Investing in exceptional talent
Go to page 20
Building a sustainable business model
Go to page 38
__
__
__
to help our
600+
institutional clients meet
their investment goals.
Man Group plc Annual Report 2020
01
At a glance
Our proposition is strong
>
We actively manage investments
of $123.6 billion in alternative and
long-only strategies_
$123.6bn
Alternative
Long-only
$77.2bn
$46.4bn
We are a technology-empowered
investment manager.
We harness the power of technology
across alpha generation, trading and
execution, and our operating platform.
Our clients are at the heart of
everything we do.
We are here to help clients meet their
individual investment goals and we
tailor our strategies to fit their needs.
We prioritise risk management
and best execution.
Our judicious approach to risk
management and cost effective
execution drive better returns for clients.
We are fundamentally a people
business.
We seek to attract and retain the best
people, and ensure that everyone can
reach their full potential.
02
Man Group plc Annual Report 2020
_
run on a quantitative and
discretionary basis across
liquid and private markets_
_
for our global client base and
the millions of individuals they
represent.
FUM1 by product category ($bn)
34.0
29.0
27.8
18.6
14.2
Absolute
return
Total
return
Multi-manager
solutions
Systemic
long-only
Discretionary
long-only
1 The Group’s alternative performance measures are outlined on pages 166-169.
53%
EMEA
28%
Americas
19%
Asia Pacific
Man Group plc Annual Report 2020
03
Strategic report //Powering
__
performance with
cutting-edge technology
Technology is part of our DNA. With 30+
years of quant investing experience, we harness
the power of technology to improve performance
and efficiency across everything from alpha
generation and risk management to trade
execution and operating infrastructure.
427
Python users supporting
our investment strategies
04
Man Group plc Annual Report 2020
#1
ranked asset manager in
the GitHub open source
software community
Man Group plc Annual Report 2020
05
Strategic report Chair’s statement
___“The Board is
justifiably proud of the
resilience, dedication
and commitment shown
by all our staff during
the year.”
John Cryan
Chair
06
Man Group plc Annual Report 2020
Overview of the year
2020 will be remembered for a generation
as the year the world became gripped by
a pandemic, economic and social activity
was locked down, and governments took
extraordinary and unprecedented steps
to support their economies using a broad
range of stimulus measures. Although we
see the prospect of science being able
to combat the effects of the virus more
successfully, the impact of government
and central bank intervention will be felt
for years, if not decades, to come.
Despite the stresses that the pandemic
has placed on the real economy, financial
markets have performed strongly in 2020.
Of all the major asset classes, precious
metals provided the best performance last
year, led by silver with a 47% return. US
equities and emerging market equities both
delivered double-digit returns, 16% and 15%
respectively, while US treasuries were more
muted, returning close to 4% despite the
tumultuous year. We ended the year with
net inflows of $1.8 billion and a new record
high FUM of $123.6 billion. A key feature of
our relative investment performance for the
year was the broad dispersion of outcomes,
with continuing relative underperformance
from styles aimed at capturing excess
returns from value opportunities. Overall,
we delivered net underperformance of
1% across our managed portfolio.
The investment management industry
continues to be heavily impacted by pressure
on profit margins on fees charged to clients.
At Man Group we are not immune to this
trend, although our technological edge
differentiates us from much of the competition
and helps us to grow our market share in
active investment management. Our AHL
TargetRisk strategy was a key driver of net
inflows. Its margin profile supported the
firm’s ability to deliver an increase in core
management fee profits¹, which increased
by $10 million. We use this metric to give
you a clearer insight into the profitability
of our core investment management fees.
1 The Group’s alternative performance measures are outlined
on pages 166-169.
Our overall profitability was impacted by
the $110 million decline in performance fee
profits¹, after a very strong performance in
2019. Our 2020 core profit before tax¹ fell by
26% to $284 million compared to the prior
year. Statutory profit before tax fell by 42%
to $179 million compared to the prior year.
The Board has decided to update our
ordinary dividend policy. It will be progressive,
taking into account growth in the firm’s
overall earnings each year. We are making
this change to reflect the fact that our overall
profitability is now driven by the growth
and opportunity in our core business,
unaffected by any legacy business roll-
off. We are confident in our core business
growing over time, and this new policy
reflects that. Additionally, we seek to return
to shareholders – recently through share
buyback programmes – remaining retained
earnings not deemed required to meet
foreseeable business needs. To initiate the
new policy, the Board has recommended a
final dividend of 5.7 cents per share, which,
when taken together with the interim dividend
already distributed, amounts to a full-year
dividend of 10.6 cents per share. The final
dividend recommendation is, as usual,
subject to approval by shareholders at the
AGM to be held in May 2021. In 2020 we
completed the $100 million share repurchase
announced in October 2019, and in
September 2020 we announced our intention
to repurchase a further $100 million of shares.
Our role as an asset manager
We are an active investment manager.
We aim to help our clients to meet their
investment goals by delivering better
performance than benchmarks or equivalent
competitor strategies. We serve millions of
underlying savers and pensioners through our
clients, the institutions or intermediaries who
pool their savings. We aim to outperform by
virtue of the combination of our technological
edge versus competitors, our talented and
experienced investment professionals,
and our inclusive, collaborative culture.
The Board spends a significant amount
of time reviewing the performance of our
investment strategies. We monitor the
sourcing and development of business
partnerships with our major clients. We
ensure that management is focused
on the creation of customised solutions
to meet investor needs. Investment
in our people and our technology is
critical to our continuing success.
We at Man Group recognise that part of our
fiduciary duty to our clients is the responsible
investment of the funds we manage on their
and their own clients’ behalf. In ensuring the
sound stewardship of our investors’ capital
we seek not only to ensure that our approach
closely aligns us with the values of our clients
but also balances the expectations of our
shareholders and all the other stakeholders
of Man Group. To this end, we employ
a formalised process that quantifies the
degree of responsible investment focus for
each of Man Group’s funds. We offer our
investment managers proprietary tools to
monitor and manage Environmental, Social
and Governance (ESG) factors. We also
maintain a list of companies whose securities
are ineligible for inclusion in our portfolios. We
thereby seek to ensure a clear and consistent
approach to responsible investment across
our entire range of strategies, and to inform
how we deliver on our approach to ESG
matters in a manner that can meet the
broad palette of preferences expressed
by our clients. We also believe that we
must be transparent about the implications
of climate change on our business.
We have clearly set out actions that we are
taking to manage environmental risks: we
actively seek to minimise our environmental
footprint; we are committed to carbon
offsetting; and we have defined our
pathway to net zero emissions by 2030.
Working from home
In line with new local laws and government
guidelines aimed at controlling the spread
of the pandemic, nearly all of our workforce
has been working from home since mid-
March 2020. I am pleased to report that
the transition to remote working was
seamless. This is a reflection of the quality
of our technology and networks, and
the effectiveness of our organisational
structure, support systems and infrastructure
services. It also reflects the strength and
robustness of our key vendor relationships.
Funds under management
$123.6bn
+5%
2019: $117.7bn
Statutory EPS
9.3¢
-49%
2019: 18.4¢
Core EPS1
16.2¢
-23%
2019: 21.0¢
Proposed dividend per share
10.6¢
+8%
2019: 9.8¢
Man Group plc Annual Report 2020
07
Strategic report Chair’s statement continued
___“Our success in
attracting, retaining,
developing and
motivating staff is
of vital importance
to our future and
remains a key area
of focus for the
Board and senior
management.”
08
Man Group plc Annual Report 2020
Importantly, there was no noticeable impact
on our ability to service our clients nor
on the effectiveness of our operations or
controls. The Board is justifiably proud of
the resilience, dedication and commitment
shown by all our staff during the year.
Throughout the period of remote working,
management has been extremely attentive
to the needs of individuals and the specific
challenges that each member of staff
has faced when working in their home
environment. The Board has been hugely
impressed by the thoughtful and caring
approach management has taken to the
physical and emotional well-being of everyone
at Man Group during these trying times.
People and culture
Our success in attracting, retaining,
developing and motivating staff is of vital
importance to our future and remains a
key area of focus for the Board and senior
management. An element of this effort
involves us ensuring that Man Group remains
a highly attractive place to work. Increasingly
too, it means ensuring that we espouse and
act with corporate social responsibility. Firms
that are well run get their CSR engagement
right. Good governance, a social conscience,
respect for the environment: these should
be the very least that we expect from a 21st
century company. As your Board, it is our
duty to foster a culture of responsibility and
decency in everything Man Group does.
The Board also oversees management’s
alignment of our culture with the ethical values
we embrace. We encourage management
in its promotion of diversity and inclusion
of staff at all levels of the organisation. To
assess progress, we conducted another
employee survey during the year. We
were keen to understand the views of staff
in the context of remote working. I am
pleased to report that the results of the
survey, while indicating areas for further
improvement, were highly encouraging.
Community
We aim to give back and contribute
positively to those around us. Giving
back to our local communities has been
tremendously important to us. For example,
during the COVID-19 lockdowns, we have
encouraged each staff member to donate
to their local foodbank, something that
the firm has funded. Our global charitable
efforts are primarily run through the Man
Charitable Trust (UK) and the Man US
Charitable Foundation which focus on
promoting literacy and numeracy.
ManKind is the firm’s community volunteering
programme, which enables all our employees
to take two additional days’ paid leave per
annum to volunteer with charities supported
by the Trust, the Foundation, or a registered
charity of their choice. Many of our employees
take on regular commitments using their skills,
for example sitting as trustees of charities
or as governors of local schools. Some also
work with projects that the firm has set up
as part of its Diversity and Inclusion work,
such as mentoring students from King’s
College London Mathematics School, or in
the US, working with the Codman Academy.
We continue to promote diversity and social
mobility in education and to work with
organisations such as SEO London and
Speakers4Schools. We continually look to
expand our work and to form partnerships
that allow us to reach more students.
Shareholders
The Board gives high priority to shareholder
and investor communications. It receives
regular investor reports which detail the
feedback from investor meetings and from
engagement with the various shareholder
representative organisations. The Board has
also been focused on ensuring proactive
engagement with shareholders in specific
relation to remuneration matters.
In 2020, we held our Annual General Meeting
via a webcast. This provided our shareholders
with a safe environment to join the meeting,
and the ability to directly ask the Board
questions as if they were attending in person.
Board changes
In February 2020, Matthew Lester stepped
down from the Board after having served
for nine years. Upon the conclusion of our
Annual General Meeting in May, Andrew
Horton also stepped down from the Board.
Both Matthew and Andrew saw significant
change at Man Group over their many
years of service, and I would like to thank
them for their tremendous contributions
and for their support and friendship. I wish
them both the very best for the future.
I am delighted to welcome to the Board
Lucinda Bell and Ceci Kurzman, who joined
us in February, and Anne Wade who joined
us at the end of April. All three have already
made a significant impact on the Board.
Lucinda took over as Chair of the Audit and
Risk Committee of the Board upon Andrew
Horton’s retirement. Upon the conclusion of
the next AGM in May 2021, Anne will become
Chair of our Remuneration Committee.
Richard Berliand, the current Chair, who is
also our Senior Independent Director, will
remain on the Committee. I would like to
thank Richard for his invaluable support and
leadership and his dedication to shareholder
engagement on remuneration matters.
Workforce engagement
We include in our report to shareholders
a statutory statement on how your Board
has considered and balanced, among
other matters, the interests of all of the
Group’s stakeholders in coming to its
decisions. Implicit in this is the Board’s
consideration of the impacts of corporate
decision making on our employees. We
choose to engage formally and directly
with our employees across the globe.
Dame Kate Barker and Zoe Cruz are the
Board’s appointed representatives, who
take the lead with this engagement. Given
the global restrictions on face-to-face
gatherings, direct engagement in 2020 had
to be somewhat restricted and tailored to
remote working. The Board has discussed
and considered the feedback to date.
We continue to assess what may be the
most effective means whereby the interests
of our staff can inform Board discussions,
both in the light of our own staff feedback
and by comparing how other UK-listed
public companies interpret and use the
2018 UK Corporate Governance Code.
I would like to thank all my colleagues for
their dedication and hard work. On behalf
of the Board I would like to thank all our
shareholders for their continuing support and
look forward to engaging with those who join
the firm’s Annual General Meeting this year.
John Cryan
Chair
___“We encourage
management
in its promotion
of diversity and
inclusion of staff
at all levels of the
organisation.”
Man Group plc Annual Report 2020
09
Strategic report
Our business model
Resilient
and sustainable
>
Our aim…
…is to help our clients meet their
investment goals through value-added
active investment management.
We seek to deliver better performance
than benchmarks or competing
strategies through the combination
of our talent and technology.
>
Why we are
well positioned
We believe we can achieve
outperformance because of
our technology, our talented
professionals and our platform.
We have more than 30 years of experience in
applying quantitative techniques to financial
markets. We believe these techniques
and our cutting-edge technology can
deliver better outcomes for clients than
traditional approaches, and we apply
them to new markets each year.
We serve millions of underlying savers
through longstanding relationships with
the largest institutions and intermediaries
in the world and put our clients’ needs at
the centre of everything we do.
At the core of Man Group’s investment
management and distribution capabilities
are an institutional quality infrastructure
and disciplined risk management, controls
and governance frameworks, which
ensure we can grow sustainably and
take advantage of new opportunities to
generate an attractive return on capital.
10
Man Group plc Annual Report 2020
Single
point of
contact
Approach
Long-only
Alternative
Investment style
Quantitative
Discretionary
Multi-manager
Asset class
Equity
Multi-asset
Real estate
Currency
Credit
Volatility
Commodities
Our business is
underpinned by our:
People
and culture
Go to
page 56
Risk
management
Go to
page 30
Governance
framework
Strong
capital base
Go to
page 62
Go to
page 29
>
How we deliver
We strongly believe that different investment
approaches work better at different times and
therefore we do not enforce any one investment
style on our teams.
Our culture is designed to allow each team to apply their own
approach, while also benefiting from collaboration with their
colleagues and our world-class trading and technology. We believe
this gives us an edge in developing, attracting and retaining high-
quality, experienced teams. The combination of internal research
and development and hiring experienced investment professionals
allows us to maintain and broaden our offering to clients.
Our products and customised solutions are distributed
to institutions and private investors via our global sales
team. Each client has one point of contact whose role is
to be an expert in that client’s requirements and maintain
client relationships on behalf of the entire business.
>
Cash flow generation
We believe the combination of profit growth,
dividend yield and capital generation from
performance fees provide a highly attractive
total return to shareholders over time.
Revenues
Capital growth in our investment strategies together with net
inflows from clients drive organic revenue growth. Management
fees are typically charged as a percentage of funds under
management or net asset value. Performance fees are typically
charged as a percentage of investment performance above
a benchmark return or previous valuation ‘high-water mark’.
Costs
Man Group is fundamentally a people business and a significant
portion of the firm’s costs comprises compensation for individuals,
whether they are investment managers, our sales staff or the
teams that manage the firm’s operations and infrastructure.
Profitability
The operating leverage inherent in our business means management
fee profits can grow faster than management fees if we maintain
cost discipline. This in turn supports a growing dividend in line with
our new progressive dividend policy. In addition, we generate capital
from performance fees which may be returned or reinvested.
>
The value we deliver
to our stakeholders
Servicing
clients’ needs
58%
FUM customised
for individual
client needs
Dividends and
share buyback
$253m
in relation to 2020
Clients
Absolute
performance
$3.3bn
of gains for clients
in 2020
Go to
page 26
Shareholders
Shareholder
returns
$1.4bn
of dividends and
buybacks in the last
five years
Go to
page 29
Employees
Employee
engagement score
83%
Internal
transfers
184
Go to
page 57
Communities
Rapid Assistance
in Modelling the
Pandemic
2,400
employee volunteer hours
provided to the Scottish
COVID-19 Consortium
Go to
page 55
Donations
£500
offered to every
employee to donate
to a local food bank
Man Group plc Annual Report 2020
11
Strategic report Our market
Market environment
and industry trends
>
Market
Macro environment
Description
Brexit
Description
• Having rallied strongly in 2019, markets
opened 2020 at all-time highs. News of
the COVID-19 outbreak brought a total
decline of 34% in the S&P 500 index
from 19 February to 23 March.
• Subsequently, global central banks lowered
benchmark interest rates and announced
new asset purchases, with government
bond yields reaching new all-time lows.
• Most major markets recovered to reach
fresh highs by year-end, led primarily by
the technology sector.
• The UK entered a transition period after
leaving the European Union (EU) on
31 January 2020. This transition period
ended with a trade and cooperation
agreement (TCA) between the UK and
EU coming into effect on 1 January 2021.
The UK and EU continue to work on a
framework for regulatory cooperation on
financial services and equivalence, which
may impact market access in the UK and
other European countries.
>
Industry
Margin pressure
Description
• The average fee margin across the
industry has been reducing over time,
particularly among traditional investment
management strategies, as clients allocate
towards cheaper products or seek to
renegotiate fees.
Demand for alternatives
ESG
Description
Description
Technology
Description
• We see increased demand for alternatives
• The long-term trend toward ESG-linked
• This year has shown the importance of
as a diversifying source of return in a low
investment strategies accelerated sharply
technology in investment performance
interest rate environment and to reduce
in 2020 as investors’ interest in strategies
and risk management for our clients,
portfolio correlations to traditional markets.
which incorporate Environmental, Social
in particular with the majority of our
employees required to work from home.
and Governance factors increased
significantly against the backdrop of
the COVID-19 pandemic.
What this means for Man Group
What this means for Man Group
What this means for Man Group
What this means for Man Group
What this means for Man Group
What this means for Man Group
• While we do not focus on market timing,
many of our strategies are able to profit
from upward or downward trends in
markets and are therefore well positioned
to protect client capital through periods
of market disruption.
• We maintain the highest standards of
risk management and monitor liquidity
carefully across our investment strategies.
• Our funds remained liquid and our
open-ended funds remained open
to subscriptions and redemptions
throughout the year.
• We planned for a range of Brexit
scenarios that may impact our
employees, our business or our clients.
At the beginning of 2019, we received
regulatory approval to upgrade the
regulatory permissions of our existing
Irish entity and opened a physical office
in Dublin, with locally based staff.
Branches of the regulated Irish entity have
been established in various European
countries. This has allowed us to continue
to service our existing European clients
and to solicit new business in the EU.
• Throughout the Brexit process, Man
Group has advised and supported
our EU national staff in the UK.
• We will continue to monitor developments
closely throughout 2021 and will take
necessary steps to ensure that any
negative impacts of Brexit on our
employees, our business and our
clients are minimised.
• 77% of our revenue in 2020 related to
alternative product categories. These
are higher-fee, alpha-oriented products
that are supported by strong investment
performance and are less affected by the
fee pressures facing the broader industry.
• We face particularly strong demand
for our flagship strategies in the liquid
alternatives space and we manage
capacity carefully to preserve our ability to
outperform. Fee margins are not reducing
in those areas of our business where
client demand exceeds the supply of
available capacity.
• In other areas of our business, notably
multi-manager solutions and systematic
long-only strategies, we are able to take
advantage of our technological expertise
and internal infrastructure to service large
accounts profitably at lower fee rates.
• We have over 30 years of experience
• Man Group strives to be a leader in
• Technology is a key differentiator for
in liquid alternative investment strategies
Responsible Investment (RI) across all our
Man Group relative to our competitors.
and are a market leader in this area.
• Alternatives represent 62% of our FUM
which positions Man Group well to take
advantage of this trend.
• Our trend-following strategies have
historically performed well in market
sell-offs, including in the first half of
2020, reinforcing the diversifying nature
of our product offering.
investment styles and our commitment
to RI includes integration of ESG into
investment decisions, stewardship,
advocacy and thought leadership.
• $43 billion of our FUM incorporates ESG
factors into the investment process and
we see strong demand for ESG-linked
investment products.
• Our quantitative expertise allows us to
cleanse and extract insights from ESG
data, making ESG a driver of alpha across
our strategies.
• For more information on our approach
to Responsible Investment, see page 48.
• The ability to reposition risk and
exposures quickly during volatile markets
creates significant value for clients.
• We employ machine learning and
proprietary algorithms for trading
through a centralised, global desk
across all asset classes.
• We executed more than four million
trades in March, double our usual
monthly volume, without incident.
• Our employees have been able to
work from home seamlessly.
• We continue to invest heavily in our
technology with 500 quants and
technologists across the firm.
12
Man Group plc Annual Report 2020
Macro environment
Description
Brexit
Description
Margin pressure
Description
• Having rallied strongly in 2019, markets
• The UK entered a transition period after
• The average fee margin across the
opened 2020 at all-time highs. News of
the COVID-19 outbreak brought a total
decline of 34% in the S&P 500 index
from 19 February to 23 March.
leaving the European Union (EU) on
31 January 2020. This transition period
ended with a trade and cooperation
agreement (TCA) between the UK and
industry has been reducing over time,
particularly among traditional investment
management strategies, as clients allocate
towards cheaper products or seek to
EU coming into effect on 1 January 2021.
renegotiate fees.
• Subsequently, global central banks lowered
benchmark interest rates and announced
new asset purchases, with government
bond yields reaching new all-time lows.
• Most major markets recovered to reach
fresh highs by year-end, led primarily by
the technology sector.
The UK and EU continue to work on a
framework for regulatory cooperation on
financial services and equivalence, which
may impact market access in the UK and
other European countries.
• While we do not focus on market timing,
• We planned for a range of Brexit
many of our strategies are able to profit
scenarios that may impact our
from upward or downward trends in
employees, our business or our clients.
markets and are therefore well positioned
At the beginning of 2019, we received
to protect client capital through periods
regulatory approval to upgrade the
of market disruption.
• We maintain the highest standards of
risk management and monitor liquidity
carefully across our investment strategies.
• Our funds remained liquid and our
open-ended funds remained open
to subscriptions and redemptions
throughout the year.
regulatory permissions of our existing
Irish entity and opened a physical office
in Dublin, with locally based staff.
Branches of the regulated Irish entity have
been established in various European
countries. This has allowed us to continue
to service our existing European clients
and to solicit new business in the EU.
• Throughout the Brexit process, Man
Group has advised and supported
our EU national staff in the UK.
closely throughout 2021 and will take
necessary steps to ensure that any
negative impacts of Brexit on our
employees, our business and our
clients are minimised.
• 77% of our revenue in 2020 related to
alternative product categories. These
are higher-fee, alpha-oriented products
that are supported by strong investment
performance and are less affected by the
fee pressures facing the broader industry.
• We face particularly strong demand
for our flagship strategies in the liquid
alternatives space and we manage
capacity carefully to preserve our ability to
outperform. Fee margins are not reducing
in those areas of our business where
client demand exceeds the supply of
available capacity.
• In other areas of our business, notably
multi-manager solutions and systematic
advantage of our technological expertise
and internal infrastructure to service large
accounts profitably at lower fee rates.
• We will continue to monitor developments
long-only strategies, we are able to take
Demand for alternatives
ESG
Description
Description
• We see increased demand for alternatives
as a diversifying source of return in a low
interest rate environment and to reduce
portfolio correlations to traditional markets.
• The long-term trend toward ESG-linked
investment strategies accelerated sharply
in 2020 as investors’ interest in strategies
which incorporate Environmental, Social
and Governance factors increased
significantly against the backdrop of
the COVID-19 pandemic.
Technology
Description
• This year has shown the importance of
technology in investment performance
and risk management for our clients,
in particular with the majority of our
employees required to work from home.
What this means for Man Group
What this means for Man Group
What this means for Man Group
What this means for Man Group
What this means for Man Group
What this means for Man Group
• We have over 30 years of experience
• Man Group strives to be a leader in
• Technology is a key differentiator for
in liquid alternative investment strategies
and are a market leader in this area.
• Alternatives represent 62% of our FUM
which positions Man Group well to take
advantage of this trend.
• Our trend-following strategies have
historically performed well in market
sell-offs, including in the first half of
2020, reinforcing the diversifying nature
of our product offering.
Responsible Investment (RI) across all our
investment styles and our commitment
to RI includes integration of ESG into
investment decisions, stewardship,
advocacy and thought leadership.
• $43 billion of our FUM incorporates ESG
factors into the investment process and
we see strong demand for ESG-linked
investment products.
• Our quantitative expertise allows us to
cleanse and extract insights from ESG
data, making ESG a driver of alpha across
our strategies.
• For more information on our approach
to Responsible Investment, see page 48.
Man Group relative to our competitors.
• The ability to reposition risk and
exposures quickly during volatile markets
creates significant value for clients.
• We employ machine learning and
proprietary algorithms for trading
through a centralised, global desk
across all asset classes.
• We executed more than four million
trades in March, double our usual
monthly volume, without incident.
• Our employees have been able to
work from home seamlessly.
• We continue to invest heavily in our
technology with 500 quants and
technologists across the firm.
Man Group plc Annual Report 2020
13
Strategic report Our strategy
Driving
sustainable
growth with talent
and technology
Many of the major trends that impact asset management
have been the same for some time now: clients continue
to rotate into low-cost passive strategies for core equity
and fixed income exposure, while also increasing
allocation to alternative and high-alpha strategies.
Innovative investment products and the technology to
handle complexity efficiently are as important as ever.
This year, COVID-19 has had a further impact on financial
markets and the asset management industry. The
ultra-low interest rate environment has increased
demand for alternatives, and market volatility has
highlighted both the importance of risk management and
operating a sustainable business model. Lastly, adapting
to a new working environment has demonstrated why
technology remains a core differentiator.
Four strategic pillars drive value for Man Group:
Firstly, we develop innovative investment strategies. By hiring
exceptional talent, fostering a collaborative environment and
leveraging our 30+ years of experience in liquid alternatives and
systematic investing, we are uniquely positioned to cater to
client demand with an institutional quality platform and strong
risk management.
Secondly, we cultivate strong client relationships to ensure we
understand our clients’ needs and can offer tailored solutions.
We provide a single point of contact and build long-term
partnerships. We meet each client’s unique risk and return
requirements by leveraging our broad investment capabilities
and designing customised portfolios. Over the last few years,
we have also responded to client demand and worked to
develop our Responsible Investment framework, strengthening
our capabilities in stewardship and ESG integration. We now
manage $43 billion of ESG-integrated FUM.
Thirdly, efficient and effective operations are at the core
of everything we do. With 500 quants and technologists across
the firm, our advanced investment technology platform supports
our investment teams at every stage of their process, from alpha
generation and portfolio management to trade execution and
risk. Our single operating platform underpins our business
processes in a flexible and scalable way. As a result, we were
able to seamlessly transition to working from home this year.
Finally, we focus on returning capital to shareholders or
reinvesting in our business for growth. We continued our share
buyback programme and dividend payments as normal this
year while maintaining a strong and liquid balance sheet.
14
Man Group plc Annual Report 2020
>
Innovative investment
strategies
Combining talent and technology
to generate superior investment
returns and develop new products
for our clients.
How we performed in 2020
• Absolute performance of $3.3 billion
in a volatile year.
• Gains from momentum strategies.
• Excellent relative performance during
the sell-off.
• Challenging year for quant equity and
valuation-focused strategies resulted
in overall relative asset weighted
underperformance of 1.0%.
• Strong performance from growth and
ESG strategies.
• Investment into our UK community
housing fund to build social housing as
part of our commitment to society.
• Further enhanced our Responsible
Investment capabilities, see page 48.
9
new investment strategies seeded
across our business this year
Objectives for 2021
• Build on the success of AHL TargetRisk
research and investment process by
launching new related strategies.
• Encourage greater collaboration between
investment engines to develop products
for clients in areas of particular interest
e.g. RI-dedicated.
Building long-term partnerships with
Harnessing technology to power
clients, through a single point of contact,
investment performance and
Generating excess capital to either
return to shareholders or reinvest in
to understand their needs and offer
infrastructure, provide scalable options
our business to create long-term value.
customised solutions across our range
for growth and create operating
of investment strategies.
efficiencies throughout the firm.
How we performed in 2020
How we performed in 2020
How we performed in 2020
• Net inflows of $1.8 billion outperformed
• Able to reposition risk and exposures
• FY20 dividend of 10.6c, 8% higher than in
the industry by 4.6%.
• Transitioned to remote working
seamlessly, providing continuous
client support.
• Conducted 1,000+ remote client
conversations monthly.
• Hosted our annual quant conference
virtually for 350+ attendees in June.
• Maintained a focus on reinforcing existing
client relationships: 42% of FUM from
clients invested in four or more products.
• Continued to build new relationships:
28 new clients invested $50 million or
more with us.
• Published 180+ new pieces of thought
leadership to engage with clients.
quickly during volatile markets, creating
FY19, which is the starting point for our
significant value for clients.
new progressive dividend policy.
• Minimised slippage during March liquidity
• Strong cost discipline and resilient cash
shock and executed four million trades
– more than double our usual monthly
volume – while transitioning to work
from home.
• Seamlessly transitioned to work from
home and rolled out several collaborative
tools to support employees e.g. Slack.
• Cost control and FX tailwinds supported
growth in management fee profits despite
the environment.
flows during a challenging period.
• FY19 and HY20 dividend paid as normal.
• Completed $100 million share buyback
announced in October 2019.
• Announced the intention to repurchase
a further $100 million of shares in
September 2020.
• Strong, liquid balance sheet with
$716 million of net financial assets.
• $4 million reduction in net financing
expense.
58%
client needs
10%
in 2020
FUM customised for individual
reduction in fixed cash costs
9%
average capital return as %
of market cap since 2016
Objectives for 2021
Objectives for 2021
Objectives for 2021
• Attract and develop talent in sales,
• Continue investment in technology across
• Maintain focus on balance sheet
providing relevant training and
development across all levels.
both our investment and infrastructure
efficiency and generate incremental
teams to support future growth.
capital through performance fee profits.
• Broaden and deepen existing client
• Maintain focus on our cost base to ensure
• Assess capital returns alongside any
that we run the business efficiently.
potential acquisition opportunities.
relationships and continue to develop
relationships with key target clients.
The Group’s alternative performance measures are
outlined on pages 166 to 169.
Combining talent and technology
to generate superior investment
returns and develop new products
for our clients.
How we performed in 2020
• Absolute performance of $3.3 billion
in a volatile year.
• Gains from momentum strategies.
• Excellent relative performance during
the sell-off.
• Challenging year for quant equity and
valuation-focused strategies resulted
in overall relative asset weighted
underperformance of 1.0%.
• Strong performance from growth and
ESG strategies.
• Investment into our UK community
housing fund to build social housing as
part of our commitment to society.
• Further enhanced our Responsible
Investment capabilities, see page 48.
>
Strong client
relationships
>
Efficient and
effective operations
>
Returns to
shareholders
Building long-term partnerships with
clients, through a single point of contact,
to understand their needs and offer
customised solutions across our range
of investment strategies.
Harnessing technology to power
investment performance and
infrastructure, provide scalable options
for growth and create operating
efficiencies throughout the firm.
Generating excess capital to either
return to shareholders or reinvest in
our business to create long-term value.
How we performed in 2020
How we performed in 2020
How we performed in 2020
• Net inflows of $1.8 billion outperformed
• Able to reposition risk and exposures
the industry by 4.6%.
• Transitioned to remote working
seamlessly, providing continuous
client support.
• Conducted 1,000+ remote client
conversations monthly.
• Hosted our annual quant conference
virtually for 350+ attendees in June.
• Maintained a focus on reinforcing existing
client relationships: 42% of FUM from
clients invested in four or more products.
• Continued to build new relationships:
28 new clients invested $50 million or
more with us.
• Published 180+ new pieces of thought
leadership to engage with clients.
quickly during volatile markets, creating
significant value for clients.
• Minimised slippage during March liquidity
shock and executed four million trades
– more than double our usual monthly
volume – while transitioning to work
from home.
• Seamlessly transitioned to work from
home and rolled out several collaborative
tools to support employees e.g. Slack.
• Cost control and FX tailwinds supported
growth in management fee profits despite
the environment.
• FY20 dividend of 10.6c, 8% higher than in
FY19, which is the starting point for our
new progressive dividend policy.
• Strong cost discipline and resilient cash
flows during a challenging period.
• FY19 and HY20 dividend paid as normal.
• Completed $100 million share buyback
announced in October 2019.
• Announced the intention to repurchase
a further $100 million of shares in
September 2020.
• Strong, liquid balance sheet with
$716 million of net financial assets.
• $4 million reduction in net financing
expense.
9
58%
10%
9%
new investment strategies seeded
across our business this year
FUM customised for individual
client needs
reduction in fixed cash costs
in 2020
average capital return as %
of market cap since 2016
Objectives for 2021
• Build on the success of AHL TargetRisk
research and investment process by
launching new related strategies.
• Encourage greater collaboration between
investment engines to develop products
for clients in areas of particular interest
e.g. RI-dedicated.
Objectives for 2021
Objectives for 2021
Objectives for 2021
• Attract and develop talent in sales,
providing relevant training and
development across all levels.
• Continue investment in technology across
both our investment and infrastructure
teams to support future growth.
• Maintain focus on balance sheet
efficiency and generate incremental
capital through performance fee profits.
• Broaden and deepen existing client
• Maintain focus on our cost base to ensure
relationships and continue to develop
relationships with key target clients.
that we run the business efficiently.
• Assess capital returns alongside any
potential acquisition opportunities.
The Group’s alternative performance measures are
outlined on pages 166 to 169.
For more information on how KPIs relate
to our strategy go to page 22.
For more information on how Risks relate
to our strategy go to page 30.
Man Group plc Annual Report 2020
15
Strategic report
Chief Executive Officer’s review
___“Over the past
few years, we have
built a business that is
fundamentally resilient
and run for long-term
growth and success.
It is during difficult times
that the merit of having
such a robust business
model shines through.”
Luke Ellis
Chief Executive Officer
16
Man Group plc Annual Report 2020
Overview¹
Few events in the last 75 years have had
as profound an impact on our society and
on markets as the COVID-19 pandemic.
Looking back on 2020, I am proud of how we
have responded at Man Group. Despite the
market volatility, the public health emergency,
and more than 99% of the firm working
remotely for most of the year, our team has
not missed a beat, continuing to deliver for
our clients throughout. Above and beyond
the professionalism and commitment,
I am proud of how the whole firm has
come together to support and look after
each other in difficult and testing times.
Throughout 2020, our foremost concerns
were the health and well-being of our
employees and the performance of our
clients’ assets. Over the past few years, we
have built a business that is fundamentally
resilient and run for long-term growth and
success. It is during difficult times that the
merit of having such a robust business
model shines through. Our investment in
cutting-edge technology and our people
meant we were able to be proactive
in dealing with both the personal and
investment challenges of the year in a calm
and measured fashion. This is a reflection
of the resilience of our business as well as
the incredibly positive, collaborative attitude
and dedication of the entire Man Group
workforce, to whom I am sincerely grateful.
We have not furloughed any employees,
reduced pay or utilised any government
liquidity facilities. Our ability to handle such
a material challenge as 2020 reinforces
my belief that our technology edge, the
incredible talent and dedication of our staff,
the positive, supportive culture we have, and
the strength of our client relationships mean
we are well placed to deliver performance
to our clients over time and therefore
growth and income to our shareholders.
With that in mind, I am delighted to deliver
a strong set of financial results for 2020.
Volatility in the financial markets has been
significant and at times challenging; in March
alone, markets had one of their steepest and
fastest falls on record. Crucially, we were
able to respond rapidly and to demonstrate
the benefits of our investment in our risk
management and trading capabilities and
thereby adjust our portfolio positioning
rapidly to the changing circumstances,
delivering for our clients in a time of crisis.
Following the equity market’s trough in
March, the MSCI World Index rose 71%
on a total return basis and ended the
year on a new high driven by huge fiscal
and monetary stimulus. The dramatic
improvement in sentiment towards the end
of the year particularly benefited our long-only
strategies and our momentum strategies.
Absolute performance across our product
categories was up 3.0%. Our alternative
strategies were up 2.0%, driven by strong
performance from AHL Alpha (+7.9%) and
AHL TargetRisk (+5.7%). Our long-only
strategies were up 4.3% on average, having
benefited from the rebound in equity markets
in the latter part of the year. Performance
in GLG Continental European Growth
(+24.7%) and Numeric Global Core (+13.0%)
was particularly strong, whilst performance
in our value-biased strategies, namely
GLG Japan CoreAlpha (-15.9%) and GLG
Undervalued Assets (-16.0%), was weaker.
Asset weighted relative outperformance of
1.4% in alternatives was driven by our total
return strategies, while Alternative Risk Premia
continued its relative outperformance since
launch despite a difficult year for absolute
performance. AHL TargetRisk was in line over
the year having outperformed significantly
during the sell-off and the GLG Emerging
Market Debt strategy outperformed as it
anticipated the sell-off. Relative performance
across our long-only strategies was weaker,
driven by their valuation focus. The GLG
Japan CoreAlpha strategy, which has a large
cap value focus, in particular underperformed
for much of the year, although we saw
improvements following the vaccine news.
Against this backdrop, we grew our funds
under management (FUM) by $5.9 billion
to $123.6 billion, a new high for Man
Group. This increase in FUM was driven
by positive investment performance of
$3.3 billion across our strategies and
strengthening of the US dollar against
other currencies. Relative performance
across the firm was mixed, with asset
weighted underperformance versus peers
across our strategies of 1.0% in the year.
AHL TargetRisk, which has performed
strongly in rising markets in recent years and
protected capital during the sell-off, was an
important contributor to our overall net inflows
for the year of $1.8 billion. These inflows are
also testament to the strength of our client
relationships. We believe that communicating
with our clients in times of crisis is more critical
than ever and have focused on maintaining
or indeed accelerating client engagement in
order to counter the effects of the ongoing
pandemic and remote working environment.
Despite these positive elements, core
profit before tax², one of our financial
KPIs, decreased by 26% to $284 million
compared to 2019. This reflects a
decline from a strong performance fee
outcome in the previous year. Statutory
profit before tax also decreased by 42%
to $179 million compared to 2019.
Performance¹
2020 was characterised by the arrival of the
global pandemic, with repercussions that few
had forecast. Financial markets responded
initially with alarm and then rebounded with
an uncharacteristic speed as governments
and central banks rapidly introduced
accommodative measures supporting
liquidity, businesses and individuals. In
the last quarter, positive news about the
efficacy and safety of vaccines began to
help the world to foresee an eventual end to
the devastating effects of the pandemic.
Absolute and relative performance in 2020
Relative
Absolute
Absolute return
-0.6%
3.5%
Total return
6.0%
-0.3%
Multi-manager solutions
-1.9%
2.0%
Systematic long-only
-2.4%
8.1%
Discretionary long-only
-6.2%
-1.5%
Group
-1.0%
3.0%
1 Past performance is not indicative of future results. Returns may increase or decrease as a result of currency fluctuations.
Performance figures are shown net of representative management and performance fees.
2 The Group’s alternative performance measures are outlined on pages 166 to 169.
Absolute performance
$3.3bn
2019: $10.1bn
Asset weighted relative
performance
-1.0%
2019: -1.1%
Funds under management
$123.6bn
+5%
2019: $117.7bn
Statutory profit before tax
$179m
-42%
2019: $307m
Core profit before tax2
$284m
-26%
2019: $384m
Man Group plc Annual Report 2020
17
Strategic report Chief Executive Officer’s review continued
___“To best service
our clients and
shareholders, one
of our top priorities
is to attract and
retain the best
people, creating
an environment
in which they can
achieve their
potential.”
18
Man Group plc Annual Report 2020
Progress against strategic
priorities
Strong client relationships
Following positive investment performance
in 2019, net inflows in 2020 were $1.8 billion
despite the impact of COVID-19. This is very
strong relative performance compared to the
industry, which saw on average an outflow
of 3% across comparable strategies in 2020.
We worked hard to continue to deepen our
relationships with existing clients as well
as add new relationships with strategically
important asset allocators and distributors
over the course of the year. This was
particularly important in 2020 and remains
so into 2021 with clients also forced to work
from home and typically only interested
in talking to their best and most reliable
relationships. As a result of this focus, we
continue to see clients investing in multiple
strategies across the firm, with 71% of FUM at
31 December 2020 relating to clients invested
in two or more products, and 42% relating
to clients invested in four or more products.
Our 50 largest clients are invested in an
average of approximately three of our
strategies. This illustrates the strength
and breadth of our offering, and the
value of providing clients with a single
point of contact who understands them
and their unique requirements.
Innovative investment strategies
Innovation is what drives the firm forward,
maintains our relevance with existing clients,
and attracts new clients. It strengthens
our resilient business model by further
diversifying our revenue streams and provides
interesting development opportunities for
our people. COVID-19 has altered the way
we work, but the product development
pipeline has been unaffected and remains
attractive – despite a change for most to
a home office, this didn’t dampen their
creativity and we have seen countless
innovative ideas arise over the past year.
AHL TargetRisk is an excellent example of
that innovation bearing fruit. It was a product
we developed six years ago, seeded with
our own capital for a number of years and
which is now seeing material client demand
and is a significant contributor to the firm as
a whole. Last year, AHL TargetRisk reached
a new milestone, $10 billion of FUM. In
response to this strong client demand, we
have launched additional products within the
AHL TargetRisk range, including products
in collaboration with Man Numeric.
While not every new idea can be a $10 billion
runaway success, we do see our pipeline
of new ideas and products as being very
strong. We are seeing growing demand for
Responsible Investment funds in particular,
with a focus on ESG factors. At Man Group
we believe it is important that we implement
ESG across all our investment engines. Each
investment engine takes a distinct approach
to responsible investment according to the
specific asset classes and strategies under
management. At the same time, all investment
engines are able to leverage our firmwide ESG
infrastructure for engagement with companies
and collection and analysis of ESG data,
which we see as essential to our Responsible
Investment funds adding real value for clients.
Using the Global Sustainable Investment
Alliance’s definitions and classification,
we recently reported that $43 billion of
Man Group’s funds under management
integrate ESG factors into their decision-
making process. We see ESG analysis as
a way to improve client outcomes. As an
example, Man Numeric has developed
an ESG alpha model based on cutting-
edge use of data and technology that is
now live across most of their strategies.
We have made continued progress in the
development and launch of quantitative
fixed income strategies across both Man
AHL and Man Numeric. We also continue
to broaden our discretionary capabilities,
most notably launching our GLG Asia
ex-Japan Equity strategies in Q4, which
are managed by an experienced team
who joined Man Group earlier in 2020.
We have also broadened our alternative
offering across both equity and credit
during the year. Within our discretionary
business, we continue to embed quantitative
techniques to enrich the fundamental
process of the portfolio managers.
Efficient and effective operations
Technology powers our efficient and
effective operations at Man Group.
Our single technology platform is the
foundation on which the firm operates.
With the knowledge, experience and talent
of 500 quants and technologists across
the firm, the platform facilitates alpha
generation, portfolio management, trade
execution, operations, compliance, risk
management and financial reporting.
Our proprietary platform enables us to
evolve and adapt to markets and our
clients’ needs. In March 2020, as market
volatility and volumes surpassed the peak
of the global financial crisis, the platform
demonstrated its resilience and reliability.
We comfortably operated at double our
usual monthly volume, executing millions
of trades on behalf of clients, without
incident. Continuous investment in our
people, data and platform technology in
order to enhance our capabilities is what
maintains and increases our technological
lead and our competitive edge.
During the Brexit negotiations there was
little clarity as to what the final outcome
may look like. Our planning ensured
that the impact of the transition on our
employees, business and clients was
minimised and we will continue to monitor
developments closely throughout 2021.
Growth
Before turning to our outlook for the future,
I also wanted to reflect a little on the growth
we have achieved over the last five years.
When I became CEO in 2016, we faced
structural challenges, including the transition
away from legacy guaranteed products. It was
necessary to transform in order to grow and
thrive. We believed that an intensely client-
centric approach would be key to improving
flows and to delivering sustainable growth. We
also believed that our technology expertise
had to be integral to every aspect of the
business in order to build on our competitive
advantage. We reorientated the business to
have a focus on larger allocators of capital and
ramped up North American distribution. In
addition, we successfully integrated Numeric,
which allowed us to develop new strategies
based on capabilities across the firm.
The approach has been a success. Since the
end of 2015, we have seen $26 billion of net
inflows from clients and the number of clients
for whom we manage more than $1 billion
has grown from 12 to 22. We have increased
our core management fee profitability by
82% to $180 million and have grown our
core management fee EPS by 98%, while
returning on average 9% of our market cap
in dividends and share buybacks every year.
We have moved to a progressive dividend policy
with the intention to maintain or increase our
dividend each year as we grow our business.
Outlook
Progress towards normality in our day-to-day
lives depends on progress made in vaccine
development and the pace of vaccinations
on both national and global levels. Our clients
and our business adjusted rapidly, and we
have been operating at close to normality for
some time now. We saw net inflows last year
and we’ve seen that positive engagement with
clients continue into 2021. We are confident
in our growth trajectory and enter the year
with good momentum, with the combination
of our talented team and leading technology
driving our strong competitive position.
Luke Ellis
Chief Executive Officer
People and culture
We are fundamentally a people business.
To best serve our clients and shareholders,
one of our top priorities is to attract and retain
the best people, creating an environment
in which they can achieve their potential.
We place great importance on being an
employer of choice and a place where all
our employees feel that they belong.
We are a meritocracy, succeeding through
talent, commitment, diligence and teamwork.
We are committed to supporting our
employees so that everyone at Man Group
has the opportunity to be the best they can
be. Our well-being programme continues
to grow and has taken on a new importance
as we support our colleagues around the
globe faced with the challenges of living and
working in a pandemic. Our programme has
been enabled virtually as we continue to focus
on engagement and culture in the pandemic
(and hopefully post-pandemic) world.
We also believe that by celebrating
diversity and building an inclusive working
environment, we can attract the best talent
to our business and generate the best ideas
– experience has shown that homogeneous
groups are typically constrained by a sense of
group think, whereas diverse groups naturally
approach problems differently and so come
up with better, more rounded solutions. We
encourage original and collaborative thinking
with multiple and differing perspectives,
positioning us to deliver for our clients. We are
committed to increasing diversity in all forms,
at all levels, because we think it makes Man
Group a better, stronger firm. To facilitate this,
we operate Drive, an employee-led diversity
and inclusion network, which seeks to inform,
support and inspire our people. I am pleased
to report we have met our target of 25%
female representation in senior management
roles by the end of 2020 and have set a new
target of 27.5% by the end of 2022 and 30%
by the end of 2024. A wide variety of broader
diversity and inclusion initiatives continue
to take place, with one example from many
being that we have become a corporate
member of ‘PurpleSpace’, enabling us to
raise the profile of our support for disabled
employees both internally and externally.
Embedded in the firm’s culture is the desire
to give back to our communities, which
can be through financial donations, sharing
our expertise or time spent volunteering. A
particular highlight in 2020 was our response
to the UK Government’s Rapid Assistance
in Modelling the Pandemic initiative.
I believe that we do our best work for our
clients when we support our employees,
and value their different perspectives and
experience. I would like to thank everyone
at Man Group for their contribution to
the progress we made during 2020.
Female representation
target met
26%
in senior management roles
by the end of 2020.
AHL TargetRisk
$11.2bn
FUM at 31 December 2020. Last
November, AHL TargetRisk reached
a new milestone: $10 billion of FUM.
Net inflows
$26.0bn
over five years.
___“We remain
confident in our
growth trajectory,
with the combination
of our talented team
and our lead in
technology driving
our strong
competitive position.”
Man Group plc Annual Report 2020
19
Strategic report 50%
female representation
on our Board
//Investing
__
in exceptional talent
A deep and diverse pool of talent is vital to our
continued success. Our priority is to hire and
develop world-class talent across the firm, from
quants and technologists to portfolio managers
and analysts, and to foster a diverse and inclusive
workforce to support our culture of innovation
and collaboration.
20
Man Group plc Annual Report 2020
500
quants and
technologists
Man Group plc Annual Report 2020
21
Strategic report Key performance indicators
Measuring our success
Our financial KPIs illustrate and measure the
relationship between the investment experience
of our clients, our financial performance and the
creation of shareholder value over time.
Link to strategy
1 Innovative investment strategies
2 Strong client relationships
3 Efficient and effective operations
4 Returns to shareholders
>
Investment performance 1
0-2% Target not met
4
>
Relative net flows 1 2 4
1-6%2 Target met
2020
2019
2018
-1.0%
-1.1%
2020
4.6%
2019
-0.4%
1.0%
2018
9.8%
What we measure
The asset weighted performance¹ of Man Group’s strategies compared
to peers gives an indication of the competitiveness of our investment
performance against similar alternative investment styles offered by other
investment managers.
How we performed
We had asset weighted underperformance of 1.0% in 2020, despite strong
absolute performance, and therefore we did not achieve this KPI target.
For further discussion on performance see page 17.
What we measure
Relative net flows1,2 are a measure of our ability to attract and retain
investor capital in comparison to our industry peers. As set out in the 2019
Annual Report, this represents a change from the previous metric which
was calculated on an absolute as opposed to a relative basis in order to
better represent performance that management can control. FUM drives
our financial performance in terms of our ability to earn management fees.
How we performed
Relative net flows of 4.6% in 2020 are within the target range, and indicate
the attractiveness of our diversified offering across our client base despite
a challenging year for fundraising.
>
Core profit
before tax 1 2 3 4
$237m-$388m Target met
>
Adjusted management
fee EPS growth 1 2 3 4
5-12% growth Target met
2020
2019
2018
$284m
$384m3
$237m3
2020
2019
2018
5.1%
-16.9%
9.3%
What we measure
Core profit before tax1 is a measure of overall profitability and cash
generation and excludes legacy income streams, so better represents
the core business of Man Group today. This includes our performance
fee profits which, although volatile in nature, are a key earnings stream
and a significant component of value creation for shareholders over time.
How we performed
Core profit before tax of $284 million for 2020 is comfortably within
the target range, reflecting our management fee profitability and solid
performance fee generation in the year.
Change to KPI for 2021
Our core profitability KPI will change to core EPS¹ for the 2021 financial
year, in order to reflect the year-on-year profitability of our core business as
well as management actions such as share repurchases. This KPI provides
better comparability across our peers and further aligns management and
shareholder incentives, and is aligned with directors’ remuneration
(page 107).
What we measure
Adjusted management fee EPS¹ growth in the year measures the overall
effectiveness of our business model, and reflects the value generation for
shareholders from our more stable earnings stream.
How we performed
Adjusted management fee EPS increased by 5.1%, from 9.8 cents to 10.3
cents. The increase during a challenging year was underpinned by lower
discretionary spend as a result of COVID-19 (see page 27), partially offset
by lower net management fee revenues which have since bounced back
above closing 2019 run rate levels, driven by the increase in FUM in the
latter part of the year.
Due to the roll-off of our legacy business profits during 2019, this KPI
will change to core management fee EPS¹ growth from 2021 as adjusted
and core growth measures will be aligned.
22
Man Group plc Annual Report 2020
Our non-financial KPIs further demonstrate
our commitment to our people, wider society
and the environment, which reflect our core values.
>
Carbon footprint
>
Employee engagement
1,801 MTCO2e
2020
2019
2018
5,284 MTCO2e
8,775 MTCO2e
2020
2019
2018
83
77
78
What we measure
In order to monitor and decrease our carbon footprint, we measure total
greenhouse gas emissions (MTCO2e), including scope 2 market-based
emissions4.
How we performed
In 2020, total carbon emissions decreased by 66% compared to 2019.
The significant drop reflects the impact of COVID-19 and reduced travel
and energy use as a result of working from home. We also reduced
emissions by streamlining our data centre facilities and improving the
energy efficiency of our leased office premises. Further information on how
we seek to minimise any negative impact on the environment can be found
on pages 52 to 54.
What we measure
Each year we conduct a staff survey to help us monitor and understand
employee engagement and identify any areas for action.
How we performed
Our 2020 staff survey recorded an engagement score of 83 and an
increase in the response rate to 85% from 83% in 2019. The welfare
of our employees has been at the heart of our COVID-19 response, and
the survey results suggest people have recognised and appreciated this.
More information on how we prioritised and supported staff well-being
throughout the year can be found on page 57.
>
Women in senior
management roles
2020
2019
2018
26%
20%
21%
What we measure
The number of women in senior management positions, as we seek to
encourage greater diversity across the investment management industry.
This is defined as those who are or report directly to members of our
Executive Committee.
How we performed
We made progress in the number of women in senior management
roles during the year, however, we recognise there remains a long way
to go. Further information on our initiatives to support and develop
a diversified pool of talent at Man Group can be found on pages 58
and 59.
1 Details of the calculation of our alternative performance measures are provided on pages 166 to 169.
2 The 2019 and 2018 net flows KPIs were on an absolute as opposed to a relative basis in those years, however have been presented here on a relative basis in line with the 2020 KPI to aid comparability.
3 The target range for 2019 was $234 million to $388 million and for 2018 was $272 million to $473 million. The target range for each financial year is established by the Board upon approval of the
Group’s Medium Term Plan.
Indirect emissions from non-renewable electricity sources.
4
Man Group plc Annual Report 2020
23
Strategic report Chief Financial Officer’s review
___“2020 illustrates the
strength of our business.
Despite the challenging
environment we saw
growth in management
fee profitability, solid
performance fee earnings
and continued cash
generation and returns
to shareholders.”
Mark Jones
Chief Financial Officer
24
Man Group plc Annual Report 2020
Core management fee EPS1
10.3¢
+6%
2019: 9.7¢
Core EPS¹
16.2¢
-23%
2019: 21.0¢
Statutory EPS¹
9.3¢
-49%
2019: 18.4¢
Returns to shareholders
over five years
$1.4bn
Overview
Despite the volatility seen across global
financial markets in 2020 as a result of the
COVID-19 pandemic, we have managed
to protect and grow our management fee
profits, driven by solid performance and net
inflows over the course of the year together
with effective cost control. Core EPS¹
decreased from 21.0 cents in 2019 to 16.2
cents in 2020, and statutory EPS decreased
from 18.4 cents to 9.3 cents, largely driven
by lower performance fee generation
compared to a particularly strong 2019.
Our profitability and cash generation has
meant we have maintained existing returns
to shareholders, paying our 2019 year-end
and 2020 interim dividends as planned
and completing our previously announced
share buyback, and also commenced
additional returns with a further $100 million
buyback announced in September 2020.
Our diversified business model provides a
strong foundation as we head into 2021.
Our funds under management increased by $5.9 billion to a new
record of $123.6 billion at the end of 2020, largely due to positive
absolute performance of $3.3 billion across both alternative and long-
only strategies and net inflows of $1.8 billion, with inflows relative to
peers of 4.6%¹. We had small net outflows in the first half of the year,
as certain clients sought cash in response to the impacts of COVID-19
during the second quarter in particular, followed by good net inflows in
the second half, primarily from our alternative strategies. Performance
fee generation was solid, with $179 million earned in the year, reduced
from the particularly strong performance fee generation of $325 million
in 2019. Our relative performance was around 1.0% below our peers,
with a number of our larger long-only strategies underperforming
in a challenging environment for valuation-focused strategies.
Due to the roll-off of profits from our legacy guaranteed products
business in 2019, our core and adjusted measures are now equivalent.
Core net management fee revenue¹ was $730 million for the year,
a decrease of 3% from prior year due to lower average FUM as a
result of lower FUM levels mid-year and a small decline in average net
management fee margins. Run rate net management fee revenue¹
has increased to $815 million at the end of 2020, up by 6% from $771
million in 2019 as a result of the increase in closing FUM. Performance
fee revenues of $179 million were largely generated by Man AHL and
Man GLG. We made a gain of $20 million on our seed book, in line with
2019, reflecting effective risk management and strong performance
from various strategies despite a challenging investment environment.
Total costs, excluding adjusting items, were $651 million, down
from $710 million in 2019, driven both by lower performance fee
related variable compensation and a decrease in fixed cash costs.
Lower fixed cash costs reflected both measures to reduce costs we
implemented in response to market declines in the first half of the
year and some lower costs as a result of the pandemic, particularly
in travel and entertainment. We also benefited from around $9 million
of foreign exchange translation benefit on fixed costs due to more
favourable sterling to US dollar achieved rates in 2020 compared with
hedged rates in 2019, with the Group no longer hedging fixed costs
from 2020. Overall reduced discretionary spend has supported our
profitability in 2020, however we have also consciously supported and
invested in our people over this period to ensure we are appropriately
resourced through the current environment. We consider that running
our operations efficiently is an important driver of profit growth for
shareholders over time, and continue to focus on effective cost control.
The main sub-tenant in our primary London office paid us $26 million
in the first half in order to surrender their lease early, in effect bringing
forward their remaining lease payments. Following this we exercised
a break clause in our other London office in order to bring all of our
London staff together in one location from 2021. The lease surrender
resulted in a net accounting gain of $18 million on statutory profits,
due to a non-cash write-off of deferred rent of $8 million. We have
recognised $11 million of this statutory gain in adjusted profits to reflect
the associated foregone sub-lease rental income and costs incurred in
2020, with the remainder to be recognised through 2021 as we seek
to sub-let the remaining space. Given the commercial property market
uncertainty as a result of COVID-19, we have assessed our vacant sub-
lease space and recorded a $25 million impairment of our right-of-use
lease asset at year-end, which we will continue to monitor as the market
stabilises post-pandemic. We expect to incur around $6 million of
additional net costs on the remaining vacant space in 2021, and around
$22 million of project capital expenditure over the next 12 months as we
ready our consolidated London office for the post-COVID future working
environment and prepare the remaining vacant space for sub-let.
Summary income statement
$m
Core net management fee revenue2
Non-core net management fee revenue1
Performance fees2
Gains on investments2
Sub-lease rental and lease surrender income
Net revenue
Asset servicing
Fixed compensation1
Variable compensation¹
Other costs – cash costs2
Other costs – depreciation and amortisation
Total costs
Net finance expense1
Year ended
31 December
2020
730
–
179
20
18
947
(55)
(194)
(257)
(97)
(48)
(651)
(12)
Year ended
31 December
2019
751
2
325
20
14
1,112
(55)
(193)
(284)
(131)
(47)
(710)
(16)
Core profit before tax1
Core management fee profit before tax1
Performance fee profit before tax1
Adjusting items1 (see page 28)
Statutory profit before tax
Statutory EPS
Core EPS1
Core management fee EPS1
Adjusted management fee EPS1
Dividend per share3
284
180
104
(105)
179
9.3¢
16.2¢
10.3¢
10.3¢
10.6¢
384
170
214
(79)
307
18.4¢
21.0¢
9.7¢
9.8¢
9.8¢
Statutory profit before tax decreased by $128 million from 2019,
driven by lower performance fee profits in 2020 as well as the
$55 million impairment of GPM goodwill in the first half of the
year as a result of slower growth for GPM than planned and a
weaker economic outlook due to COVID-19, partially offset by
a decrease in the associated contingent consideration creditor
of $22 million. The decrease in core profit before tax¹ and core
earnings per share¹ was driven by the lower level of performance
fees compared to 2019. Core profit before tax¹, which excludes
legacy business profits, reached a ten-year peak in 2019, largely
driven by the strong performance fee generation in that year.
Our balance sheet remains strong and liquid and allows us to
successfully navigate stressed scenarios whilst continuing to invest
in the business and support our long-term growth prospects. This is
evidenced by our continued return of capital to shareholders through
both dividends and share repurchases throughout the course of the
pandemic, whilst many other UK companies have either suspended
or cut their dividend and share repurchase programmes.
We have net tangible assets of $716 million or 46 cents per share at
31 December 2020, and net financial assets¹ of $716 million (see page
29 for further detail). We have cash of $289 million (2019: $220 million)
and continue to be strongly cash generative, with operating cash flows
of $391 million (2019: $483 million). During the year we paid an interim
dividend of 4.9 cents per share and intend to pay a final dividend of 5.7
cents per share, with the total dividend for the 2020 results year up 8%
on 2019. We completed the $100 million share repurchase announced
in October 2019, and in September 2020 announced our intention to
repurchase a further $100 million of shares. We have returned over
$1.4 billion to shareholders via dividends and share repurchases
over the past five years (see page 29) and continue to focus on
generating strong cash flows which we can in turn reinvest or return
to shareholders via dividend and share repurchase programmes.
1 The Group’s alternative performance measures are outlined on pages 166 to 169.
2 Management and other fees, performance fees and other costs exclude amounts for consolidated fund entities (per Note 13.2 to the Group financial statements on page 146), with these reclassified
to gains on investments together with the third-party share. Refer to pages 166 to 169 for details of the Group’s alternative performance measures.
3 Dividend per share includes the interim and final dividend relating to each financial year, including the 2020 proposed final dividend.
Man Group plc Annual Report 2020
25
Strategic report Chief Financial Officer’s review continued
Funds under management (FUM¹)
$bn
Alternative
Long-only
Total
Absolute return
Total return
Multi-manager solutions
Total
Systematic
Discretionary
Total
Net management fee revenue
$m
Absolute return
Total return
Multi-manager solutions
Systematic long-only
Discretionary long-only
Core net management fee revenue1
Guaranteed
Net management fee revenue1
Year ended
31 December
2020
355
171
32
73
99
730
–
730
Year ended
31 December
2019
354
139
43
93
122
751
2
753
Absolute return
Absolute return FUM increased by 11% as a result of positive
investment performance, net inflows and foreign currency and other
movements. Performance was driven by Man AHL’s Alpha and
Institutional Solutions strategies, with net inflows of $2.3 billion into AHL
Institutional Solutions and AHL Evolution partially offset by net outflows
principally from Man GLG’s European Long-Short strategy. Foreign
currency movements gave rise to a $0.9 billion increase in FUM during
the year.
Total return
Total return FUM increased by 7% due to net inflows of $3.7 billion.
Net inflows included $5.3 billion into Man AHL’s TargetRisk strategy
with net outflows from Alternative Risk Premia and from Man GLG’s
Global Emerging Markets Debt Total Return strategy. Investment
performance included gains from AHL TargetRisk offset by losses from
Alternative Risk Premia. Other movements primarily relate to net
leverage decreases of $2.0 billion, partially offset by an increase of
$0.9 billion due to foreign currency movements.
FUM at
31 December
2019
30.5
27.0
14.0
71.5
27.5
18.7
46.2
117.7
Net inflows/
(outflows)
0.9
3.7
(0.3)
4.3
(2.4)
(0.1)
(2.5)
1.8
Investment
performance
0.8
(0.1)
0.8
1.5
2.5
(0.7)
1.8
3.3
Foreign
currency and
other
movements
1.8
(1.6)
(0.3)
(0.1)
0.2
0.7
0.9
0.8
FUM at
31 December
2020
34.0
29.0
14.2
77.2
27.8
18.6
46.4
123.6
Multi-manager solutions
Multi-manager solutions FUM increased by $0.2 billion, with positive
investment performance of $0.8 billion from our dedicated managed
account platform.
Systematic long-only
Systematic long-only FUM increased by $0.3 billion, driven by positive
investment performance of $2.5 billion including $1.1 billion and
$1.2 billion from Man Numeric’s Emerging Markets and Global Core
strategies respectively. Net outflows of $2.4 billion were across a range
of strategies following weaker relative short-term performance.
Discretionary long-only
Discretionary long-only FUM ended the year broadly flat. Foreign
currency movements of $0.6 billion largely offset negative investment
performance, driven by Man GLG’s Japan CoreAlpha strategy, which
also had net outflows of $2.1 billion. Man GLG’s UK UVA strategy had
$1.0 billion of net inflows during the year.
Guaranteed products
All of our legacy guaranteed products had matured at 31 December
2020, FUM having been $39 million at the start of the year and
associated profits having rolled-off in 2019.
26
Man Group plc Annual Report 2020
Revenue
Net management fee revenue and margins
The Group’s total net management fee margin¹ decreased by 2 basis
points during the year to 65 basis points, with the reduction continuing
to be driven by mix effects as higher margin strategies, particularly in
discretionary long-only, decreased during the year. The Group’s run
rate net management fee margin¹ at 31 December 2020 had increased
slightly to 66 basis points (2019: 65) as a result of higher closing FUM
from absolute return, particularly AHL Institutional Solutions and AHL
Evolution which have higher margins. The run rate net management
fee revenue¹ was $815 million (31 December 2019: $771 million), largely
as a result of the increase in absolute return FUM during the year.
The net management fee margins of absolute return and multi-
manager solutions continued their gradual decline due to margin
pressure from mix effects in recent years, with discretionary long-only
margins decreasing to 62 basis points in 2020 from 67 basis points in
2019 as a result of a decrease in GLG Japan CoreAlpha FUM which
attracts a higher margin. Conversely, the total return margin increased
from 56 basis points to 62 basis points due to the growth of higher
margin products, in particular AHL TargetRisk. The absolute return net
management fee margin decreased by 2 basis points to 118 basis
points as a result of the continued mix shift towards institutional assets
which are at a lower margin. The multi-manager solutions net
management fee margin decreased to 24 basis points in 2020 from
31 basis points in 2019, as a result of Man FRM’s continued shift
towards a solutions provider from traditional fund of funds manager.
The systematic long-only run rate net management fee margin is
broadly in line with the year-end 2019 run rate margin.
Core net management fee revenue¹ decreased by 3% to $730 million
in 2020, driven by the lower average FUM and the decline in our
average margin during the year, despite closing FUM being 5% higher
than prior year and closing run rate net management fee margin¹ also
being higher.
Performance fees and investment gains and losses
Performance fees for the year were $179 million (2019: $325 million),
which included $124 million from Man AHL (2019: $291 million),
$54 million from Man GLG (2019: $34 million), and $1 million from Man
Numeric (2019: nil). We have strong performance fee optionality and
diversity, with $49.0 billion of performance fee eligible FUM at year-end
and a diverse range of strategies having contributed to our
performance fee earnings over recent years.
Investment gains of $20 million (2019: $20 million) primarily relate to
gains on seed investments (page 29). The seeding book was $485
million at year-end, down from $514 million in 2019 driven by net
redemptions as a result of the successful marketing of a number of
funds we seeded last year. In addition we had $50 million of exposure
via total return swaps (TRSs) at year-end (2019: $62 million).
Sub-lease rental and lease surrender income
As outlined on page 25, $11 million of the $18 million net accounting
sub-lease surrender gain from our principal London sub-tenant relating
to lost rental income and other associated costs in 2020 has been
recognised within adjusted profits. We expect to release the remaining
$7 million in 2021. Due to the impact of COVID-19 on the commercial
property market, we have recognised $25 million of impairment
expense on the associated right-of-use lease asset, reflecting a lower
valuation of the sub-let floors at year-end compared to the IFRS 16
‘Leases’ accounting carrying value (an adjusting item per page 28).
Core management fee profit before tax1 ($m)
170
12
10
9
180
(21)
2019
Cost
reductions
– COVID
related
Reduced
revenues
incl. FX and
variable
compensation
changes
Cost
reductions
– other
FX impact
on fixed
costs
2020
Costs
Asset servicing
Asset servicing costs vary depending on transaction volumes,
the number of funds, and fund NAVs. Asset servicing costs were
$55 million (2019: $55 million), which equates to around 7 basis points
of average FUM, excluding systematic long-only and Man GPM
strategies.
Compensation costs
Total compensation costs¹ were $451 million for the year, down by 5%
compared to $477 million in 2019 as a result of lower management
and performance fee revenues together with more favourable achieved
sterling to US dollar exchange rates on fixed compensation in 2020.
The Group’s compensation ratio is generally between 40% and 50% of
net revenues, depending on the mix and level of revenue. We expect to
be at the higher end of the range in years when absolute performance
fees are low and the proportion from Man Numeric and Man GLG is
higher, and conversely we expect to be at the lower end of the range
when absolute performance fees are high and the proportion from
Man AHL is higher. The overall compensation ratio¹ therefore increased
to 48% in 2020 from 43% in 2019, which reflects the decrease in
performance fee revenue generated in 2020.
Other costs
Other costs were $145 million for the year (2019: $178 million excluding
adjusting items). Our recruitment and temporary staff costs decreased
as a result of lower levels of hiring during the year, with global travel
restrictions, working from home and a further reduction in recruitment
as a result of COVID-19 providing additional cost savings. As we
stopped hedging fixed costs one year in advance at the end of 2019
we were able to benefit from the more favourable sterling to US dollar
exchange rates in 2020, compared to our hedged rate of 1.36 for 2019,
although we approach 2021 with an FX headwind.
For the year to 31 December 2020, we had sterling denominated net
management fee revenues of around $113 million (2019: $114 million)
and fixed costs of $177 million (2019: $190 million).
Net finance expense
Net finance expense, excluding the unwind of discount on contingent
consideration which is classified as an adjusting item¹, decreased to
$12 million from $16 million in 2019. This was due to 2020 including
the full-year benefit of reduced interest on the Tier 2 notes, given these
were repaid in September of 2019, and the use of cheaper financing
sources in the form of TRSs and repo arrangements from the latter
half of 2019.
1 The Group’s alternative performance measures are outlined on pages 166 to 169.
Man Group plc Annual Report 2020
27
Strategic report Chief Financial Officer’s review continued
Core and adjusted profit before tax
The directors consider that the Group’s profit is most meaningful when
considered on a basis which reflects the revenues and costs that drive
the Group’s cash flows and inform the base on which the Group’s
variable compensation is assessed, and therefore excludes acquisition
and disposal related items (including non-cash items such as
amortisation of purchased intangible assets), impairment of assets,
costs relating to substantial restructuring plans, and certain significant
event-driven gains or losses. Movements in deferred tax relating to the
recognition of tax assets in the US are similarly excluded from core and
adjusted profit after tax in order to best reflect cash taxes paid.
Core profit before tax¹, which is equivalent to adjusted profit before tax¹
with the exclusion of legacy business profits which rolled-off in 2019,
was $284 million compared to $384 million in 2019. In 2019 our core
profitability reached a ten-year peak, driven by the strong performance
fee generation.
Adjusting items¹ (pre-tax) in the year totalled a net expense of
$105 million (2019: $79 million), as summarised below.
Adjusting items1
$m
Impairment of goodwill
Amortisation of acquired intangible assets
Revaluation of contingent consideration creditors
Unwind of contingent consideration discount
Recycling of FX revaluation on liquidation of subsidiaries
Unrealised foreign exchange movements on lease liabilities
Lease surrender income
Impairment of right-of-use lease asset – investment property
Total adjusting items (excluding tax)
Net derecognition of US deferred tax asset (see below)
Year ended
31 December
2020
(55)
(63)
22
(2)
17
(6)
7
(25)
(105)
(8)
Tax
The majority of Man Group’s profits are earned in the UK, with
significant profits also arising in the US, where our cash tax rate is
effectively nil as a result of available tax assets, and in Switzerland,
which has a lower rate than the UK.
The underlying rate on adjusted profit of 17% (2019: 15%) represents
the statutory tax rates in each jurisdiction in which we operate,
including nil for the US, applied to our geographical mix of profits.
The adjusted tax rate¹ was 16% (2019: 15%).
Tax on statutory profit for the year was $41 million (2019: $22 million),
which equates to a statutory effective tax rate of 23% (2019: 7%).
The increase in the tax rate is largely due to the impairment of the
GPM goodwill, partially offset by the associated revaluation of the
Aalto contingent creditor, and the derecognition of a small portion
of our US deferred tax assets (detailed below).
In the US, we have accumulated tax losses as well as tax deductible
goodwill and intangibles of $95 million (2019: $89 million), which can
be offset against future US profits and will therefore reduce taxable
profits. We have recognised $81 million of these US deferred tax
assets on the balance sheet at 31 December 2020 (2019: $89 million),
due to the derecognition of certain state and city tax losses which are
expected to expire before consumption. The associated tax expense
adjusting item of $8 million represents this derecognition, partially
offset by a net increase in the year of $6 million. As movements in the
deferred tax asset are classified as an adjusting item¹, the US core and
adjusted tax rate¹ will remain at nil until cash taxes are payable in the
US. As a result of the adjustment of the US deferred tax assets in the
year, the 2020 statutory effective tax rate on US profits is higher than
the prevailing US federal tax rate.
28
Man Group plc Annual Report 2020
Core earnings per share (cents)
9.5
9.4
1.7
11.0
11.3
5.9
9.7
10.3
1.4
6.7
2016
2017
2018
2019
2020
Core management fee EPS
Performance fee EPS
The principal factors that we expect to influence our future underlying
tax rate are the mix of profits by tax jurisdiction, changes to applicable
statutory tax rates, including in the UK, and the consumption of US tax
assets. As a result of the recognition of the majority of the US deferred
tax assets, should the earnings profile of the Group in the US increase
significantly in the future, the core and adjusted tax rate for the Group
would then be affected by the prevailing corporation tax rate in the
US and the proportion of the Group’s profits generated in the US. The
underlying tax rate in 2021 is currently expected to remain consistent
with 2020, dependent on the factors outlined above.
Cash earnings
Given the strong cash conversion of our business, we believe our
core profit after tax is a good measure of our underlying cash flow
generation, although the timing of cash conversion is impacted by the
seasonal movements in our working capital position through the year
and the size of our seed book over time. Operating cash flows,
excluding working capital movements, were $341 million during the
year and cash balances at year-end were $289 million².
$m
Opening cash2
Operating cash flows before working capital
movements, excluding contingent
consideration
Working capital movements (excluding
seeding)
Working capital movements – seeding2
Payment of dividends
Share repurchase (including costs)
Repayment of Tier 2 notes
Payment of acquisition-related contingent
consideration
Other movements
Cash at year-end2
Year ended
31 December
2020
220
Year ended
31 December
2019
344
341
9
41
(147)
(107)
–
(2)
(66)
289
465
(127)
145
(152)
(92)
(150)
(169)
(44)
220
Working capital movements in 2020 principally relate to the year-on-
year decrease in performance fee receivables and a reduction in the
Group’s seed book.
As at 31 December 2020, the Group’s cash balance was $289 million
and the undrawn committed revolving credit facility, which matures in
2025, was $500 million. The management of liquidity is explained in
Note 12 to the Group financial statements.
Capital management
Capital management, including dividends and share
repurchases
We have a robust balance sheet and liquidity position that allows us to
weather crises whilst continuing to invest in the business and support
our long-term growth prospects, maximising shareholder value.
Despite the impacts of the pandemic during 2020 we continued to
return capital to shareholders through completion of the $100 million
share repurchase announced in October 2019, and in September
2020 announced our intention to repurchase a further $100 million of
shares ($36 million of shares had been repurchased at 31 December
2020), in addition to continuing to pay our bi-annual dividends.
We continue to generate strong cash flows. We are moving to a
progressive dividend policy (see page 170), taking our 2020 total
dividend of 10.6 cents per share as a starting point. Our core business
is highly cash generative and these cash flows support a growing
dividend over time. We actively manage Man Group’s capital to seek to
maximise value to shareholders and support the Group’s strategy by
either investing that capital to improve shareholder returns in the future,
or returning it to shareholders through higher dividends or share
buybacks, after taking into account required capital (including liabilities
for future earn-out payments) and potential strategic opportunities, to
ensure we maintain a prudent balance sheet. Over the past five years
we have returned $800 million through dividends and announced
$600 million of share buybacks for shareholders.
We have a capital and liquidity framework which allows us to invest
in the growth of our business. We have maintained prudent capital
and available liquidity throughout the year. The Group’s $500 million
revolving credit facility provides additional liquidity (see Note 12 to the
Group financial statements on page 144). We utilise capital to support
the operation of the investment management process and the launch
of new fund products. We monitor our capital requirements through
continuous review of our regulatory and economic capital, including
monthly reporting to the Risk and Finance Committee and the Board.
The Board is proposing a final dividend for 2020 of 5.7 cents per share,
which together with the interim dividend of 4.9 cents per share equates
to a total dividend for 2020 of 10.6 cents per share, an 8% increase
from 2019. The proposed final dividend equates to around $81 million,
which is more than covered by the Group’s available liquidity and
capital resources. Key dates relating to the proposed final dividend are
provided in the Shareholder information section on page 170.
Mark Jones
Chief Financial Officer
Balance sheet
The Group has a strong and liquid balance sheet. Fees and other
receivables have decreased as a result of the lower level of
performance fees earned in December compared to the prior year.
Payables have decreased due to a decrease in compensation
accruals. The decrease in investments in funds is driven by seeding
investments, as outlined below.
$m
Cash and cash equivalents2
Fee and other receivables2
Payables2
Net investments in fund products and other
investments2
Pension asset
Right-of-use lease assets – investment
property3
Right-of-use lease assets – leasehold3
Leasehold improvements and equipment3
Total tangible assets
Lease liability
Net deferred tax asset
Net tangible assets4
Goodwill and other intangibles
Shareholders’ equity
Net financial assets
31 December
2020
289
382
(568)
31 December
2019
220
424
(570)
607
2
74
78
30
894
(272)
94
716
781
1,497
716
615
16
79
141
29
954
(307)
92
739
885
1,624
674
Seeding investments
Man Group uses capital to invest in new products to assist in the
growth of the business, which will be redeemed as practicable as
funds are marketed to clients. At 31 December 2020, the Group’s
seeding investments were $485 million (refer to Note 13 to the Group
financial statements), which have decreased from $514 million at
31 December 2019 largely as a result of redemptions due to seeded
funds being successfully taken up by clients. In addition, we held
$50 million of total return swap exposure at 31 December 2020 (2019:
$62 million).
Net financial assets1 ($m)
56
2
716
289
485
Cash and
seeding
Repo obligations
and contingent creditor
Net financial
assets
Cash
Seeding
Repo obligations
Contingent creditor
1 The Group’s alternative performance measures are outlined on pages 166 to 169.
2 Cash and cash equivalents, fees and other receivables and payables balances exclude amounts relating to consolidated fund entities. These are presented net within net investments in fund products
and other investments, together with third-party interest in consolidated funds (see Note 13.2 to the Group financial statements on page 146).
3 Right-of-use lease assets for investment property relates to our operating sub-leases, and includes the portion of leasehold improvements relating to those premises. These have been reclassified in
the prior period presented to separately identify these on the balance sheet as investment property, as detailed further in Note 18 to the Group financial statements on page 149.
4 Equates to net tangible assets per share of 46 cents (2019: 48 cents).
Man Group plc Annual Report 2020
29
Strategic report Risk management
Risk management
A coherent approach
Risk management is unified and fully embedded
into our approach, both to the management of funds
on behalf of our investors, and the management of
Man Group’s business on behalf of our shareholders.
Other developments in 2020
Investment underperformance remains the
biggest risk facing Man Group. Performance
in 2020 has been mixed – many of our
alternative strategies performed well on
an absolute basis and relative to peers.
This was offset by underperformance of
valuation-focused strategies such as Japan
CoreAlpha and within Alternative Risk
Premia. Performance fees and investment
gains/losses were solid but fell by 42%
compared to a strong 2019, as described
on page 27. Funds under management
rose by $5.9 billion in 2020, as described
on page 25, largely driven by absolute
performance and net inflows during the year.
Our product offering is supported by our
balance sheet, which we utilised to continue
the firm’s seeding programme. 2020 saw
the seeding of a number of funds spanning
Man Group’s investment managers, such
as a Man GPM Responsible Investment
Community Housing fund. Whilst the firm
is exposed to a decline in the value of seed
investments, supporting the development
of new products is an important way to
increase and diversify revenues. Overall
the seeding book performed well in
2020 despite the market disruption.
In May, we completed the $100 million
share repurchase programme announced
in October 2019. In September, we began
a new share repurchase programme
which will return $100 million of capital to
shareholders. As at 31 December 2020,
the programme was 36% complete.
Man Group’s Board is ultimately responsible
for risk governance and management;
however accountability is embedded
throughout the business. Our risk
management framework ensures that the
business operates within acceptable risk
tolerances, as defined by the Board’s risk
appetite, with our governance structure
providing a foundation for continuous
oversight in a changing environment.
Independent fund boards are responsible for
protecting the interests of fund investors.
The impact of COVID-19
The COVID-19 pandemic and its impact on
the health and safety of our staff and the
behaviour of markets has dominated much
of risk management throughout 2020. We
have focused on looking after our people and
enabling them to work from home effectively
and protecting our clients’ assets with
work across market, liquidity, counterparty,
cybercrime and operational risks. Risk levels
generally peaked in March and subsequently
reverted to more normal levels, although
some pockets remain (specific details are
provided in the principal risks on pages 34
to 37). Existing risk controls and processes
functioned well albeit with increased oversight
and frequency of monitoring. Despite the
heightened risk factors, there have not
been any material operational loss events or
control failures associated with COVID-19.
A dedicated COVID-19 response team
was created at the start of the year to
lead, oversee and implement Man Group’s
pandemic response plan and support the
well-being of staff. The team monitored the
pandemic and local government advice
closely – whilst most employees have worked
from home since March, some offices
opened at significantly reduced occupancy
to accommodate those wanting to return
to work. Employees shifted seamlessly to
working from home practices utilising existing
business continuity infrastructure. The
significant change was facilitated by video
conferencing and collaboration technologies.
We benefited from our thorough business
continuity planning work from previous years.
30
Man Group plc Annual Report 2020
Man Group climate change risk
management and strategy
Man Group recognises our corporate
responsibilities and ability to effect positive change
though our responsible investment principles and
fund offerings.
The firm has articulated its climate change risks
using existing risk identification processes – Risk
and Control Self-Assessment (RCSA) for the
short-term risks through to the emerging risks
assessment for medium and long-term risks. Both
processes assess risks in terms of likelihood (or
timeframe over which it may manifest) and impact
(such as business continuity, financial, regulatory
or reputational). For the risks identified there are
associated controls and actions that help
manage/mitigate the risks. Climate change risks
are captured in Man Group’s risk governance and
reporting framework within the associated risk
category such as investment performance or
business continuity.
The key short-term risk and strategic opportunity
relates to meeting and exceeding client
expectations for inclusion of meaningful
climate-related analysis into our investment
strategies. Failure, or taking too long, to deliver
suitable investment products could lead to
outflows or reduced inflows over time.
We must demonstrate responsible conduct
and leadership to our stakeholders – clients,
shareholders, business partners, employees
and our local communities. Our strategic initiatives
relating to our direct environmental footprint are
discussed on pages 52 to 54, including a
commitment to be net zero carbon by 2030,
and our support of TCFD is outlined on page 47.
Our stewardship role in relation to responsible
investment is discussed on page 50.
As the world moves towards a low-carbon
economy (in line with the consensus path to a
1.5°C or 2°C scenario) transition risks include
increased costs of business (e.g. insurance,
taxation or procurement) and restrictions on
business practices such as international travel
to meet clients. Some of these are already being
mitigated though investment in collaboration
technology and agile working, others can be
addressed as they arise through updated working
practices and having a more local presence.
Transition risks as they relate to underlying
fund asset price or liquidity could impact
fund performance – the firm has invested in a
proprietary ESG analytics tool to facilitate analysis
of the underlying exposures through an ESG lens.
Longer-term physical risks include business or
market disruption following severe weather events.
For example, the corporate headquarters in
London could be impacted by a failure of flood
defences. Such events, or even a heightened risk,
could cause the firm’s key business locations to
become less relevant. This is mitigated through
long-range monitoring and our small physical
footprint helps to reduce our exposure.
Brexit
The UK left the European Union (EU) on
31 January 2020 and the transition period ended
with a trade and cooperation agreement between
the UK and EU coming into effect on 1 January
2021. The UK and EU continue to work on a
framework for regulatory cooperation on financial
services and equivalence. This may impact market
access and general economic conditions in the
UK and other European countries.
Man Group planned for a range of Brexit scenarios
that might impact its employees, business or its
clients. At the beginning of 2019, Man Group
received regulatory approval to upgrade the
regulatory permissions of its existing Irish entity
and opened a physical office in Dublin, with locally
based staff. Branches of the regulated Irish entity
have been established in various European
countries. This allows Man Group to continue
servicing its existing European clients and to
access new business in the EU under the
delegation model.
Man Group closely monitored risk, trading,
volatility and liquidity in the lead-up to the end of
the transition period and into the start of 2021.
This included frequent scenario stress testing and
factor analysis of the impacted investment
mandates with active investment decisions to
manage the exposure to each plausible outcome.
Although there were movements in liquidity for
some instruments in early 2021, we did not
experience any risk, liquidity, execution or
reporting issues.
We will continue to monitor developments closely
throughout 2021 and will take necessary steps to
ensure that the impact of the agreement on our
employees, business and clients is minimised.
The directors have considered the impact of
climate change on the downside scenarios.
Currently none of Man Group’s plausible
downside scenarios, within the three-year
business planning horizon, are driven by
adverse impacts as a result of climate change.
Given the significant impact of COVID-19
on many equity and credit markets, the
downside scenarios run around mid-
year unsurprisingly showed reduced run
rate profitability for the firm. The directors
remained comfortable that management
actions available in such scenarios, including
cost reductions or capital management,
meant that Man Group would maintain
a capital and liquidity surplus even when
forecasting further plausible downside
scenarios from that point. Since then we
have seen FUM and profitability growth that
has built up a bigger buffer against downside
scenarios. Our operational and financial
performance during 2020 demonstrates
Man Group’s resilience to the effects of
COVID-19 and supports our assessment
that it does not impact our future viability.
The medium-term plan assessment is
augmented throughout the year by regular
briefings at the ARCom on strategy, risk and
controls, as well as dashboards across risk,
compliance, finance and Internal Audit. The
principal and emerging risks are considered
within the Board’s risk appetite framework.
Viability statement
The directors believe that there continues
to be robust global demand for asset
management firms, such as Man Group,
to provide fund management services and
make active investment decisions on behalf
of their clients in order to manage their capital.
Man Group’s value-adding services form
the basis of a sustainable business model.
A failure to deliver superior performance is the
main risk to Man Group’s ability to maintain
a capital and liquidity surplus but this is
mitigated through diversified fund offerings.
The directors confirm that they have a
reasonable expectation that Man Group will
continue to operate and meet its liabilities,
as they fall due, for the next three years.
A three-year period is consistent with Man
Group’s business planning horizon.
The directors’ assessment has been
made with reference to Man Group’s
current position and prospects, the firm’s
strategy, the Board’s risk appetite and
Man Group’s principal and emerging risks
and how these are managed (described
later in this section, on pages 34 to 37).
The principal risks are linked to each
of Man Group’s strategic priorities.
The strategy and associated principal risks
form the basis of Man Group’s medium-
term plan. This covers a three-year period
and includes downside scenario testing.
Man Group’s medium-term plan is built
by aggregating the expected business
performance across the firm, and then
stressing key business assumptions
(particularly investment performance, fund
flows and expected performance fees
determined using internal quantitative models).
Three lines of defence
1st
2nd
3rd
Business
Management
Business
Operational Risk
and Resilience
Group
Compliance
Internal Audit
External Audit
‘In Business’
Risk Management
Operational
Management
Group Risk
The overall risk management framework
at Man Group is based on the three lines
of defence model and is overseen by the
ARCom as delegated by the Board.
The framework instils the principles of direct
responsibility for risk management in each
business unit. Embedding accountability
with each employee at the business level
is the ‘first line of defence’.
The business units are monitored by the
Group Risk and Compliance control
functions which form the ‘second line
of defence’.
The independent review and oversight
provided by Internal Audit is the ‘third line
of defence’, which independently evaluates
the adequacy and effectiveness of the firm’s
risk management, control and governance
processes against best practice.
Although Man Group and the investors in
its products are susceptible to losses, we
believe our risk management framework
supports long-term value through the
process of risk-aware decision making.
Man Group plc Annual Report 2020
31
Strategic report
Risk management continued
Board oversight of risk
management and internal controls
The Board oversees and monitors Man
Group’s risk management and internal control
systems on an ongoing basis and, at least
annually, carries out a review of their
effectiveness. A summary of the firm’s risk
management and internal control systems,
including those relating to the financial
reporting process, is given below.
Objectives and governance
framework
Man Group’s risk management framework
and internal control systems aim to safeguard
assets, maintain proper accounting records
and provide assurance that the financial
information used in the business and
published externally is robust and reliable.
The framework is designed to manage key
risks but cannot eliminate the risk of failure
to achieve business objectives and can
only provide reasonable and not absolute
assurance against material misstatement
or loss. The risk management framework
and internal control systems, which have
been in place throughout the year and
up to the date of this Annual Report,
comply with the FRC’s Guidance on Risk
Management, Internal Control and Related
Financial and Business Reporting.
Whilst the Board retains overall responsibility
for Man Group’s risk management
and internal control systems, it has
delegated oversight to the Audit and Risk
Committee (ARCom). The report from
the Chair of the ARCom on pages 80
to 85 provides further information on
how the ARCom has discharged its risk
oversight responsibilities during the year.
Man Group’s governance
The governance framework and control
environment within Man Group have been
designed to manage risks in accordance
with risk appetite. The Board and ARCom
receive regular reporting on Man Group’s risk
profile and adherence with risk appetite. Any
breaches to risk appetite would be resolved in
line with the firm’s procedures and processes.
Man Group’s risk appetite
statements
The risk appetite statements are set by
the Board and cover all significant risk
categories. They apply to both the investment
management functions and Man Group
itself. The statements express the Board’s
appetite for risk, promote a risk-aware culture
and set out objectives and boundaries
for Man Group’s business. The primary
goal of risk management is to support the
achievement of Man Group’s objectives
by encouraging an appropriate balance
between risk and benefit, in a controlled
and regulatory compliant context.
During the year, the Board reviewed and
approved the output from the annual
refresh of Man Group’s Risk Governance
and Appetite Framework. There were no
material changes to the risk tolerances of
the business. However, the risk appetite
articulation was updated to reflect the
level of risk focus for the Board, including
additional qualitative statements where
appropriate. A summary of the risk appetite
statements is available on our website.
Corporate reorganisation risk
governance implementation
The corporate reorganisation in May 2019
included the creation of UK/EEA and
Rest of World holding companies and
boards. Each board has its own review
and authorisation framework to ensure a
consistent approach to business decisions in
accordance with Man Group’s risk appetite.
The UK/EEA entities are regulated on a
consolidated prudential basis by the FCA. The
2019 Internal Capital Adequacy Assessment
Process (ICAAP) for the UK/EEA entities was
approved by the UK/EEA board in 2020. In
addition, an ICAAP for the Irish entity was
prepared for the CBI. As for all regulatory
submissions, the ARCom has satisfied itself
that the appropriate ICAAP preparation
process steps were being followed.
Financial reporting controls
Man Group’s financial controls framework
is designed to provide assurance that
proper accounting records are adequately
maintained, and that financial information
used within the business and for external
publication is reliable and free from material
misstatement, thereby safeguarding Man
Group’s assets. This framework is managed
through a process whereby control owners
certify that key preventative and detective
controls have been performed and are
operating effectively. These include balance
sheet reconciliations and the financial
statements preparation process. During the
year, senior management monitored the
results of the certification process and a
sample of the certifications was independently
spot checked each month to provide
assurance that the certifications were correct.
The committees below have been given a mandate by the Board and the CEO to oversee the risk management framework. These committees provide assurance to
the Board that risk has been managed according to the risk appetite statements.
Board
CEO
Audit and Risk Committee
Senior ExCo
The Audit and Risk Committee (ARCom) is a committee of the Board which has
oversight of the assurance functions (see pages 80 to 85 for further detail).
The Senior ExCo is accountable for all risks assumed in the business and is
responsible for the execution of appropriate risk management discipline.
The Risk and Finance Committees (RAFs) oversee the operational, regulatory and reputational risks and the internal control environment. There are three committees
covering Global, UK/EEA and Rest of World Man Group entities. The committees also monitor balance sheet financial risks and the adequacy of capital and liquidity
buffers. The RAFs are chaired by the Chief Financial Officer and the Group Chief Operating Officer & General Counsel.
Risk and Finance Committees
32
Man Group plc Annual Report 2020
Ongoing risk reporting
The Board receives regular reports
from the Chair of the ARCom, business
management and Group Risk on the
risks to the achievement of Man Group’s
operational and financial objectives, together
with assurance that the level of risk taken
is consistent with and being managed in
accordance with the Board’s risk appetite
and with business planning. These reports
include a summary ‘risk commentary’ and a
quantitative assessment of the downside risks
faced by Man Group. The Board reviewed
and discussed Man Group’s emerging
risks and the firm’s response to these.
Specific annual review of risk
management and internal controls
In addition to its ongoing monitoring of Man
Group’s risk management and internal
controls, the Board has conducted a
specific annual review of their effectiveness
in respect of 2020 and up to the date of this
Annual Report. This review included a robust
assessment of Man Group’s principal and
emerging risks (see details on pages 34 to
37) and any significant operational risk events
and Internal Audit findings raised during
the period. The Board also considered the
potential impact of certain risks identified by
the business, the outcome of the Risk and
Control Self-Assessment (RCSA) process
performed by business management
and the quality of the controls in place to
mitigate these risks. Following this review,
the Board concluded that Man Group’s risk
management processes were effective and
that there were no significant weaknesses
or failings in the system of internal controls.
Assessment of principal
and emerging risks
Man Group’s comprehensive risk framework
includes business, credit, liquidity,
market, operational and reputational
risks to both the firm and our funds.
Man Group’s risk profile has not changed
materially in 2020. However, market and
operational risks linked to COVID-19, mass
working from home and a no-deal Brexit
have been a focus. Man Group does not
currently have any integration risk. Business
risks continue to represent the biggest
risks to Man Group; of these, investment
underperformance is the single biggest risk.
Given its wide range of investment products
and strategies, Man Group manages a
wide array of operational risks. The breadth
and complexity of the regulations that
Man Group and its funds are subject to
across multiple jurisdictions also represent
significant operational risks should the
firm fail to comply with these regulations.
Man Group supports proportionate and
thoughtful regulation and initiatives that
develop the regulatory environment.
However, regulatory change can also result in
increased operational complexity and costs.
The directors confirm that they have carried
out a robust assessment of the principal and
emerging risks facing Man Group, including
those that would threaten its business
model, future performance, solvency or
liquidity. In 2020 this also included a specific
assessment of climate change risks facing
the firm – as a principal risk in its own right
and impacting the other principal risks.
The directors have described and assessed
these principal and emerging risks on
pages 34 to 37 and explained how they
are being managed or mitigated.
Man Group plc Annual Report 2020
33
Strategic report Risk management continued
Link to strategy
1 Innovative investment strategies
2 Strong client relationships
3 Efficient and effective operations
4 Returns to shareholders
Change in status and trend
Increased
Unchanged
Decreased
>
Business risks 1 2 3 4
Risk
Mitigants
Status and trend
Change
1
Investment
performance
Fund underperformance on an
absolute basis, relative to a benchmark
or relative to peer groups, could
reduce FUM and may result in lower
subscriptions and higher redemptions.
This risk is exacerbated at times of
volatile markets. This may also result
in dissatisfied clients, negative press
and reputational damage.
Lower FUM results in lower management
fees and underperformance results in
lower performance fees.
2
Key person risk
A key person to the business leaves or is
unable to perform their role. In 2020 this
included team resilience to individuals
being incapacitated by COVID-19.
Retention risk may increase in years of
poor performance and reduced
compensation.
Man Group’s investment businesses
each have clearly defined investment
processes designed to target and
deliver on the investment mandate of
each product. We focus on hiring and
retaining highly skilled professionals who
are incentivised to perform within the
parameters of their mandate.
Man Group’s diversified range of
products and strategies limits the risk to
the business from underperformance of
any particular strategy. This includes a
current focus on responsible investment
products incorporating ESG analytics to
meet current and future investor needs.
Business and investment processes are
designed with a view to minimise the
impact of losing any key individuals.
Diversification of strategies reduces the
overall risk to Man Group. The COVID-19
response sought to minimise resilience
risks through physical separation of key
persons.
Succession plans and deferred
compensation schemes are in place to
support the retention of senior investment
professionals and key management.
2020 has seen mixed performance. Many
alternative strategies performed well over
the year on an absolute and relative basis.
However, performance has been weaker
for the valuation-focused strategies such
as Japan CoreAlpha and those within Man
Numeric and Alternative Risk Premia.
FUM increased largely due to absolute
performance and net inflows over the year.
The discussion of Man Group’s
performance is on page 17.
Man Group has continued to be able to
attract and retain an array of talented
individuals across the firm. We have seen
a decline in voluntary staff turnover as a
result of COVID-19.
We did not see any investor concerns or
material outflows as a result of announced
departures in 2020. We continue to
operate a succession planning process
to manage this risk.
>
Credit risks 1 2 3 4
Risk
Mitigants
Status and trend
Change
3
Counterparty
A counterparty with which the funds or
Man Group have financial transactions,
directly or indirectly, becomes
distressed or defaults.
Shareholders and investors in Man
Group funds and products are exposed
to credit risk of prime brokers,
custodians, sub-custodians, clearing
houses and depository banks.
Man Group and its funds diversify
exposures across a number of strong
financial counterparties, each of which is
approved and regularly reviewed for
creditworthiness by the Counterparty
Monitoring Committee (CMC). The CMC
also oversees contingency planning
ahead of significant market or political
events.
The risk teams monitor credit metrics
on the approved counterparties daily.
This includes CDS spreads and credit
ratings.
Increased regulatory scrutiny, stress
testing and capital requirements for
investment banks and central clearing
houses following the 2008 financial crisis
supported the overall stability of Man
Group’s core counterparties going into
the stressed markets of March 2020.
Credit spreads widened in March (some
of which can be attributed to less liquid
markets) and Man Group’s core
counterparties underwent heightened
monitoring during this time until the credit
indicators reverted to more normal levels.
It was not necessary to take any
meaningful mitigating action against
any name.
34
Man Group plc Annual Report 2020
>
Liquidity risks 1 3 4
Risk
Mitigants
Status and trend
Change
4
Corporate
and fund
Volatile markets and reduced market
liquidity can place additional, often
short-term, demands on the balance
sheet. Man Group is exposed to having
insufficient liquidity resources to meet its
obligations.
Adverse market moves and volatility
may sharply increase the demands on
the liquid resources in Man Group’s
funds. Market stress and increased
redemptions could result in the
deterioration of fund liquidity and in the
severest cases this could lead to the
gating of funds.
A $500 million revolving credit facility
(RCF) maturing in five years provides
Man Group with a robust liquidity
backstop. Liquidity forecasting for the
Man Group and UK/EEA entities,
including downside cases, facilitates
planning and informs decision making.
The investment risk teams conduct
regular liquidity tests on Man Group’s
funds. We endeavour to manage
resources in such a way as to meet all
demands for fund redemptions
according to contractual terms.
The asset liquidity distribution across
funds has remained broadly unchanged.
Markets in March 2020 saw significantly
increased transaction costs and reduced
liquidity in the less liquid markets. Man
Group’s funds generally trade in more
liquid markets but nevertheless some
funds took steps to reduce exposure to
the less liquid assets where necessary.
Liquidity largely returned to markets by
mid-year, while transaction costs were
elevated for longer.
>
Market risks 1 3 4
Risk
Mitigants
Status and trend
Change
5
Investment
book
Man Group uses capital to seed new
funds to build our fund offering and
expand product distribution. Man Group
also holds Collateralised Loan Obligation
(CLO) risk retention positions until the
product maturity.
The firm is therefore exposed to a
decline in value of the investment book.
6
Pension
Man Group underwrites the risks related
to the UK defined benefit pension plan
which closed to new members in 1999
and future accrual in 2011. The plan is
well funded but is exposed to changes
in net asset versus liability values.
A disciplined framework ensures that
each request for seed capital is
assessed on its risk and return on
capital.
Approvals are granted by a Seed
Investment Committee (SIC), which is
comprised of senior management, Risk
and Treasury. Investments are subject
to risk limits, an exit strategy and are
hedged to a benchmark where
appropriate. The positions and hedges
are monitored regularly by Group Risk
and reviewed by the SIC.
The UK pension plan has a low net
exposure to UK interest rates and RPI
inflation. The return-seeking assets are
low volatility and have a low correlation
to directional equity markets. Longevity
is the largest remaining risk but is
uncorrelated to Man Group’s other risks.
The investment book ended 2020 with a
similar size and risk profile compared to
the start of 2020. Market volatility in
March/April was challenging, particularly
for the CLO risk retention positions.
Overall the seeding book returns for 2020
were positive, with the benchmark hedges
performing as expected.
Man Group continues to use repo and
swap financing for some of the CLO and
seed positions to release liquidity but
retain the market risk, and was able to roll
positions throughout 2020.
The scheme has a slight surplus on an
accounting basis and has a projected
small deficit on an actuarial basis, which
will be reviewed in the upcoming triennial
valuation as of year-end.
The deficit increased in March 2020 with
underperformance of most of the
return-seeking funds but has largely
recovered to end the year with only a
modest deficit increase over the year.
The impact of COVID-19 on mortality
assumptions has not been built into
actuarial assumptions.
Man Group plc Annual Report 2020
35
Strategic report Risk management continued
Link to strategy
1 Innovative investment strategies
2 Strong client relationships
3 Efficient and effective operations
4 Returns to shareholders
Change in status and trend
Increased
Unchanged
Decreased
>
Operational risks 1 3 4
Risk
Mitigants
Status and trend
Change
7
Information
technology and
business
continuity
Risk of losses incurred by IT software
and hardware failures resulting in system
downtime, severely degraded
performance or limited system
functionality.
Business continuity risks arise from a
denial of access to a key site or a data
centre outage leading to business
disruption.
8
Internal
process failure
9
External
process failure
10
Information
and cybercrime
security
Risk of losses resulting from inadequate
or failed processes within Man Group.
Man Group continues to outsource
a number of functions as well as
managing outsourcing arrangements
on behalf of its funds. The risk is that the
outsourced service providers do not
perform as required, resulting in
knock-on implications for our business
and processes.
External service providers faced
heightened risks attributable to
COVID-19.
The risk of loss resulting from
cybercrime, malicious disruption to our
networks or from the theft, misplacing,
interception, corruption or deletion of
information.
The risk and potential impact are
heightened while most of the firm
is working from home.
Technology plays a fundamental role in
delivering our objectives, so the IT
functions work closely with each
business unit to ensure work is correctly
prioritised and financed. The
prioritisation process considers the
life cycle of both hardware and software
to ensure both are adequately
supported and sized. The firm’s
operational processes include mature
risk, incident and problem management
procedures to minimise the likelihood
and impact of technology failures.
Business continuity risk has been
mitigated through detailed planning and
testing of remote access and
contingency/recovery operations, and
ongoing risk and threat assessment.
Man Group’s risk management
framework and internal control systems
are based on a three lines of defence
model.
In response to the pandemic, the Risk
and Finance Committee attendees
identified areas of heightened risk and
associated management actions.
2020 has tested our business continuity
plans and we are pleased with how we
have operated. Despite this, we continue
to improve our technology capability and
security. New hardware and software
have enhanced core technology and data
centres, whilst the trading and operations
platforms continue to be enriched.
Considerable progress was made in the
centralisation of order and execution
management technology for the firm.
Collaboration technologies (and prior
extensive business continuity planning)
facilitated a seamless move to mass
working from home, with enhancements
in this space continuing through 2020 to
provide added security, resiliency and
efficiency.
Man Group remains focused on
enhancing its systems and control
processes where required and ensuring
internal process failures are kept to a
minimum.
Man Group has not observed an increase
in material internal events in 2020, nor any
material operational events directly
attributable to COVID-19.
Man Group’s operations team has
implemented a robust methodology
(including ongoing third-party due
diligence and KPI monitoring) to confirm
that outsourced service providers are
delivering as required.
The firm has concentrated its outsourcing
into a smaller number of carefully selected
and proven outsource providers with
which it has established working
relationships allowing for greater process
consolidation and rationalisation.
Man Group has established information
security and cyber security programmes
that are aligned with industry
expectations and best practices. They
are continuously reviewed and adjusted
to keep pace with the regulatory,
legislative and cyber threat landscapes.
Our security mechanisms are layered in
a defensive posture and include
technologies powered by artificial
intelligence enabling them to detect and
prevent malicious activities and highly
complex cyber-attacks.
We observed a modest increase in issues
faced by some of our third-party providers
during 2020. However, these have not had
any material loss impacts.
The cyber landscape continued to evolve
throughout 2020 with criminals seeking to
exploit COVID-19 and working from home.
Key threats arise from social engineering
(phishing), ransomware, extortion, denial
of service and cloud data storage/
processing attacks. Criminals increased
attacks against remote access
infrastructures aiming to disrupt
workforces and breach poorly configured
remote access gateways and services.
Man Group did not experience any
material cyber or data breaches in 2020,
and our security operations and incident
response functions remained fully
operational.
36
Man Group plc Annual Report 2020
>
Operational risks continued 1 3 4
Risk
Mitigants
Status and trend
Change
11
Legal and
regulatory
The global nature of Man Group’s
business, the expansion of its
investment businesses and the
acquisition of new investment
businesses, with corporate and fund
entities located in multiple jurisdictions
and a diverse investor base, makes it
subject to a wide range of laws and
regulations. Failure to comply with these
laws and regulations may put Man
Group at risk of fines, lawsuits or
reputational damage.
Changes in laws and regulations can
materially impact Man Group or the
sectors or the market in which it operates.
Man Group operates a global legal
and compliance framework which
underpins all aspects of its business and
is resourced by experienced teams.
These teams are physically located in
Man Group’s key jurisdictions, helping
them to understand the context and
impact of any requirements.
Emphasis is placed on proactively
analysing new legal and regulatory
developments to assess likely impacts
and mitigate risks.
Man Group continues to liaise directly
and indirectly with competent authorities
e.g. FCA, SEC, FINMA, CBI.
Man Group continues to experience new
regulatory requirements. In 2020 this
included embedding of SMCR and
transaction reporting.
Man Group maintained an open dialogue
with regulators throughout 2020 around
the impact of COVID-19 on markets, fund
performance and our resilience.
Work continues on a number of regulatory
initiatives including IBOR transition,
implementing the Investment Firms
Prudential Regime (IFPR) and climate
change disclosures (TCFD).
>
Reputational risks 1 2 3 4
Risk
Mitigants
Status and trend
Change
12
Negative
publicity
The risk that an incident or negative
publicity undermines our reputation as a
leading investment manager and place
to work. Reputational damage could
result in significant redemptions from
our funds, and could lead to issues with
external financing, credit ratings and
relations with core counterparties and
outsourcing providers.
Our reputation is dependent on both
our operational and fund performance.
Our governance and control structure
mitigate operational concerns, and our
attention to people and investment
processes are designed to comply
with accepted standards of investment
management practice.
Man Group continues to enjoy a good
reputation and this risk is assessed as
stable.
Work continues to build Man Group’s
Responsible Investment brand through
fund offerings and corporate behaviour.
>
Climate change risks 1 2 3 4
Risk
Mitigants
Status and trend
Change
13
Physical and
transition risks
Physical risks of business disruption,
property damage or to employee
well-being due to a severe weather
event or longer-term shifts in climate
patterns.
Man Group has a small number of
employees and a relatively limited
physical footprint. Man Group is
sufficiently agile to be able to adjust
to medium-term transition risks.
Transition risks as the world moves
towards a low-carbon economy can be
legal, regulatory, technological, market
or reputational.
The risks to Man Group are described
in the call-out box on page 30.
The firm continues to focus on providing
investors with products that incorporate
ESG analytics and meeting and exceeding
stakeholder expectations. This is
augmented by active stewardship of fund
assets to influence positive change. The
firm has announced its commitment to
become net zero carbon by 2030.
The firm will continue to monitor and
manage other medium/long-term risks
though BAU reporting and management
processes for the relevant principal risk
(see numbers 1, 7, 11 and 12).
>
Emerging risks 1 2 3 4
Risk
Mitigants
Status and trend
Change
14
External risks
Primarily external in nature and
complementary to the principal risks
which are focused on current internal
risk. The emerging risk categories
include natural disasters, future
pandemics, disruption to financial
markets and business infrastructure,
political risk and changes in the
competitive landscape.
The Board and Group Risk monitor
emerging risks, trends and changes in
the likelihood of impact. This
assessment informs the universe of
principal risks faced by the firm.
The emerging risks were reviewed by the
Board in 2020. No material changes were
made to Man Group’s headline principal
risks, but some likelihoods and impacts
were reassessed.
The coronavirus (COVID-19) transitioned
from a generic pandemic emerging risk
to a business continuity principal risk.
Man Group plc Annual Report 2020
37
Strategic report 2,400
hours of employee volunteer time
provided to the UK Government’s
Rapid Assistance in Modelling
the Pandemic initiative
38
Man Group plc Annual Report 2020
//Building
__
a sustainable business
Making a positive impact on our
stakeholders, our communities and the
environment is a key priority for us, and we
have achieved these goals in what was a
challenging and volatile year for many firms.
$43bn
ESG-integrated FUM according
to the Global Sustainable
Investment Alliance definition
Man Group plc Annual Report 2020
39
Strategic report Our sustainable business model
Introduction
We manage our business for long-term
growth, building a resilient company that can
thrive and grow during periods of stress.
This section of our
Annual Report showcases
the resilience and sustainability
of our business model and
demonstrates the sincerity
of our approach to running
Man Group in a responsible
way as we seek to grow.
40
Man Group plc Annual Report 2020
We achieve this by investing in and developing state-of-the-art
technology, offering a highly diversified range of investment strategies,
continuing to build a pool of exceptional talent and maintaining a
strong, liquid balance sheet.
While we, like many other businesses, faced a unique set of challenges
this year, the benefits of our approach and the resilience we had
established were evident. We were able to adapt quickly to the
pandemic, with minimal disruption, and to prioritise the interests of
all our stakeholders throughout the year.
For our clients, this meant protecting their assets in a volatile market
environment and continuing to invest responsibly. We have made
significant progress on the latter in recent years and have now
successfully integrated ESG within $43 billion of our funds under
management, spanning long-only and alternative strategies. More
information about our approach to Responsible Investment can be
found on page 48. This year we were particularly proud to have
received an ‘A’ grade from the UN PRI for our stewardship efforts,
alongside an A+ for overall strategy and governance.
For our people, this meant ensuring a seamless transition to new ways
of working and providing support remotely. It also meant continuing our
efforts to address all forms of inequality. Our commitment to improving
diversity across our business and industry is unwavering, but we
recognise that there is still significant progress that we can make.
The pandemic has also taken a tremendous toll on our communities.
We contributed our expertise and resources where we could to make
a positive difference. In March, for example, we responded to the Royal
Society’s call for volunteers by providing significant computing power
and employees with world-leading skills in quant and modelling to help
with its Rapid Assistance in Modelling the Pandemic programme.
We continued to work on reducing our environmental footprint,
offsetting any remaining emissions, and have committed to achieving
net zero carbon in our global workplaces by 2030. We are also a
registered supporter of the TCFD and more information about this can
be found on page 47.
This section of our Annual Report showcases the resilience and
sustainability of our business model and demonstrates the sincerity of
our approach to running Man Group in a responsible way as we seek
to grow. We believe this approach is linked to our long-term success,
with social and financial rationales and benefits. Therefore, we
continue to conduct our business with honesty, to challenge ourselves
to be better, to raise the bar and to continuously improve the way in
which we operate.
Our policies
and practices
We run our business with integrity and
holding ourselves to high ethical standards
in everything we do is embedded within our
culture. Our policies and practices are designed
to foster a business environment where each
and every one of our employees upholds
these standards, and to help ensure we are
transparent and held to account as a firm.
We define our ethical standards within our
Global Code of Ethics, which makes an
overarching commitment to high standards
and professional conduct. We expect our
people to follow our core business principles
by acting ethically and with integrity,
putting clients’ interests first, managing
conflicts of interest, retaining and disclosing
information appropriately, and observing
high standards of market conduct.
This policy sits alongside further guidance
for staff that includes our Code of Conduct;
Global Personal Account Dealing Policy;
Global Gifts and Entertainment Policy;
Global Conflicts of Interest Policy; Global
Whistleblowing Policy; and Global
Complaints Policy. Our staff receive annual
training on the standards and obligations
set out within these, along with other core
policies and practices that include: anti-
bribery and corruption, slavery and human
trafficking, security and privacy, human
rights, whistleblowing and service provider
selection, management and oversight.
Anti-bribery and corruption
The Anti-Bribery and Corruption Policy,
alongside other policies covering political and
charitable donations, gifts and entertainment,
fraud, tax evasion, sanctions, anti-money
laundering and counter-terrorist financing,
sets out our standards and processes. Our
programme is designed to comply with all
applicable laws and regulations, including
the US Foreign Corruption Practices Act
1977 and the UK Bribery Act 2010. The
programme and risk methodology is overseen
by a dedicated due diligence team and
includes various policies, procedures and
controls designed to prevent and detect
bribery and corruption. These include: ‘know
your customer’; due diligence and enhanced
due diligence checks; procedures to prevent,
detect and report suspicious activity and red
flags; training employees; and undertaking
politically exposed persons (PEPs) screening.
Annual training is given on our financial
crime programme to ensure employees
understand their responsibilities and duties.
We have implemented risk-based due
diligence procedures, designed to identify
and verify the owners and controllers of
relationships. This ensures we know our
partners in business, our suppliers and our
clients, and that we comply with all applicable
laws and regulations. We perform enhanced
due diligence for relationships in higher-risk
countries. Man Group also expects those
who provide services to us or who work on
our behalf to have the same commitment,
wherever in the world they operate.
The annual report from the Money Laundering
Reporting Officer is submitted to the Man
Group Audit and Risk Committee and the
firm’s policies and procedures are subject to
regular review by the Internal Audit function.
Slavery and human trafficking
Man Group has a zero-tolerance approach to
slavery and human trafficking, and we expect
all those in our supply chain to comply with
those standards. Our employees receive
annual training on modern slavery which
includes the various forms of servitude and
the actions to be taken should staff become
aware of or suspect the presence of modern
slavery at the firm or within our supply chain.
Fund service provider
due diligence
As an investment manager, we have
relatively simple supply chains that are largely
comprised of business and professional
service organisations. When we engage with
fund service providers, we follow the firmwide
process set out in our Service Provider
Management Policy. These policies ensure
our fund service providers are appropriately
selected, managed and overseen, with
any issues identified and escalated.
Human rights
We do not tolerate discrimination or
harassment of any kind and call out
behaviour that is against our values. Our
Human Rights Statement gives information
on our recognition and promotion of
human rights around the world.
Raising concerns
Staff can raise feedback and concerns
in various ways, including in person with
management or the HR and Compliance
departments, via pulse surveys and the
annual staff survey or via our anonymous
‘whistleblowing’ hotline operated by an
external provider. Advice for staff is set
out in various documents, including our
Global Inclusion Statement and Global
Whistleblowing Policy. Our Audit and
Risk Committee has oversight of matters
that have been raised and can raise
these to our Board if appropriate.
Health and safety
Man Group is committed to ensuring the
health and safety (H&S) of its employees
and any other persons who may be
affected by Man Group’s activities. We
recognise our responsibility to provide
and maintain a safe working environment
to prevent ill health, occupational injury
and to promote mental well-being. Our
commitment is set out in the Man Group
Environmental, Health and Safety Policy
Statement endorsed by the CEO. We have
defined control objectives to address H&S
risks and our policy objectives are aligned
to the requirements of an internationally
recognised H&S management system to
ensure that we implement a structured
management system, which defines Man
Group’s minimum H&S standards, to support
the safe delivery of our services globally.
ESG-linked revolving credit facility
In 2019, Man Group converted its revolving
credit facility into one which incorporates a
range of ESG targets. The facility will be priced
according to Man Group’s performance
against three sustainability-linked targets:
• To remain a signatory to the Women in
Finance Charter and increase the
percentage of women in senior
management roles in line with targets.
• To increase the percentage of employees
volunteering in charitable initiatives.
• To maintain the highest PRI rating of A+ for
our strategy and governance approach to
responsible investment.
Man Group plc Annual Report 2020
41
Strategic report Our sustainable business model continued
S172(1) statement
Man Group plc, as a listed company,
discloses its section 172(1) statement in
accordance with the requirements of the
2018 UK Corporate Governance Code.
The Board of Directors confirms that during the
year ended 31 December 2020, it has acted in
a way that it believes promotes the long-term
success of the Company for the benefit of
its members as a whole, whilst having due
regard to the matters set out in section 172(1)
(a) to (f) of the UK Companies Act 2006.
The Board has identified its key stakeholders
as its shareholders, clients, employees,
local communities, the environment and
its business partners and supply chain.
The case studies on page 43, the Board
Activities section on pages 70 and 71 and the
Stakeholder Engagement section on pages
72 to 75 provide further information on how
the Board has considered, engaged with
and responded to each stakeholder group.
Consequences of decisions in the
long term
The Board has demonstrated its awareness
of the likely consequences of its decisions
over the long term through its consideration
of Man Group’s strategy and business model
as set out on pages 10 to 15. The Board has
spent considerable time in the latter part of
the year discussing the long-term strategic
direction of the firm and has two dedicated
strategy sessions arranged for 2021. As
part of its strategy discussions, the Board
considered the market environment and key
trends impacting the asset management
industry which are set out on pages 12 and 13.
The principal decisions undertaken by the
Board in 2020 are set out on pages 70 and 71,
with each principal decision clearly linking to
at least one of Man Group’s strategic priorities.
The case studies on the opposite page also
demonstrate the Board’s consideration
of likely long-term consequences of two
specific decisions taken during the year.
In relation to decisions with long-term
strategic importance, the Board generally
has a policy in place to formally review these
decisions two years after they have been
implemented to assess their effectiveness
and whether there are any lessons learned
that can be applied to future decisions.
The Board plans to undertake in 2021 a
‘Two years on’ review of the corporate
restructure that was completed in 2019.
Interests of employees
The Board dedicated significant time during
2020 to considering employees’ interests,
particularly in the context of the global
pandemic. The Board received regular
updates on culture and well-being initiatives
42
Man Group plc Annual Report 2020
that were introduced to support our employees
and considered specific plans to enable those
who wished to do so to return to the office.
In 2019, the Board endorsed management’s
plans to move to a single office space in
London, recognising the benefits that having
all London-based employees in the same
building would bring. The Board continued to
consider the workplace environment during
2020 with specific focus on progress on the
office move and the proposed rollout of a more
agile working model in London in response
to employee feedback. The ‘Workplace
environment’ case study on page 43 provides
further details on these discussions.
Further details on how the Board has
considered and engaged with employees are
set out on page 74. The People and Culture
section on pages 56 to 60 describes how
the Company has engaged more broadly
with its employees throughout the year.
Fostering business relationships
Man Group’s most significant business
relationship is with its clients. The Board
has looked to strengthen its understanding
of key client relationships during the year
through discussions with the Sales team
on client engagement processes and in
the context of the development of ESG
strategies and the ESG analytics tool in
response to client demand and feedback.
The Board was updated on initiatives
that had been implemented to maintain
strong client engagement throughout the
pandemic and the plans that had been
implemented to mitigate any potential
negative client impact arising from Brexit.
The Board also considered Man Group’s key
suppliers and business partners in the context
of Brexit and plans that had been implemented
to reduce any negative impact on them, as well
as Man Group’s engagement with its broader
supply chain as part of its annual approval of
the Modern Slavery Transparency Statement.
Further details on how the Board has
considered and engaged with clients, suppliers
and business partners are set out on page 75.
Impact on the community and
the environment
The Board actively encourages, supports
and monitors progress on initiatives that it
believes will have a positive impact on the
environment and communities in which Man
Group operates. Man Group’s commitment
to communities and the wider environment
has been codified in the Corporate Social
Responsibility booklet which was presented
to and reviewed by the Board during the year.
The Board has also considered Man
Group’s environmental impact in the
context of discussions with the Responsible
Investment team on Man Group’s ESG
strategies and its approach to responsible
investment within its own portfolios. Further
details can be found on pages 48 to 51.
Further details on how the Board has
considered and engaged with communities
and considered the wider impact on the
environment as part of its decision-making
process are set out in the case study on
page 43 which highlights the Board’s decision
to donate the proceeds received from the
share forfeiture exercise to the Man Group
plc Charitable Trust, and on page 75.
High standards of business
conduct
As an asset management company, it
is vital that our workforce act with a high
degree of integrity in accordance with our
published business principles. The Board is
responsible for determining the Company’s
values and leading by example to instil a
positive culture throughout the organisation
which reflects a reputation of adhering to high
standards of business conduct. The policies
and practices set out on page 41 support
the Group in upholding these standards.
The Board considered culture at each
Board meeting through updates contained
within the CEO Report and had specific
discussions on employee engagement and
the output of the 2020 employee survey. It
also received updates from the Audit and
Risk Committee on any business conduct
issues reported to it and the actions taken
by management to address such issues.
Need to act fairly between
shareholders
The Board actively engages with Man
Group’s largest shareholders and encourages
feedback as part of this engagement
process. The Board recognises, from this
feedback, that shareholders sometimes
have conflicting priorities and therefore
takes differing shareholder views into
consideration when setting the strategy
for the long-term success of the firm.
The asset reunification programme
highlighted on the opposite page sets out
the process that was followed to ensure
that a consistent approach was taken to the
identification of and engagement with Man
Group’s ‘lost’ shareholders and the Board’s
consideration and approval of this process.
The Board Activities section on pages 70
and 71 and the Stakeholder Engagement
section on pages 72 to 75 provide further
details on how the Board has considered and
engaged with shareholders during the year.
Examples of key Board
decisions and impact on
stakeholders
> Asset reunification and share
forfeiture programmes
Man Group instructed EQ, its share registrar, to
conduct a review of its share register with the aim of
re-engaging with its ‘lost’ shareholders and reunifying
them with their Man Group plc shares together with
any unclaimed dividends attached to those shares.
As a result of the share register review, a total of 110 shareholders
were identified as ‘lost’ with an aggregate holding of 279,803
shares. A ‘lost’ shareholder is classified as a holder who has not
claimed or cashed a single dividend payment from the Company
over a period of at least the last 12 years.
Upon identification of the ‘lost’ shareholder population, the Board
agreed that an asset reunification programme and a subsequent
share forfeiture programme would be undertaken by EQ. Approval
was sought at the Company’s 2020 Annual General Meeting
to amend its Articles of Association (the Articles) to help facilitate
these programmes.
Following receipt of shareholder approval to amend the Articles,
the asset reunification programme commenced and ProSearch
(a specialist tracing company) was appointed to help trace the
Company’s ‘lost’ shareholders and reunite them with their assets.
Following completion of the tracing exercise, the Company was able
to successfully reunify 187,663 shares and associated dividends,
worth £304,000, with its shareholders.
After adhering to the requirement set out in the Articles, the
remaining 92,140 unclaimed shares were forfeited and sold by the
Company in the market in November 2020. The Board decided that
the net proceeds from the sale of the unclaimed shares and the
associated dividends, having a combined net value of approximately
£250,000, would be used to fund the Man Group plc Charitable
Trust (the Charitable Trust). Further information on the activities of
the Charitable Trust can be found on page 61.
The Board undertook the asset reunification exercise programme to
maximise its engagement with shareholders and considered it to be
in the long-term best interests of the Company and its shareholders
as a whole. The decision to allocate the funds from the share
forfeiture programme to the Charitable Trust was centred around the
Board’s commitment to making a positive impact to the wider
community in which Man Group operates. The Company will also
be conducting a separate exercise for unclaimed dividends which
are over 12 years old in the first half of 2021.
For more information on Board activities
and stakeholder engagement see
pages 70 and 71 and pages 72 to 75.
Man Group plc Annual Report 2020
43
> Workplace environment
During the year, the Board has devoted substantial time
to considering its workplace environment. Following
the decision taken in 2019 to move all London-based
employees into one office space, the Board has continued
to monitor the implementation of the office move.
As part of this, the Board was keen to ensure that the views of
employees were considered as it relates to the office move as well as
the general working environment. Employees were asked, via an
email survey, to provide an indication of their future working
preferences once the UK Government guidelines enabled employees
to safely return to the office. The results from this survey were factored
into the office refurbishment and also informed plans to reconsider
our current working model in light of the evolving COVID-19
pandemic. Employee feedback indicated a preference for further
flexible working and informed Board discussions on implementing a
more agile working model to better suit the needs of our employees
and the business as a whole. Additional engagement with employees
is planned throughout 2021 to ensure their interests are taken into
account when finalising our approach to our future working model.
The Board believes that seeking and acting upon employee
feedback in respect of the future of the workplace environment will
create and sustain a collaborative, productive, healthy and
sustainable environment fit for the long term. Similarly, a workplace
environment that enables a more agile working model will create
value by attracting and retaining key talent and will foster good
working relationships between colleagues within the firm and assist
in maintaining our strong corporate culture; this, in turn, will enable
the delivery of an enhanced experience to our clients.
As part of the office refurbishment, the Board is pleased to report that
we will maintain our BREEAM (Building Research Establishment
Environmental Assessment Method) excellence certification to ensure
the sustainability performance of the building is in line with the Board’s
commitment to reducing the firm’s environmental impact. Where
possible, we plan to re-use existing infrastructure to reduce waste.
Strategic report
Our sustainable business model continued
Non-Financial
Reporting Statement
In the interests of good governance, Man Group has chosen
to comply with sections 414CA(1) and 414CB(1) of the UK
Companies Act 2006, however as a Jersey incorporated
company we are not required to do so.
The table below constitutes our non-financial reporting statement and
we have included cross references to other sections of this report
where appropriate. For a description of our business model please
refer to pages 10 and 11.
Our policies
and standards
Environment
Environmental Policy Statement
and Environment, Health and
Safety Policy
Describes our commitment
to conducting our business
responsibly and minimising our
climate-related impacts.
Due diligence and governance
Impact and outcomes of our
policies and standards
Related principal risks
We track progress through environmental
data compilation systems ensuring
accurate reporting of measures. Our
environmental strategy is presented to the
Board for review. For further information
please see pages 52 to 54.
On behalf of the Board, the EHSC oversees
the development and implementation of our
environment, health and safety processes
and procedures. Our Board maintains
overall responsibility for the health, safety
and welfare of employees.
Our achievements in relation to our impact
on the environment can be found on
pages 52 to 54.
Climate change risk management and
strategy is discussed on page 30 and
as a principal risk on page 37.
Our greenhouse gas emissions data can
be found on page 54.
We continue to work towards becoming
carbon neutral by 2030. For further
information on this objective see page 53.
We have achieved foundation level
accreditation under the London Healthy
Workplace Award scheme.
Supporter and signatory of the
Task Force on Climate-related
Financial Disclosures (TCFD)
To ensure that we provide consistent
and transparent information on
climate-related financial disclosures.
As a supporter of the TCFD, the Board
oversees progress on the development of
our climate-related financial disclosures.
The Board will continue to be kept
apprised of climate-related risk via the
Audit and Risk Committee.
For further information on our progress
implementing the TCFD requirements see
page 47.
Climate change risk management and
strategy is discussed on page 30 and
as a principal risk on page 37.
Social Matters
Responsible Investment (RI)
Policy
Outlines our commitment and
support for the development and
integration of RI across our
investment engines.
RI is linked to our investment
performance and reputational
principal risks on page 34 and
page 37.
We integrate ESG considerations in our
investment decision making and
monitoring across strategies in line with the
policy and processes overseen by the
Responsible Investment Committee. We
now manage $43 billion in ESG-integrated
FUM and have also developed an analytics
tool to enable an innovative and uniform
approach to RI. For further information on
how this has benefited our RI policy
objectives see pages 48 to 50.
We recognise the increasing importance of
responsible investing to our clients and the
impact on the wider environment. Our
Responsible Investment Committee
oversees the implementation of our RI
policy and processes. The Board also
receives regular updates from the RI
leadership team.
A KPI to maintain a UN PRI rating of A+ is
linked to our revolving credit facility. The
rating addresses the Group’s approach to
RI and the incorporation of ESG factors
into investment decisions. Progress
against the target is reported to senior
management through the Senior ExCo
and UK/EEA and Rest of World subgroup
holding company boards.
ManKind Initiative
The Company’s volunteering
programme which aims to
encourage employee volunteering.
We prioritise giving back to our
communities and this takes place through
various channels. For further information
on our initiatives see page 61.
Senior management actively communicate
with staff throughout the year to
encourage participation in volunteering
activities.
Not linked to our principal risks.
Well-being and Inclusion –
Global Inclusion Statement
We are committed to looking after our
people and have a global well-being
programme in place. This includes
guidance given by newsletters, webinars
and events (onsite and virtual).
We have a number of policies and
offerings including our Gender Neutral
Parental Leave, Employee Assistance
Programme, Tenure Award Leave, and
Flexible Working options. For further
information see the ‘People and culture’
section on pages 56 to 60.
Not linked to our principal risks.
44
Man Group plc Annual Report 2020
Our policies
and standards
Due diligence and governance
Impact and outcomes of our
policies and standards
Related principal risks
Anti-Bribery and Corruption
Anti-Bribery and Corruption
Policy
Describes the controls and
processes governing our approach
to anti-bribery and corruption.
For further information on our Anti-Bribery
and Corruption Policy please see page 41.
The procedures and controls that stem
from our policy are subject to rigorous
testing and review by our Internal Audit
team and results are scrutinised and
challenged by the Audit and Risk
Committee.
Regular training is provided to employees
to ensure they understand their
responsibilities.
Employees
We implement effective controls and
systems to prevent anti-bribery and
corruption from occurring within the
business.
Failure to implement effective
controls in relation to anti-bribery
and corruption is a principal
operational risk on page 37.
Global Code of Ethics and Code
of Conduct
Sets out standards and obligations
that employees are required to
adhere to. Outlines our overarching
commitment to high standards of
business conduct.
The Company has a monitoring framework
which ensures these codes are regularly
reviewed and remain fit for purpose.
Regular training is provided to employees
to ensure they are informed of our
expected standards.
Employees contribute to our success by
adhering to our core business principles:
acting ethically and with integrity, putting
clients’ interests first, monitoring conflicts
of interest, retaining and disclosing
information appropriately and observing
high standards of business conduct.
Employee conduct is linked to
our operational and reputational
principal risks on pages 36 and 37.
Diversity and Inclusion
Initiatives, Global Inclusion
Statement and Diversity
Focused Recruitment Policy
Governs our approach to diversity.
Our diversity and inclusion initiatives
support Man Group’s commitment to
improving diversity across the Company
and within the finance industry more
generally. The initiatives are supported at a
senior level by the Senior Executive
Committee and our Drive (D&I) Steering
Committee (see pages 58 to 60).
At Board level the Nomination Committee
discusses diversity targets and reviews
composition annually (see pages 86 to 89).
A gender diversity target is linked to our RCF
and progress against this target is reported
to senior management through the Senior
ExCo and UK/EEA and Rest of World
subgroup holding company boards.
We achieved gender parity on our Board
during 2020. Our Board also meets the
ethnic diversity targets set by the Parker
Review.
Our Board members are actively engaged
on diversity topics and our CEO and Chair
are members of the 30% Club which aims
to take action to increase diversity at both
Board and senior management level.
We have signed up to the Race at Work
Charter and the Women in Finance
Charter. Further information on our
diversity and inclusion initiatives can be
found within our D&I report on the Man
Group website.
Not linked to our principal risks.
‘Paving the Way’ Initiative
Our initiatives focus on attracting
diverse talent into the Company and
the industry.
We actively encourage, support and
progress initiatives that help assist in
addressing social barriers that have
historically prevented access to our
industry. Our initiatives are overseen by the
Drive (D&I) Steering Committee and the
Board is updated on progress.
As part of the launch of the ‘Paving the
Way’ initiative we have partnered with
various organisations to address pipeline
recruitment issues. For more information
see page 60 and the Corporate Social
Responsibility (CSR) booklet on the Man
Group website.
Not linked to our principal risks.
Global Talent Function
Ensures we nurture our current talent
and attract new talent.
The Senior ExCo discusses succession
planning throughout the year and works
closely with the Talent team and HR
leaders. For further information see our
CSR booklet, our website and pages 57
and 58.
Whistleblowing Policy
Encourages an open and
collaborative culture and advances
our core business principles.
Our Whistleblowing Policy allows staff to
raise concerns anonymously and is
subject to independent oversight by the
Audit and Risk Committee.
During 2020 we launched a new global
feedback tool to support our collaborative
working environment.
We continue to seek to develop talent
within the Group and actively encourage
mentoring relationships. For further
information see the ‘People and culture’
section on pages 56 to 60.
We also continued to hold ‘virtual’
internships despite the COVID-19
pandemic.
Employees are able to raise concerns to
an independent external agency as well as
to nominated individuals internally. All
reports are assessed and actioned as
appropriate. Disclosures made under the
policy are reported to the Audit and Risk
Committee.
Key person risk is a principal
business risk on page 34.
Negative publicity is a principal
reputational risk on page 37.
Man Group plc Annual Report 2020
45
Strategic report Our sustainable business model continued
Non-Financial Reporting Statement continued
Due diligence and governance
Impact and outcomes of our
policies and standards
Related principal risks
Man Group is committed to high
standards of business conduct and
this extends to the commitment to the
protection of human rights throughout the
business. We have this year formalised a
Human Rights Statement which can be
found on our website.
Our Human Rights Statement sits
alongside our Global Inclusion Statement
and our Modern Slavery Transparency
Statement, showing our commitment to
the promotion of human rights within the
workplace, our operations and how we
operate our business. It was adopted in
Q4 of 2020.
The Board reviews and agrees the
statement on an annual basis.
There are no known instances of modern
slavery within our business.
Our policies
and standards
Human Rights
Human Rights Statement
Sets out our high standards and how
these define and inform our
operations.
Modern Slavery Transparency
Statement
Our statement details how we
actively manage and prevent modern
slavery from occurring within the
business and supply chain.
Other
Negative publicity is a principal
reputational risk on page 37.
Negative publicity is a principal
reputational risk on page 37.
Legal and regulatory is a principal
operational risk on page 37.
External process failure by one of
our service providers is a principal
operational risk on page 36.
Counterparty risk is a principal
credit risk on page 34.
Through our current programme we are
able to partner closely with our fund
service providers and ensure that we have
detailed oversight of their service provision
and that any issues are promptly identified,
escalated and resolved. We continue to
enhance our governance and processes in
this area to remain resilient. Furthermore,
we are developing a revised Third Party
Risk Management Policy which will seek to
extend the breadth and depth of our
reviews and include additional factors,
such as ESG and CSR.
The policy seeks to ensure counterparties
are monitored appropriately and any
identified issues are communicated and
actioned in a timely manner.
Service Provider Management
Policy
Ensures our fund service providers
are appropriately selected, managed
and overseen and that any issues
are identified and escalated.
In order to ensure we appropriately select
and oversee our fund service providers,
an ongoing programme of due diligence is
conducted and guidance is provided on
our expectations of their conduct and
operation. For further information on our
policy see page 41.
Counterparty Risk Policy
Details the framework and
governance for all trading and risk
counterparties with the firm and
outlines the roles and responsibilities
for both engaging in new
counterparty relationships and
monitoring existing ones.
Non-financial KPIs
The CMC is responsible for updating and
maintaining the policy.
All new counterparty relationships must
follow an approval workflow led by central
trading and including risk, legal, compliance
and operations.
The CMC will review and assess all
counterparties covered by the policy. Any
final decision on reducing or removing
counterparty exposure rests with our CEO
and Chief Investment Officer. The CMC
ensures that the policy is understood by the
business and immediate notification of likely
defaults are communicated to the CEO and
the heads of risk.
The Board and Senior Executive
Committee have implemented three
non-financial KPIs and targets which
reflect Man Group’s core values and future
success. For more information, please see
page 23.
46
Man Group plc Annual Report 2020
Following the implementation of our three
non-financial KPIs, we will track progress
going forward.
Negative publicity is a principal
reputational risk on page 37.
TCFD
Man Group is a registered supporter of the
Task Force on Climate-related Financial
Disclosures (TCFD). Best practice for the
TCFD recommended disclosures continues
to evolve, with these disclosures mandatory
for financial years from 2021 onwards.
We believe that protecting our planet is a shared responsibility across
businesses, and are strong believers in the importance of disclosing
climate-related information. In addressing the TCFD disclosure
recommendations we have made valuable enhancements to the
quantification of our climate-related risk exposures and resilience
assessments.
The table below summarises the TCFD’s guidance and cross-
references to the relevant disclosures in this report in relation to
corporate actions. We also engage with companies at a fund level to
advocate change and more information on how we incorporate this
into our investment process can be found on pages 48 to 51.
TCFD recommendation
Man Group response
Governance
Strategy
Risk management
Metrics and targets
The Board’s oversight of climate-related risks and
opportunities.
For details of the Board’s oversight, please refer to the Chair’s governance overview
(page 63), the Corporate governance report (page 77) and our Audit and Risk
Committee report (pages 80 and 83).
Management’s role in assessing and managing
climate-related risks and opportunities.
We have established a TCFD working group which includes senior management
from our investment, client service, risk management, financial reporting and
infrastructure teams. The group actively discusses climate-related matters with
updates provided to the Board and Audit and Risk Committee as appropriate.
Our approach to climate change strategy can be found in the climate change
call-out box on page 30 within the Risk management section.
Climate-related risks and opportunities the
organisation has identified over the short, medium
and long term.
The impact of climate-related risks and
opportunities on the organisation’s business,
strategy and financial planning.
The resilience of the organisation’s strategy taking
into consideration different climate-related
scenarios, including a 2°C or lower scenario.
The organisation’s process for identifying and
assessing climate-related risks.
Our approach to climate change risk management can be found in the climate
change call-out box on page 30 within the Risk management section.
The organisation’s process for managing
climate-related risks.
How processes for identifying, assessing and
managing climate-related risks are integrated into
the organisation’s overall risk management.
The metrics used by the organisation to assess
climate-related risks and opportunities in line with
its strategy and risk management process.
The TCFD working group, together with our Facilities team, actively consider
metrics and targets relevant to our business in order to assess and monitor relevant
climate-related risks and opportunities in the future.
The targets used by the organisation to manage
climate-related risks and opportunities and
performance against targets.
More information on our assessment of climate change risks and their impact on
our business can be found in the climate change call-out box on page 30 within the
Risk management section.
Scope 1, 2 and 3 greenhouse gas (GHG) emissions
and related risks.
GHG emissions data and details of our commitment to reducing our carbon
footprint can be found in the Environmental impact section on pages 52 to 54.
Man Group plc Annual Report 2020
47
Strategic report Our sustainable business model continued
Responsible Investment
We recognise that Responsible Investment (RI) is
fundamental to our fiduciary duty and our approach to RI
across the firm ensures that our interests and values are
closely aligned to those of our clients and stakeholders.
FUM with ESG integrated into
the investment process
$43bn
at 31 December 2020
Man Group calculation based on Global Sustainable Investment
Alliance definitions, where integration is defined as the
systematic inclusion by investment managers of ESG factors in
the investment process. This includes combined FUM of all
eligible Man Group strategies.
PRI Strategy and Governance
rating
A+
Source: PRI report. Man Group, as a PRI signatory, submits
annual, compulsory transparency modules, which report on
ESG integration and active ownership across the firm’s
investment engines. We received an A+ during the most recent
reporting year for Strategy and Governance, which
encompasses our overall approach spanning our RI policy,
objectives, strategy, governance, HR policies and the degree to
which we are promoting best practices in responsible
investment within the industry.
Our commitment to RI spans three core areas:
• ESG integration: We aim to identify
and address ESG-related risks and
opportunities via deep fundamental
analysis and our proprietary quantitative
ESG model.
• Stewardship: We recognise that effective
stewardship goes beyond just engaging
on a reactive basis and we seek to use our
resources, rights and influence proactively
to exercise positive change in the
companies in which we invest.
• Advocacy, education and thought
leadership: We are actively building industry
influence while promoting best practices
and ESG education to all our stakeholders.
The Man Group Responsible Investment
website defines our commitment to RI and
outlines our RI policies across investment
engines.
www.man.com/
responsible-investment
Implementing RI at Man Group
Man Group strives to be a leader in RI across
all asset classes and investment strategies.
We are a global, diversified asset manager
and our firmwide strategy and framework
ensures consistency, transparency, credibility
and collaboration across our business. Each
of our investment strategies applies best
practices of responsible investment in the
most relevant way to its field. At a portfolio-
level, integrating ESG into such a wide range
of strategies is not without its challenges.
Indeed, the breadth of Man Group’s
investment engines means that the firm
represents a unique intersection of
perspectives — quantitative, discretionary,
macro, private markets and asset allocation
— where competing and sometimes
conflicting expectations, approaches and
applications of responsible investment are
actively debated.
Our firmwide governance and policies include:
• A Responsible Investment Committee,
which includes senior members from each
of Man Group’s investment engines and
infrastructure, charged with governing
overall strategy, policy, research and
education. It also promotes an internal
culture that insists on holding ourselves to
the highest standards of Corporate Social
Responsibility;
• A Stewardship and Active Ownership
Committee, which maintains the firm’s
stewardship policies and framework;
• The Man Group RI Fund Framework, which
establishes a baseline requirement of ESG
standards for all our funds and classifies
them into three, clearly demarcated
subcategories: the base standard; a
standard for funds with a further level of RI
integration; and a standard for RI-dedicated
funds. The standards are designed to
incentivise migration to stronger degrees of
RI and ESG integration across asset classes;
• A mandatory, firmwide exclusion policy
across all funds to limit the firm’s exposure
to companies that participate in the
manufacture, supply or distribution of
global weapons banned by international
convention;
• A Man Group RI Exclusions List, which is a
proprietary list of sectors that will be
excluded from Man Group’s RI-integrated
or RI-dedicated funds (including banned
weapons, tobacco and companies where
coal or coal-based energy represents more
than 50% of revenues); and
• An enhanced stewardship framework,
which includes a customised proxy voting
policy and a three-tiered engagement
process at the fund, firm and industry level.
48
Man Group plc Annual Report 2020
Each of our investment engines applies RI
policies that credibly address responsible
investment in a way that is aligned to their
investment strategies and philosophies.
1
ESG
integration
Approach
• 100% proxy voting goal
• No banned weapons
• Man Universal RI
Restriction List
• Consolidated ESG and
stewardship reporting
• Corporate engagement through proactive
discussions with companies on ESG issues
Core Beliefs
ESG Philosophy
Systematic
Fundamental Quant
Discretionary
Customised
Private Markets
• Systematic restrictions
embedded for all single
name issuers
• Research-driven culture
to assess emerging best
practices including
ESG-friendly futures
• Quantitative ESG investing
approach systematically
hardcoded into the
investment process
• Proprietary ESG model
integration
• ESG integration based
on discretion of each PM
• Seeking sustainable
growth, purpose-led
companies, ESG leaders
and SDG themes
• Alpha models in 90%
• Engagement –
of FUM
• Advanced quantitative
carbon budgeting in
RI strategies
constructive relationships
with management to drive
change
• Bespoke ESG integration
• External manager
framework. ESG due
diligence on all managers
• Engagement with
sub-managers to promote
the inclusion of ESG
factors
• Consistent ESG reporting
• Affordable housing
(impact investing)
• Increase sustainable,
affordable, multi-tenure
homes in the UK housing
market1
• Positively contributes
to SDG goals2
• Leverages the unique RI and ESG
expertise across all of Man Group’s
investment engines
• Central platform for building
customised ESG portfolio
• Work in partnership with Man
Group’s investment engines to
facilitate ESG investment ideas
• Creation of customised ESG tilts,
screens and ESG reporting
Solutions
Schematic illustrations 1 and 2 refer to Man GPM’s Community Housing strategy.
Source: Man Group.
ESG Analytics Tool
As a data-centric firm, we believe in
providing our portfolio managers with as
much high-quality ESG data as possible.
Standardising ESG data and making
decisions with that data is one of the key
challenges of ESG-linked investing. To help
manage this, we built the Man Group ESG
Analytics Tool; a proprietary tool that enables
investment teams and our clients to monitor
non-financial risks at a portfolio level and on a
single-stock basis. It monitors a range of ESG
metrics including environmental statistics,
voting and stewardship data and company
controversies, and embeds our proprietary
ESG scoring model alongside datasets from
leading ESG data providers. This provides
our investment teams with an innovative,
standardised approach to managing ESG
risks and opportunities.
Man Group plc Annual Report 2020
49
Strategic report Our sustainable business model continued
Responsible Investment continued
Our
approach to
stewardship 2
As stewards of our clients’ capital, we believe
that we have an obligation to actively and
responsibly manage their assets to unlock
sustainable long-term value.
Our investment engines include both
discretionary and quantitative strategies, and
the individual aspects of stewardship, proxy
voting and engagement vary according to
each investment discipline. This year, we
published our inaugural Stewardship Report
outlining our proxy voting and engagement
initiatives throughout 2019. In 2020, we
formalised our approach to engagement in
our Engagement Policy, which can be found
on our RI website.
Man Group’s dedicated stewardship team
works with a third-party proxy adviser who
provides research and recommendations on
the basis of the firm’s voting preferences;
these are reviewed by our stewardship team.
We use our voting rights to promote sound
corporate governance practices at our
investee companies. While this is a central
element of our active ownership approach,
we go a step further than traditional policies
by seeking to encourage good corporate
governance practices and ESG standards.
During 2020, the stewardship team
established dialogue with 209 companies
across 31 different countries on ESG issues
(100 direct engagements and 109
engagements in collaboration with other
shareholders). Climate Change, Human
Rights, Compensation, Board Composition
and Labour Relations were key areas
of discussion.
Our efforts to participate in RI and ESG-
related initiatives enhance our ability to
influence change. These include our
involvement in the Climate Action 100+
initiative and the Investor Forum (a
membership-funded not-for-profit
organisation focused on collective investor
engagement with UK companies).
Our voting policy is particularly supportive of
environmental and social-related shareholder
proposals. Man Group has been ranked by
ShareAction, Voting Matters 2020, as the
fourth best asset manager out of 60 for
supporting at least 96% of shareholder
resolutions on climate and social issues.
Environment-focused
shareholder proposals
97%
Environment-focused shareholder proposals
supported.
Source: Man Group.
PRI Active Ownership
rating
A
Source: PRI report.
The tool’s key features represent a solution to
common ESG-related problems:
Key features
• Applied across equity and fixed
income securities for long-only and
alternative strategies;
• Embeds Man Group’s proprietary
ESG score alongside datasets from
three leading ESG data providers;
• Analyses and compares ESG data
at a portfolio, country, sector,
company and index level; and
• Provides an overview of the portfolio’s
stewardship activity.
Solutions
• Helps to break down and organise
the complexity of ESG data for
investment teams;
• Measures and manages ESG
opportunities and risks on a
comprehensive basis across asset
classes given the multi dataset format;
and
• Reports on ESG in an innovative yet
uniform approach.
Analytics and reporting are important
components of investment management,
and we have consequently invested
significantly in data to allow our portfolio
managers to measure and monitor ESG
factors, including carbon emissions
and other climate-related metrics.
Man Group is a supporter of the Task Force
on Climate-related Financial Disclosures
(TCFD) and encourages our investee
companies to report high-quality and
comparable climate-related information
through our in-house stewardship team.
Our ESG Analytics Tool integrates data
that addresses many of the static TCFD
requirements, allowing our investment
managers to analyse their portfolio against
absolute and relative environmental and
climate exposure metrics. It also integrates
issuer specific data, allowing investment
teams to analyse and decompose data
across sectors and carbon measures.
Looking ahead, we aim to allocate
significant resources to consider climate
scenarios and how they can be simulated
across our diversified asset mix. This
feature will enable us to track our
portfolios against long-term goals, as well
as other climate change outcomes.
For more information on how
TCFD is relevant to our business
please see page 47.
50
Man Group plc Annual Report 2020
Jason Mitchell
Co-Head of Responsible
Investment
Advocacy,
education
and thought
leadership
3
We actively promote education around RI and
set high standards through leading and
participating in several industry-wide
initiatives, for example:
• We are signatories to the UN-supported
Principles for Responsible Investment (PRI),
as part of the Hedge Fund Advisory
Committee as well as the Fixed Income,
Macroeconomic Risk and Academic
Advisory Committees.
• Luke Ellis, CEO of Man Group, is Deputy
Chairman of the Standards Board for
Alternative Investments (SBAI).
• We are part of the Sustainability Accounting
Standards Board’s (SASB) Investor
Advisory Group and RI working group.
• We are the only asset manager and
non-EU representative on the European
Commission supported EFRAG Steering
Committee that is overseeing the EU’s
ESG standard work.
• We produce our award-winning,
educational podcast, ‘A Sustainable
Future’, which explores what can be done
today to build a more sustainable world
tomorrow, hosted by our Co-Head of
Responsible Investment Jason Mitchell.
• We contributed to the CFA Institute’s
Certificate in ESG Investing curriculum
and the CFA’s award-winning paper
Climate Change Analysis in the
Investment Process.
• We are actively building industry influence
and promoting best practices and education
in ESG to our clients via our dedicated
educational website Man Institute.
• We host internal RI education sessions
on a quarterly basis for all our employees
to educate them on sustainability and
social issues.
This area of our industry is constantly
evolving, and we believe it is important to
regularly challenge and advance our thinking
to develop truly responsible approaches that
add value for our clients.
Q. Please tell us about your responsibilities
and areas of focus at Man Group.
A. I oversee Man Group’s approaches to discretionary
ESG integration, stewardship, government policy and
regulation. My background is in portfolio management
where I’ve managed both long-only and alternative
investment strategies, including dedicated climate
change and sustainability strategies. A major area of
focus in 2020 and one that will remain so for the next
several years is how government policy and EU
Sustainable Finance Disclosure Regulation is applied
to Man Group and our investment strategies across
reporting, integration and product development. We are
increasingly involved in investor advisory committees,
industry, standards and government-related working
groups as part of this.
Q. How important is stewardship for Man Group?
A. Our stewardship approach has significantly evolved
over the last few years. We’ve developed a programme
to level up on our stewardship, proxy voting and
engagement activities at a firmwide level and are now
seeing the benefits of that investment and capacity
building. We have built a process in which the firm’s
stewardship team feeds into our discretionary
investment teams, enabling engagement and informing
voting decision making.
Q. What differentiates Man Group from
your competitors?
A. Man Group’s breadth of strategies has proven to be
an inherent advantage. While there is certainly a unifying
approach to RI in our organisational policy, stewardship
and analytics framework, we actively cultivate tailored
approaches and use cases for ESG integration. This
creates a fascinating intersection of discussion and
debate. For example, while our discretionary business
views ESG from the traditional, bottom-up fundamental
perspective, our quantitative businesses search for
top-down factors. Finally, our fund of funds platform
applies a qualitative assessment process as well as
leverages our ESG analytics tool to inform its manager
selection process.
Q. What other initiatives are you most proud of?
A. I am particularly proud of the Man Group ‘A
Sustainable Future’ podcast which I host and co-
produce. Launched in January 2018, it is an award-
winning series about what we’re doing today to build a
more sustainable world tomorrow. The firm has been
tremendous in supporting this exploration into
sustainability, which is meant to be an open, educational
resource. Recent guests include: Raghuram Rajan,
former Governor of the Reserve Bank of India; Paul
Polman, former Unilever CEO; Mary Robinson, former
President of Ireland; Andrew McDowell, Vice President
of the European Investment Bank; and Dr. Amesh
Adalja, Senior Scholar at the Johns Hopkins Center for
Global Health Security.
Man Group plc Annual Report 2020
51
Strategic report Our sustainable business model continued
Environmental impact
Man Group is actively committed to reducing its absolute
carbon footprint and making consistent, transparent
progress. From 2020, we offset any remaining emissions
by supporting certified offset projects. We are pleased
to report that we are on track to meet our emissions
reduction targets set to 2022 and have committed to
achieving net zero carbon emissions in our global
workplaces by 2030.
Renewable energy
Man Group procures 100% renewable
energy in jurisdictions where such supplies
are available. In 2020, 72% of our operations
based on headcount were powered by 100%
renewable energy.
Water
Currently our water usage figure comes from
operations within our control. In 2020, total
water usage was 17,372m3 (2019: 27,221m3).
The reduction in water usage is because
of reduced office occupancy during 2020 as
a result of COVID-19 restrictions.
Waste
Man Group operates at zero waste to
landfill in jurisdictions where these services
are available. In 2020, 67% of our operations
based on headcount were zero waste
to landfill.
Responsible procurement
Man Group offices procure goods and
services that are in line with our environmental
objects. We utilise ISO standards and ratings
systems such as energy star for IT equipment
and green star for paper supplies to assist us
in choosing sustainable products. We also
ensure all our equipment complies with
the Restriction of Hazardous Substances
EU Directive.
Governance
Board oversight of environmental
matters related to our operations
The Board maintains overall responsibility
for Man Group’s environmental impact and
ensures that our environmental policy
statement1 is implemented and reviewed.
The Board has a collective role in providing
environmental leadership throughout Man
Group’s global operations and is committed
to continual improvement in environmental
performance.
Environmental policy
Man Group’s firmwide environmental
policy is to use natural resources responsibly
and to minimise the environmental impact
of our activities through maximising energy
efficiency, reducing greenhouse gas
emissions and recycling or minimising waste.
Our UK offices, which account for 67% of our
operation based on headcount, are covered
by environmental operating procedures
which are aligned to ISO 14001.
Strategy
Green buildings
Minimising our environmental impact is at
the centre of our real estate strategy.
In 2020 we occupied six buildings certified
by LEED (Leadership in Energy Efficiency
and Design) and two by BREEAM (Building
Research Establishment Environmental
Assessment Method).
1 Contained within Man Group’s Environmental, Health and
Safety Policy.
52
Man Group plc Annual Report 2020
Vendor management
As a condition of supplying services to Man
Group, our consultants, contractors and
sub-contractors are directed to use natural
resources responsibly and to minimise their
environmental impact through maximising
energy efficiency, reducing greenhouse
gas emissions, and recycling or minimising
waste. Contract managers and procurement
specialists are responsible for ensuring our
consultants, contractors and sub-contractors
fulfil their duties in this area through contract
audits and performance reviews.
Environmental data compilation systems
We strive to deliver clear and transparent
reporting that captures the measurable
elements within our control. We monitor and
track our global environmental impacts using
specialist tracking software and an energy
services consultancy to help us to mitigate
risk, maximise opportunities and reduce our
carbon footprint.
Environmental performance audits
In 2020, Man Group’s largest office,
Riverbank House, was comprehensively
audited for energy and air-conditioning
efficiency. The audit recommendations
have led to investment into new energy-
saving equipment such as LED lighting
and chiller upgrades.
Environmental training and awareness
All Man Group staff complete a mandatory
annual training module which outlines Man
Group’s environmental policy and objectives.
The course highlights ways in which staff can
contribute to minimising our environmental
footprint such as reducing waste through
re-using and recycling, maintaining systems
to monitor and measure our use of resources,
engaging with suppliers on environmental
best practice and ensuring anything we
purchase comes from sustainable and
reputable sources.
Environmental awareness campaigns are
also run in offices focusing on areas such
as increasing recycling, reducing energy use,
cycling to work and removing single use
plastics. Such campaigns include applying
energy intensity metrics to rank the best and
worst performing Man offices to promote
energy-saving efforts.
Timeline to net zero carbon
2020
2022
2024
2026
2028
2030
Scope 1
Reduce natural gas and
fuel emissions by 30%
Move to green gas supplies in jurisdictions where this is available
Set new science-based targets to 2030
Upgrade equipment to ensure efficiency and reduce wastage
Set new science-based targets to 2030
Scope 2
Reduce global energy
usage by 20% and
reduce scope 2
market-based emissions
by 50%
Increase the adoption of
100% REGO supplies
by 25%
Non-renewable
energy to
supply <10% of
operations
Non-renewable
energy to
supply <5% of
operations
Upgrade equipment to ensure efficiency and reduce wastage
Scope 3
All scopes
Further deploy remote working tools to reduce the need for business travel
Adopt agile working strategies to reduce the need for commuting travel
Reduce emissions by prioritising carbon net zero strategies when refurbishing or
relocating offices
Adopt agile working strategies to reduce our office carbon footprint
PV cells on our Riverbank
House office, London
Riverbank House is rated
‘Excellent’ via the Building
Research Establishment
Environmental Assessment
Method (BREEAM). The
building has a green roof,
rainwater harvesting and
solar power generation.
Carbon net zero commitment
Man Group is committed to net zero carbon
emissions in our global workplaces by 2030.
From 2020 we will continue to reduce our
carbon footprint as much as possible and will
offset any remaining emissions by supporting
certified carbon removal projects. Reducing
our carbon footprint is one of our non-financial
KPIs and more information on this can be
found on page 23. We acknowledge that
carbon offsetting is only an interim measure
and that it does not remove the need to
reduce our own emissions in the first
instance. To reach net zero we will reduce the
carbon emissions under our operational
control associated with:
Scope 1 – emissions
Scope 2 – market-based emissions
Scope 3 – business travel emissions
In 2020, we have offset 1,801 MTCO2e
through reforestation projects in Chile
and Uruguay.
Climate change risk management
Strategic and/or operational climate change
risks to our business are managed in the
same way as other business risks covered
by our firmwide risk management systems.
The firm’s control environment is constructed
to manage risks in accordance with the
statements made by the Board that reflect
their risk appetite to the organisation, covering
risks as they apply to both the investment
management functions and Man Group itself.
In the event there is a breach of risk appetite,
the risks will be resolved promptly in line with
the firm’s procedures and processes.
Man Group considers climate risks 15+ years
into the future. It does this through multi-
disciplinary company-wide risk identification,
assessment and management processes.
The types of risks considered include current
and emerging regulation, technological
changes and upgrades, market risks,
reputational risks, acute and chronic physical
operational impacts as well as upstream and
downstream risks.
For more information on how
TCFD is relevant to our business
please see page 47.
Man Group plc Annual Report 2020
53
Strategic report Our sustainable business model continued
Environmental impact continued
Performance and targets
Our mandatory annual greenhouse gas
emissions reporting, relating to the firm’s
physical presence, is detailed here pursuant
to the Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013 and
the Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018.
In 2020, total emissions (including scope 2
market-based) decreased by 66% from 2019.
This exceeded reduction targets set for the
year. This was achieved through the second
phase of a real estate strategy to streamline
our data centre provision and improved
energy efficiency of our property portfolio.
We acknowledge that the reduction in
greenhouse gas grid emission factors has
contributed significantly towards the overall
decreasing trend in Man Group’s carbon
footprint, as well as remote working during the
COVID-19 pandemic.
Methodology
We reported scope 1 and scope 2 carbon
emissions on all sites where we have
operational control. This includes sites
where we operate less areas that are
sub-metered to tenants and sites where
we do not operate but have sub-meters in
our demised areas. As per GHG Protocol
guidance, scope 2 emissions have been
reported according to a location-based
method and a market-based method.
We have applied the latest Department for
Environment, Food and Rural Affairs (DEFRA)
and the Intergovernmental Panel on Climate
Change (IPCC) emission factors. Where
emissions data was not available, annualised
estimates have been applied in order to
calculate the full-year emissions. Based on
the nature of our emissions and the
consistency month-on-month, we believe
this is an appropriate representation of
Man Group’s global annual emissions.
Performance against targets
We strive to make our contribution to the Paris
Agreement ambition. In 2019 we set firmwide
targets in line with the Science Based Targets
initiative methodology to limit the global
temperature increase to a maximum of 1.5°C.
We exceeded our targets in 2020, in part due
to COVID-19, and expect emissions to
increase as employees return to the office
(reflected in our future targets). We review our
targets regularly and have linked our revolving
credit facility to ESG, thereby embedding our
environment-related commitments throughout
our organisation.
54
Man Group plc Annual Report 2020
2020
2019
UK
786
Offshore
Total
UK
Offshore
Total
2
788
1,132
4
1,136
2,873
363
3,236
3,695
558
4,253
–
363
363
2
462
464
650
4,674
1,801
3,684
9,073
5,284
16,448
1,462
17,910
17,712
1,818
19,530
Scope 1 (MTCO2e)
Scope 2 location-
based (MTCO2e)
Scope 2 market-
based (MTCO2e)
Scope 3 business travel
(MTCO2e)
Total including scope
2 location-based
Total including scope
2 market-based
Energy consumption
(kWh, ‘000s)
Scope 1
We have seen a reduction by 31% from 2019 in total
emissions, driven by heating efficiencies made at Riverbank
House in London.
Scope 2 location-based
Employing country-level emissions factors, we have seen a
decrease in emissions, saving 1,017 MTCO2e of carbon. This
is largely due to works in the United Kingdom to streamline
our data centre provision and LED lighting upgrade projects.
Scope 2 market-based
The reported emissions reflect our commitment to using
renewable energy where available and reducing our energy
usage globally. In 2020 our emissions were reduced by 22%
from 2019.
Scope 3
There has been a decrease in emissions by 82% in 2020. This
is due in part to advances in our remote working infrastructure
and travel restrictions due the COVID-19 pandemic.
Disclosures of our voluntary scope 3
emissions includes business travel (taxis,
flights and hotel stays). Reporting on scope 3
utilises reporting from third-party suppliers
(or estimates where such information does
not exist). We continue to work to improve
accuracy on our scope 3 reporting.
Energy consumption has been calculated in
kilowatt hours (kWh). Transport data collected
in total kms or litres of diesel fuel has been
converted into kWh using an average
consumption estimate of 10kW per litre.
Intensity metric
Our reporting emissions have been calculated
using an intensity metric which will enable us
to monitor emissions independent of activity.
As Man Group is a people-centric business,
we expect that any changes to headcount will
impact the property space we occupy and
the amount of business travel we use.
Therefore, emissions per employee are the
most appropriate metric for our business,
as shown in the table below.
Emissions per
employee
Total FTE
Scope 1
Scope 2 (Location)
Scope 2 (Market)
Scope 3
Total MTCO2e per
FTE including
market-based
Total MTCO2e per
FTE including
location-based
2020
2019
1,444
1,413
0.5
2.2
0.3
0.5
1.2
0.8
3.0
0.3
2.6
3.7
3.2
6.4
2019
Baseline
2020
Target
2020
Result
2021
Target
2022
Target
Scope 1:
Reduce scope 1 natural gas and fuel
emissions by 30%
Scope 2:
Reduce global energy usage by 10%
per year
1,136
TCO2e
4,253
TCO2e
1,022
TCO2e
3,836
TCO2e
Scope 2 market-based:
Reduce emissions by 50%
464
TCO2e
387
TCO2e
Water:
Reduce baseline usage 2% per year
27,221m3
26,676m3
788
TCO2e
Target Met
3,236
TCO2e
Target Met
363
TCO2e
Target Met
17,372m3
Target Met
908
TCO2e
795
TCO2e
3,409
TCO2e
2,983
TCO2e
309
TCO2e
232
TCO2e
26,143m3
25,620m3
COVID-19 response
Since the beginning of the pandemic, the safety of our staff has
been our highest priority. We recognise the challenges working
remotely presents and implemented our resiliency plan across
our global workforce with minimal disruption and a primary focus
on the health and well-being of our staff.
We also prioritised maintaining our culture and
fostering an inclusive environment by
promoting virtual social initiatives (e.g. Man
Group Coffee Club), knowledge sharing
sessions (e.g. Minds at Man Group) and
regular team-building events across regions
and teams.
continued to support our UK and US
charitable trust foundations to promote
literacy and numeracy at a time when
schooling and learning programmes were
interrupted, and encouraged remote and
in-person volunteering activities as part of our
community outreach.
COVID-19 has also had a significant impact
on our communities, and we wanted to make
a positive impact where possible. We offered
all staff £500 to donate to local food banks
around the world in addition to many
donations made in a personal capacity,
COVID-19 will continue to impact
our people, how we work and
society beyond 2020, and we remain
dedicated to supporting all our
stakeholders in every way we can.
> Rapid Assistance in Modelling the Pandemic (RAMP)
We were uniquely positioned to support our communities by
responding to help with the Rapid Assistance in Modelling
the Pandemic (RAMP) initiative.
The results of the SCRC’s research, incorporating data from
the UK and elsewhere, have fed into governmental policy, and
the underlying epidemiological modelling software has been
released as an Open Source Project to the international community.
In March, the Royal Society put out a call to the modelling and data
analytics community seeking to bring expertise from a diverse range
of disciplines to support the government’s efforts to model the
pandemic and to create a clearer understanding of different exit
strategies from lockdown.
Our company has cutting-edge perspectives in many aspects
relevant to RAMP, including mathematical, statistical, technological,
quantitative and data analysis. We enthusiastically responded to the
call for volunteers, believing our contribution could make a significant
difference. We offered six full-time employees and significant
computing power, including up to 30 hypervisors (virtual machines)
and 40 computing resource nodes, to the Scottish COVID-19
Response Consortium (SCRC) at no cost to them. Our volunteers
had extensive Python expertise in research and production coding,
and unrivalled experience in dealing with large structured and
unstructured datasets.
The work undertaken was on a suite of interlinked epidemiological
models with a shared data pipeline. The framework allowed the
impact of interactions and social interventions on transmission to be
assessed from the individual level through to city, region and national
aggregations. Assumptions about what processes are important for
disease dynamics involve a degree of expert judgement, but these
can be tightened with numerical parameter estimates once sufficient
data is available. Statistical inference tools to provide these estimates
and understand their sensitivity were also developed.
___“Man Group has made an extraordinary
contribution to the consortium. From
specific work on individual models to higher
level work on the shared infrastructure that
the consortium has developed on data
management, sensitivity analysis and
inference, the Man Group team members
have been extremely productive and valued
members of our consortium. We’re very
grateful for their contribution.”
Dr Richard Reeve
Joint Lead of the Scottish COVID-19 Response Consortium
Man Group plc Annual Report 2020
55
Strategic report
Our sustainable business model continued
People and culture
At Man Group, we believe in the importance of a meritocratic and collaborative
environment, where success is based on talent, commitment, diligence and
teamwork. By celebrating diversity, we seek to challenge consensus and foster
healthy debate, which we believe makes us a better and more innovative business
for our clients and shareholders. Above all, we seek to attract and retain the best
people, and to ensure everyone at Man Group can reach their full potential.
Nationalities
59
Internal transfers
184
Uptake of enhanced
parental leave
57
Throughout this extraordinary year, Man
Group’s workforce has continued to work
productively, successfully managing the
transition to most of our staff working from
home for at least several months and in many
cases for a large part of the year. In January
2020, in response to emerging concerns over
the new virus, we established a dedicated
COVID-19 Response Team – its remit includes
monitoring government guidance across all
locations, managing office closures and
re-openings, and supporting our global
employee base.
We adapted quickly to the new way of
working and took a number of measures
to provide optimal support to our staff as
we recognise the additional challenges
many face in this new paradigm, whether
related to their health, families or personal
circumstances. We continued to encourage
flexible working and created a team to assist
those who needed to work from a location
different from their usual home due to
temporary displacement or personal
requirements.
We also offered practical support to staff,
providing technology equipment for home
use, solutions to enhance collaboration
and remote working advice with a focus
on well-being. Managers received targeted
guidance on how to manage and support
remote teams effectively.
We continued to onboard new joiners despite
most offices being closed. Teams involved
in the virtual new joiner process worked
closely together to make necessary changes
seamlessly and have successfully enabled
over 140 new starters globally to be set up
and able to work remotely and effectively on
day 1.
We continued to focus on maintaining our
culture and fostering an inclusive workplace
and launched a variety of virtual initiatives
aimed at bringing together our global
workforce. This included the ‘Man Group
Coffee Club’, where individuals from across
the firm are paired at random to promote
interaction and a greater sense of community
across the different parts of our business.
We also launched ‘Minds at Man Group’, a
firmwide event series hosted by a different
colleague each week, covering a topic they
are passionate about. The series has been
well received, with 23 sessions hosted in
2020, and has brought employees from
across the globe together to discuss topics
ranging from baseball to rock climbing, and
asteroids to fine wine. Additionally, teams
across the firm have engaged in regular
team-building activities, such as virtual
cooking, origami or yoga.
56
Man Group plc Annual Report 2020
Employee engagement
The welfare of our employees has been
at the heart of our COVID-19 response and
engagement agenda, and at the forefront
of every decision we have made. The HR
and Talent teams played an active role in
supporting our workforce, proactively
engaging with every manager across the
business to provide targeted health and
well-being support for them and their teams
as needed.
We developed an enhanced well-being
programme providing live and pre-recorded
webinar content focusing on mental health,
nutrition and the benefits of regular exercise to
support staff while they were working
remotely. We also rolled out a new digital
mental health solution, Unmind, to provide
mindfulness and relaxation exercises, mental
health advice, and tools to manage sleep,
exercise and anxiety for our workforce
globally. We recognise that employees also
benefit immensely from peer support and
actively encouraged mentoring and support
circles for individuals experiencing specific
challenges, such as isolation or increased
care responsibilities.
Moreover, and as part of our COVID-19
response plan, our technology team
fast-tracked the implementation of
collaboration tools for our employees to help
them maintain productivity and connectivity
whilst working remotely. We successfully
rolled out Slack, our business communication
platform, and WebEx, our video conferencing
platform; over the course of the year, we have
seen over 12 million messages shared across
the firm via Slack and have hosted more than
200,000 WebEx meetings.
To ensure that our employees are aware
of business priorities and the latest
developments across the firm, they receive a
range of communications and information via
several channels; we continue to share a daily
newsletter with all employees and, since the
beginning of the pandemic, our CEO has also
circulated a weekly missive. Regular town hall
sessions are now virtual and led by the
Executive Committee and other senior
management across departments and
regions. Two of our non-executive directors,
Kate Barker and Zoe Cruz, are now
specifically focused on staff engagement.
We are pleased to report that our 2020 staff
survey recorded an engagement score of
83% and an increased response rate of 85%.
Employee engagement is one of our
non-financial KPIs and further information on
this can be found on page 23. We also seek
feedback from employees across the firm on
an ongoing basis and have conducted a
range of pulse surveys to inform how we
continue to make Man Group an appealing
place to work.
Talent acquisition, retention
and development
We believe that the continued success of our
firm is due to our employees. Throughout this
unusual year, our focus on attracting and
retaining the best talent has remained a top
priority, and we have continued our emphasis
on training and development as a key way to
maintain our competitive edge.
Our Talent Development Strategy is fully
established and a core part of our business.
We seek to provide career development
guidance and performance support to staff at
all levels.
This may take the form of structured coaching
or mentoring, use of our virtual learning
platform (used by over 85% of employees)
or attendance at one of the learning events
within our regular programme (accessed by
over 50% of our staff). In further efforts to
support employees to manage their
performance, we launched ‘Adaero’, a
proprietary feedback app, more broadly
across the organisation in 2020, after
developing and piloting the app with our
quantitative research and technology teams.
The app has been open-sourced as a
demonstration to our commitment of
continued investment in the broader tech
community.
We are now also better positioned to assess
the performance and potential of all our
employees through a globally adopted talent
review process. The data and insights from
this process are part of our Senior Executive
Committee’s bi-annual talent and succession
planning reviews. We offer one-to-one
development support to staff identified as
most critical to the current and future
performance of the firm.
> Testimonial
Michael Buerer
Head of Swiss Office
Man Group
Q: Which of the recent WFH initiatives
and advice from Man Group have
helped you? What else has really
worked for you while you have been
working remotely?
A: HR and Talent have provided a range of
tips. In my case, it was simple but very
effective: taking regular breaks from the
screen has definitely helped. During WFH,
breaks don’t happen naturally but need to
be actively taken. My mentee has also
inspired me to take on a personal WFH
challenge; it was (and still is) learning to
juggle with four balls – I find it a great way to
instantly take the focus away from work and
clear my mind.
Q: What has surprised you about
WFH, maybe something that you
have unexpectedly found a struggle
or a challenge?
A: I was impressed by the firm’s ability
to roll out a variety of tools to enable
communication between staff in groups of
all sizes. And I knew I had an incredibly
good office chair, but now I REALLY know!
Having a good work setup at home was a
challenge at first and I think one that many
people shared.
Man Group plc Annual Report 2020
57
Strategic report Our sustainable business model continued
People and culture continued
The retention and development of our
workforce is of paramount importance and
we strive to make internal appointments
wherever possible to maximise career
progression. During 2020, internal promotions
included the appointments of: CEO of Man
Numeric; COO of Man Numeric; Head of Man
GPM; Head of Business Operational Risk &
Resilience (BORR); and CIO for Man AHL.
We continue to build a junior talent pipeline
via a number of entry-level (both graduate
and intern) programmes within investment
management and finance and operations.
In 2020, we also launched a new technology
graduate stream. We onboarded 16 analysts
remotely in 2020 and were delighted to offer
all our UK virtual summer interns positions
on future graduate programmes. These
programmes run for two years, and on
completion, our trainees possess a
comprehensive skillset, a sound knowledge
of our business, and are well placed to
move into permanent roles.
As a global firm we are also able to create
opportunities for our people to gain
international experience via short-term
placements and permanent relocations.
Following Britain’s withdrawal from the
European Union, we remain committed to
ensuring that we continue to provide support
to those members of our workforce who are
EU nationals working in the UK. Hiring the
best talent from around the world, including
the EU, is fundamental to our business
and we remain committed to doing so.
We continue to monitor immigration
updates in relation to their potential impact
on our workforce. Our aim is to ensure that
our staff have the correct guidance and
documentation to travel between the UK
and Europe, and that our existing employees
who are EU nationals have the information
and support to enable pre-settled and
settled status applications.
We wish to attract the brightest and the best
at all levels of the firm and provide a
workplace that promotes innovative thinking
– a vital component of our ability to deliver
results for our clients. Alongside our inclusive
culture and talent strategies, our remuneration
policies and practices are one of the initiatives
designed to enable us to remain competitive
in the increasingly global markets in which
we operate and are benchmarked annually.
Remuneration includes combinations of
salary, annual performance bonus and
deferred share or fund awards, alongside
a range of non-cash benefits. The bonus
deferral arrangement is a key mechanism
for focusing our employees on long-term
performance, aligning their interests with
those of our clients and shareholders. During
2020, we once again offered our UK-based
employees the opportunity to participate
in the Man Group Sharesave Scheme at
the maximum limit and discount allowed
by HMRC.
See pages 90 to 117 for the
Directors’ Remuneration report.
The implementation of Workday in 2019 has
streamlined many of our operational HR and
Finance processes, and in 2020, we have
further optimised the recruitment functionality,
added new dashboards and continued to
enhance our reporting to better support our
staff and talent acquisition requirements.
Man Group’s total headcount, including
contractors and consultants, has moved
from 1,436 at 31 December 2019 to 1,469
at 31 December 2020.
Diversity and inclusion
Man Group’s culture is based on mutual
respect for others, a commitment to
prioritising diversity and inclusion (D&I) and a
zero tolerance approach to discrimination of
any kind. Our senior D&I steering group and
working groups continue to progress our
inclusion agenda under the umbrella of Drive,
our global programme for the firm’s D&I
initiatives. We remain well connected with
peer organisations which gives us the
opportunity to host joint events and
share knowledge. Several of our senior
management team are involved in industry
working groups and committees, giving us
external presence and enabling us to drive
change in the industry, as well as within Man
Group. The Senior Executive Committee
champions this and has incorporated a
systematic review of diverse talent within
their talent and succession planning reviews.
We are delighted to have the following
active staff networks, which consist of both
members and allies, regularly running events
for our workforce:
• BEAM Network (Black Employees At Man)
• FAM Network (Families At Man)
• PRIDE@Man Network (LGBT+)
• WAM Network (Women At Man)
In addition, we also have working groups
focused on NextGen and social mobility,
as well as workstreams exploring how best
to support people with disabilities.
> Testimonial
Deborah Kester
Q: Which of the recent WFH initiatives
and advice from Man Group have
helped you? What else has really
worked for you while you have been
working remotely?
A: I have benefited hugely from using the
Unmind app – there are great relaxation
tools only a few minutes long, so even
though I don’t get much me-time, I have
made good use of them. And I’ve also found
the educational series on well-being a really
worthwhile way to learn more about different
mental health topics.
Q: What has surprised you about
WFH, maybe something that you
have unexpectedly found a struggle
or a challenge?
A: I enjoy being able to pop over to
people’s desks, so I am missing that
contact and it also means I am sitting still
for more of the day than is good for me.
I am trying to do more calls instead of just
WebEx meetings, as it means I can stand
up and walk, sometimes even outside to
enjoy some fresh air!
Global Head of HR
Man Group
58
Man Group plc Annual Report 2020
Staff by gender (at 31 December)1
Staff
2019
29%
2020
29%
Senior Managers
2019
20%
2020
26%
Man Group Board
2019
20%
2020
50%
Female
Male
71%
71%
80%
74%
80%
50%
1 Based on 1,444 FTEs and 214 senior managers.
2020 saw Man Group employees participate
in an active programme of D&I events and
awareness days, primarily focused on the
importance of allyship. The BEAM Network
conducted a series of events, highlighting the
issues of racial injustice following the Black
Lives Matter movement and supporting
organisations fighting for this cause. The
network also ran a successful lunch and learn
programme, featuring role models from the
industry, as well as initiatives to mark Black
History Month in the UK and US. PRIDE@Man
led a series of events for Pride Month 2020
and continued to champion the importance
of allies through their programme for the year.
The WAM Network hosted events to meet
the firm’s new female non-executive directors
and launched a peer mentoring initiative for
its members. The FAM Network continued
its efforts to support parents and those with
caring responsibilities, particularly during this
period of home working and home schooling.
The network held a variety of virtual events,
including a virtual Summer Camp, Halloween
Party and Christmas Party, as well as webinar
sessions on important topics, such as
managing family commitments and financial
planning. All networks came together to
celebrate Global Inclusion Week and to
launch a cross-network book club,
underlining the theme of allyship.
Man Group is supportive of the requirement
for employers in the UK to calculate and
publish their gender pay gap, and we have
again published our figures within our annual
Diversity and Inclusion report. The data still
demonstrates the lower representation of
females in investment management and
senior roles, but we are committed to
addressing this and continue to make
significant efforts to do so. During 2020,
we achieved gender parity on our Board of
Directors (see page 88 for the Nomination
Committee’s diversity policy). In addition,
having signed up to the Women in Finance
Charter in 2018, we achieved our target
of 25% female representation in senior
management during 2020. We recognise that
there is still a long way to go and have now
committed to further targets of 27.5% by the
end of 2022 and 30% by the end of 2024. The
number of women in senior management
roles is one of our non-financial KPIs and
further information on this can be found on
page 23.
While we do not see a gender pay gap across
similar roles, we recognise that this isn’t
enough on its own to attract and retain talent
and we must take further action, through the
initiatives articulated in this section, to foster
better gender diversity, particularly in senior
and front office roles.
___“At Man Group, we want everyone
to know what we stand for, which
is an absolute and unequivocal
commitment to inclusiveness.”
Robyn Grew
Group COO and General Counsel, Man Group
Man Group plc Annual Report 2020
59
Strategic report Our sustainable business model continued
People and culture continued
We have seen ongoing progress in terms
of gender balance within our graduate
recruitment over the past few years, and we
continue to work proactively with schools,
societies and education providers to promote
careers in the financial services sector at a
grassroots level. Our initiatives range from
hosting events to encourage the pipeline of
female talent at the firm and in the broader
industry, to internal mentoring for women
within the firm both on an individual level and
through peer mentoring circles, through to
our partnership with Women Returners to
support those returning to work following
a career break.
Working with Women Returners, we identify
suitable candidates from a high calibre, female
talent pool and provide them with tailored
mentoring to support their transition back into
the workplace. During 2020, we again
recruited returners onto fixed-term contracts
and converted our final 2019 returner into a
permanent hire. This continues to be a
successful means of hiring experienced and
high-quality women for us.
We continue to champion our senior female
role models and this year we saw several of
them being recognised for their work. Robyn
Grew was named winner of the Role Model
of the Year at Investment Week’s Women in
Investment Awards, featured on Financial
News’ Top 100 Women in European Finance
list, alongside Kate Squire, and the HERoes
Role Model List for 2020. Marina Ebrubah
was named on the 2020 Empower 100 Ethnic
Minority Future Leaders List and she was
named winner of the Unsung Hero Award at
Investment Week’s Women in Investment
Awards. Kirsten Achtelstetter and Alison
Hollingshead were announced as finalists
in the WeQual Awards, in the Technology
and Transformation & Strategy categories
respectively, with Alison winning the award
in her category.
As part of Paving the Way, our dedicated
campaign to help encourage a more diverse
pipeline of candidates, both within Man Group
and across the investment industry more
broadly, we have a number of other
partnerships in place that feed into our
broader D&I agenda. In the UK, to increase
our access to candidates from under-
represented backgrounds, we work with SEO
London, an organisation which provides
educational support and career access, and
Bright Network, a career network of bright
students from a range of backgrounds. We
have also signed up to the 100 Black Interns
and 10,000 Black Interns initiatives, and we
continue to focus on commitments made
when we signed up to the Race at Work
Charter in 2020. In the US, our emphasis is
on increasing exposure to technology and
finance for underrepresented communities
and we partner with Codman Academy and
Girls Who Invest. Our partnership with the
King’s College London Mathematics School
– a specialist state-funded school for gifted
mathematicians aged 16-19 – continues to
___“Our partnership with King’s
Maths School has continued to gain
momentum this year, driven by the
enthusiasm of our mentors and
the resilience of the students.
It’s fantastic to help students see
the real-world application of the
maths they learn in class.”
Slavi Marinov
Head of Machine Learning, Man AHL
60
Man Group plc Annual Report 2020
flourish, with Man Group staff members
working closely with the school to offer
valuable support to the pupils and teachers.
The school offers an access route for
students from backgrounds that are often
under-represented in mathematical sciences.
Apprenticeship programmes also continue to
be a way for us to show our commitment to
tackling youth unemployment in London and
broadening our access to young people who
may not otherwise have considered a career
in financial services. We have been hiring
apprentices since 2013 and were delighted
this year to offer extended or permanent
contracts to those apprentices who
completed their programmes during 2020.
Man Group is committed to providing equal
employment opportunities and discrimination
by any individual on the grounds of age,
disability, gender, race, religion, sexual
orientation or educational background is not
tolerated. Full and fair consideration is given
by Man Group to all employment applications,
including from people with disabilities,
considering their aptitudes and abilities.
The firm also ensures that people with
disabilities are fairly treated in respect of
training and career development. For those
who become disabled during their
employment, reasonable adjustments are
made and ongoing support is provided to
enable the individual to continue working.
During 2020, Man Group has become a
corporate member of PurpleSpace, the
world’s only networking and professional
development hub for employees with
disabilities. The organisation serves as a
network and resource group for leaders and
allies from all sectors and trades.
More information about Man Group’s
commitment to D&I can be found in the
Diversity and Inclusion Report, available
at www.man.com/diversity.
Communities
2020 has brought our communities sharply into
focus and the desire to give back has been strong
across the firm, whether this be through giving
time, expertise or financial contributions.
COVID-19 prompted an outpouring of support
and below you will read about the many ways
in which our employees gave back to
their communities.
Man Group’s own charitable funding efforts
are primarily focused on promoting education
and are run primarily through the Man
Charitable Trust (UK), established in 1978,
and the Man US Charitable Foundation,
established in 2019.
Employees at Man Group are also able to
support charitable programmes via their Give
As You Earn (GAYE) accounts or charitable
donation matching and participation this year
was higher than it was in 2019. The UK Trust
provided £26,900 in GAYE funding ‘bonuses’
for all employees with an account to donate to
charities of their choice. Additionally, the Trust
proudly matches independent fundraising by
employees up to the value of £1,000 in the UK
and sponsorships up to $1,500 in the US.
___“The past year has
been unprecedented. Our
charities have had to adjust
and work within constantly
changing restrictions,
further intensifying their
already challenging roles.
We are very proud to
continue to support and
engage with these charities,
providing both financial and
mentoring support.”
Teun Johnston
Chairman of the Man Charitable Trust
and CEO of Man GLG
Our annual festive fundraising activities this
year were expanded to include the US for
the first time. One of our key initiatives was
the Last Hour Appeal, which gave staff an
opportunity to donate the last hour of their
salary in 2020. We raised a total of £16,064
for Brain Tumour Research in the UK and
$7,072 for St Jude Children’s Research
Hospital in the US, both charities chosen
by staff through a voting process.
The Charitable Trust (the Trust)
The Man Charitable Trust (UK) is led by a
group of seven trustees and supports a
diverse range of charities in the UK, with a
focus on improving education through literacy
and numeracy. The charities supported
include: Auditory Verbal UK, Children’s
Literacy Charity, City Gateway, Discover
Children’s Story Centre, First Story, Generating
Genius, Greenhouse Sports, Maths on Toast,
MyBnk, NSPCC, Refugee Support Network,
The Brilliant Club, Tower Hamlets Enterprise
Business Partnership and XLP.
As our business and geographical footprint
continues to grow, we have made a significant
effort to broaden our charitable activities. The
Man US Charitable Foundation is led by six
US-based trustees and is now providing
funding and volunteering opportunities in the
US and supports the following charities: Defy
Ventures, Jeremiah Program, Read to a Child
and S.T.E.P.S.
Although this year has impacted everyone
in different ways, it has been particularly
challenging for the most vulnerable people
in our communities. In many cases, the
charities supported by the Trust have been
at the frontlines and many have adapted or
innovated impressively.
The Trust understands that continuity is
crucial and has funded the same recipients
throughout this period, ensuring that our
support goes above and beyond our financial
contribution. Each charity is assigned a lead
trustee who establishes a relationship and
provides mentoring, supported by our staff
who provide pro bono advice and guidance
as required. Our employees have engaged in
virtual events, fundraisers, training sessions
and board meetings for many of the charities
we work with.
ManKind
This year, ManKind, the firm’s community
volunteering programme, went global,
allowing all employees to take two days’ paid
leave per annum to volunteer. Although we fell
short of our volunteering target as COVID-19
restrictions made in-person volunteering
challenging for many, our staff contributed to
their communities in new and varied ways.
Some of our staff supported their local food
banks and vulnerable neighbours by grocery
shopping and making deliveries in their local
areas, while others participated in litter picking
activities in parks and on beaches. Our staff
also volunteered remotely; many connected
with elderly and isolated neighbours over
weekly phone calls, and others worked with
organisations to share their professional skills
for interview and CV sessions as well as other
administrative tasks.
As part of our global ManKind initiative, we
have assigned ‘Volunteering Captains’ to
champion efforts in each region. They speak
regularly to coordinate global initiatives and
to discuss how we as an organisation can
positively impact our communities. One of our
new initiatives is the ‘Giving Challenge’, which
encourages staff to nominate colleagues
to volunteer their time or make a charitable
donation. This challenge takes place on our
internal #mankind forum on Slack, which
has seen a high level of engagement, with
over half the firm sharing volunteering stories.
In the UK, the Man Charitable Trust gave
grants to the value of £413,980 and in the US,
the Man Charitable US Foundation grants
of $130,000.
Man Group plc Annual Report 2020
61
Strategic report Chair’s governance overview
Shaping and maintaining
a strong corporate culture
Dear Stakeholder
I am pleased to present the Corporate
governance report for the financial
year ended 31 December 2020, my
first year as Chair of Man Group.
This section will enable you to gain
an understanding of the governance
responsibilities and focus of the Board
throughout the past year and its ambitions for
2021. Man Group recognises the importance
of corporate governance and the Board
remains committed to ensuring the highest
standards of governance throughout the
organisation. This year’s report includes
a more comprehensive section on the
Senior Executive Committee, including
the biographies of its members and its key
responsibilities and activities, to reflect the
importance of the role that this committee
plays in the governance of the organisation.
Board and Committee changes
As set out in my earlier statement, there have
been a number of Board changes during
2020. Matthew Lester and Andrew Horton,
who had served on the Board for almost
nine and seven years respectively, stepped
down in the first half of the year. I would
like to thank Matthew and Andrew once
again for their service to the Company. We
welcomed Lucinda Bell and Ceci Kurzman
to the Board at the end of February and
Anne Wade at the end of April, all of whom
have made excellent contributions to Board
discussions and decisions since their
appointment. Lucinda took over as Chair
of the Audit and Risk Committee in May
2020 and Anne will take over from Richard
Berliand as Chair of the Remuneration
Committee following the 2021 AGM.
You will hear more from Lucinda in her report
from the Audit and Risk Committee and
from Anne and Ceci in the Q&A sections
later in this report. Anne reflects on her
induction programme and the benefits
and challenges of this being conducted
remotely, and Ceci provides insights on
her first year as a non-executive director
of a financial services organisation.
62
Man Group plc Annual Report 2020
> Statement of Compliance
The Company is subject to the 2018 UK Corporate Governance Code (the Code), which is publicly available at
www.frc.org.uk. The Company has, throughout the year ended 31 December 2020, applied the principles of,
and complied with the provisions of, the Code except in relation to the following:
Provision 15 of the Code recommends that
additional external appointments for directors should
not be undertaken without the prior approval of the
Board. The Board has established a process for
approving such appointments which it considers to
be effective. The process requires directors to inform
the Chair of any proposed external appointment.
The Chair then assesses the proposed appointment
and either approves it or, where the Chair considers
it appropriate, including in any situation where
there may be a potential conflict with the director’s
role on the Man Group Board, refers the matter
to the full Board for consideration and approval.
A full description of the process is on page 77.
Provision 33 of the Code requires that the
Remuneration Committee (the Committee)
should have delegated responsibility for setting
the remuneration of the Chair. The terms of
reference of the Committee provide that the
Committee has authority to recommend to the
Board but not to approve the remuneration of
the Chair. This is because the Board believes
that in order to provide transparency and
allow the views of all directors, executive and
non-executive, to be taken into account, it is
appropriate for all Board members to provide
input into determining the Chair’s remuneration.
Diversity
The Board recognises the value of diversity,
in its broadest sense. Following the
appointments of Lucinda, Anne and Ceci,
we are pleased to report that we now have
gender parity on our Board. We are also
pleased to report that our Board meets the
ethnic diversity targets set out by the Parker
Review. In recognition of the importance
that the Board places on diversity and the
benefits that having a diverse Board brings,
we have included some additional diversity
data on our Board members on page 63.
We will always be mindful of diversity
when making any future appointments
in line with our Board diversity policy,
which is set out on pages 88 and 89.
People and culture
Perhaps unsurprisingly, the Board has spent
a significant amount of time during 2020 and
the early part of 2021 understanding how
Man Group’s people have coped during these
exceptional and uncertain times, as well as
the initiatives put in place by the management
team to support the health and well-being of
staff. The Board received an update on this at
every Board meeting with additional meetings
held in March and June, at which Luke Ellis
outlined the Company’s initial response to the
pandemic and, once the restrictions had been
eased, set out the plans to enable those who
wished to return to the office to do so and
the measures in place to ensure their safety.
Our Board members with specific employee
engagement responsibilities, Kate Barker and
Zoe Cruz, continued their formal employee
engagement programme, albeit remotely,
and shared the output of this with the Board.
Further details on employee engagement,
including examples of engagement that took
place outside of the formal programme,
are set out on page 74. We intend to review
the current employee engagement model
during 2021 and consider alternative options
to ensure that we are able to engage with
employees in the most effective way.
Technology and remote working
As a result of the COVID-19 pandemic, all
Board and Committee meetings since March
2020 have been held virtually. Whilst we are
keen to meet again in person, we recognise
the importance of technology in helping us to
remain connected with other Board members
and members of the management team.
As was the case for most other companies,
our 2020 AGM was also held virtually which,
once again, highlighted the importance of
technology in enabling us to communicate
effectively with our shareholders and other
stakeholders. We received positive feedback
from shareholders and from the FRC on
our decision to hold a meeting with facilities
to allow shareholders to ask the Board
questions on a real-time basis. Further details
are set out in the stakeholder engagement
section of this report on page 73.
Board experience
International business
Finance
100%
90%
Operational
80%
Risk management
80%
Board diversity
Gender
Ethnicity
Male
Female
50%
50%
Black, Asian and
ethnically diverse
Ethnic majority
20%
80%
Age
Location*
35–44
45–54
55+
10%
20%
70%
US based
UK based
30%
70%
*
In normal circumstances, John Cryan and Anne Wade split their time between the UK and US.
Man Group plc Annual Report 2020
63
The Board has also considered developments
in Man Group’s technology, particularly in
the context of the competitive advantage
that it provides. We focused on investment in
technology as part of the discussions on AHL
TargetRisk and Central Trading and received a
demonstration of Man Group’s ESG analytics
tool which enables clients to incorporate
ESG into their own investment objectives.
Environmental, Social and
Governance (ESG) matters
One of the key areas that the Board
focused on in 2020 was around progress
that had been made by the Company
on its commitment to ESG matters.
We discussed Man Group’s corporate
climate change strategy, the approach to
align the Group’s climate change disclosures
with the Task Force on Climate-related
Financial Disclosures (TCFD) in our Annual
Report and Man Group’s Corporate
Social Responsibility (CSR) booklet
which acts as a single reference point to
enable stakeholders to learn about Man
Group’s broad range of CSR initiatives.
The Responsible Investment leadership
team also presented to the Board on the
performance of Man Group’s ESG strategies
and growth opportunities in this area as well
as the risk management and governance
supporting Man Group’s approach to
responsible investment within its portfolios.
Priorities for 2021
As a result of the pandemic, we decided to
defer the full-day strategy session usually
held in June to such time as we could all
meet again in person. Given the continuing
travel restrictions and government guidance
on in-person meetings, we decided to
allocate time to strategy discussions in
our regular Board meetings in the latter
part of 2020 and have arranged two
dedicated strategy sessions in H1 2021.
I’d like to thank all of our people worldwide
for their outstanding resilience so far during
the pandemic and for going that extra mile.
The achievements of the Company stand
as a testament to what everyone at Man
Group did that was so special during 2020.
John Cryan
Chair
Governance Board of Directors
A balanced
and effective team
Executive director
Non-executive director
Committees key
Nomination (Chair)
N
Remuneration (Chair)
R
Audit and Risk (Chair)
A
Nomination
N
Remuneration
R
Audit and Risk
A
Appointed: January 2015. Chair: January 2020
Areas of expertise and contribution: John has
broad knowledge of international financial markets
gained from experience at leading global financial
institutions and brings significant knowledge of the
regulatory environment in which Man Group operates.
Background and career: John is Chair of XCyber
Group Limited, a cyber intelligence company based
in the UK. John was CEO of Deutsche Bank AG from
July 2016 to April 2018, having previously served as
co-CEO from July 2015. Prior to his appointment
as CEO, John served on the Supervisory Board of
Deutsche Bank AG, as Chair of its Audit Committee
and as a member of its Risk Committee. Prior to
this, he held a number of senior roles at UBS AG
over a career spanning more than 25 years with
the banking group, during which time he served as
Group CFO as well as Chairman and CEO of UBS
AG, EMEA. Following his time at UBS AG, John
was President of Temasek, based in Singapore.
Appointed: September 2016
Areas of expertise and contribution: Luke
has a strong and varied investment management
background and extensive knowledge of Man
Group. Since his appointment as CEO, Luke has
led the Group in diversifying its product range and
increasing its international presence. He provides
strong leadership and plays a critical role in instilling
a positive corporate culture across the organisation.
Background and career: Prior to his appointment
to the Board, Luke served as President of
Man Group from 2012, with responsibility for
the management of Man Group’s investment
businesses. Before this, he was Head and CIO of
Man Group’s Multi-Manager Business and Non-
Executive Chair of GLG’s Multi-Manager activities.
Luke previously served as Managing Director of
FRM from 1998 to 2008, prior to which he was a
Managing Director at J.P. Morgan in London.
Appointed: January 2017
Areas of expertise and contribution: Mark has
significant management, financial and operational
experience gained through his previous roles at
Man Group. This experience, together with his
substantial industry knowledge, has supported the
development of the Group’s strategy and offering
to clients. Since his appointment as CFO, Mark has
brought clear focus on cost through the delivery
of challenging cost saving initiatives, led the work
on our corporate restructure, and has successfully
Appointed: January 2016
Areas of expertise and contribution: Richard
has a wealth of experience in the financial services
sector gained through a number of senior executive
roles. He also brings extensive experience from a
diverse range of international non-executive positions
which gives him a deep understanding of areas
such as the current regulatory environment, risk
management and technology. Richard’s focus on
investor engagement through his role as Chair of
the Remuneration Committee and SID has provided
overseen a number of changes to the structure of the
Group’s Risk function, as well as the implementation
of the Finance and HR system, Workday.
Background and career: Before joining the Board,
Mark served as Co-CEO of Man GLG from 2013
and COO of Man GLG from 2010. Mark joined Man
GLG in 2005 from strategy consulting firm McKinsey,
where he worked across a range of industries.
valuable context to Board decisions, specifically
in relation to remuneration policy and practice.
Background and career: Richard held a number
of senior roles at J.P. Morgan over a 23-year
career at the firm, including Global Head of Prime
Services, Global Head of Cash Equities and
Chair of J.P. Morgan’s Market Structure practice.
Richard is currently Chair of TP ICAP plc.
Appointed: April 2017
Areas of expertise and contribution: Kate has over
30 years’ experience as a senior business economist
with broad-ranging knowledge of monetary and public
policy, and the financial services sector. Kate brings
to Man Group strategic thinking and economic insight
coupled with a strong knowledge of financial markets
and is a valuable adviser and contributor to the Board.
Background and career: Kate was previously a
member of the Bank of England’s Monetary Policy
Committee from 2001 to 2010 and prior to that, she
was Chief Economic Adviser to the Confederation
of British Industry. Her previous roles include Senior
Adviser to Credit Suisse from 2010 to 2016 and
a non-executive director of the Yorkshire Building
Society and Taylor Wimpey plc. Kate was awarded
a CBE in 2005 for services to social housing and
a DBE in 2014 for services to the British economy.
She is currently a member of the Saunderson
House Investment Committee and is Chair of
Trustees for the British Coal Staff Superannuation
Scheme, the Universities Superannuation Scheme
and Chair of the Jersey Fiscal Policy Panel.
John Cryan
Chair
Luke Ellis
Chief Executive Officer (CEO)
Mark Jones
Chief Financial Officer (CFO)
Richard Berliand
Senior Independent Director (SID)
Dame Katharine (Kate) Barker
Independent non-executive director
64
Man Group plc Annual Report 2020
Lucinda Bell
Independent non-executive director
Zoe Cruz
Independent non-executive director
Cecelia (Ceci) Kurzman
Independent non-executive director
Dev Sanyal
Independent non-executive director
Anne Wade
Independent non-executive director
Appointed: February 2020
Areas of expertise and contribution: Lucinda has
extensive financial expertise as well as experience
in Environmental, Social and Governance matters.
She has significant listed company experience
acquired through her role as CFO at The British
Land Company PLC. She also has solid experience
as an Audit Committee member and Chair.
Background and career: Lucinda served as CFO
of The British Land Company PLC from 2011 to 2018,
where she also led on sustainability. Prior to that,
Appointed: June 2018
Areas of expertise and contribution: With
her senior-level experience within global financial
institutions, broad understanding of the macro
context for investment management, and
her strong US perspective, Zoe is a valuable
contributor to the development of Man Group’s
business strategy and risk management.
Background and career: Zoe held various senior
roles during a 25-year career at Morgan Stanley,
including serving as Co-President of the firm between
Appointed: February 2020
Areas of expertise and contribution: Ceci has
gained substantial experience within marketing,
brand management and technology, specifically
digital media and digital endorsement, throughout
her career. She has significant experience
with company launches, funding growth stage
businesses and strong entrepreneurial skills.
Background and career: Ceci founded and is
currently the President of Nexus Management Group.
Prior to this she spent eight years at Sony as Vice
Appointed: December 2013
Areas of expertise and contribution: Dev has
extensive knowledge of capital markets, asset and
risk management, trading and foreign exchange
gained from his role as BP Group Treasurer and
Chair of BP Investment Management Ltd. With
broad international experience and wide ranging
operational expertise, he is able to contribute to
the development and execution of Man Group’s
business strategy and global relationships.
Appointed: April 2020
Areas of expertise and contribution: Anne
brings over two decades of experience in investment
management to the Board, including traditional fund
management as well as experience in the areas
of social finance, ESG and impact investment.
Background and career: Anne held a number of
senior roles in research and equity investment during
her 17-year career at Capital International, including
Senior Vice President and Director. Anne is currently
a non-executive director of Summit Materials Inc;
she held a range of finance and tax roles at British
Land. Lucinda previously served as a non-executive
director and Chair of the Audit Committee at Rotork
plc from 2014 to 2020. Lucinda is currently a non-
executive director and Chair of the Audit Committee
at Derwent London plc, and a non-executive director
of Crest Nicholson Holdings plc. She is national
Trustee and Treasurer of Citizens Advice, where
she also chairs the Audit and Risk Committee.
2005 and 2007 and Global Head of Fixed Income,
Foreign Exchange and Commodities from 2001
until 2005. Following her time at Morgan Stanley,
Zoe founded Voras Capital Management in 2009
and ran the firm as CEO until 2013. She was also a
non-executive director of Old Mutual plc from 2014
until its managed separation completed in 2018. Zoe
founded EOZ Global, a single family office based in
New York, and currently serves as its CEO. She is
also CEO and Founder of Menai Financial Group.
President of Global Marketing for Epic Records
and at Arista Records where she led marketing
and artist development functions. Ceci currently
serves as a non-executive director on the Board
of Revlon where she is also a member of the Audit
and Compensation Committees. She is also a
non-executive director of Warner Music Group.
Background and career: Dev has held a
number of senior financial and line management
positions with BP in a global career spanning 30
years. Dev is currently Executive Vice President
of Gas and Low Carbon Energy and a member
of the Group Executive Committee at BP.
a Partner in Leaders’ Quest; and a Trustee of both
Big Society Capital Ltd and The Heron Foundation.
She also served as a non-executive director and
Chair of the Remuneration Committee on the Board
of John Laing Group plc until January 2021.
Man Group plc Annual Report 2020
65
Governance
Senior Executive Committee
Managing the business,
implementing strategy
Key activities of the Senior Executive Committee during 2020
In normal circumstances, the Senior Executive
Committee (Senior ExCo) meets on a weekly basis to
maintain its broad operational oversight of the
business, discuss top-level strategic and risk issues
and develop proposals for Board review, which is
supplemented by informal interaction to share and
test views. However, in 2020, the Senior ExCo met on
a daily basis during the early stages of the pandemic
to discuss its ongoing response and the plans in place
to support the well-being of Man Group’s employees.
In addition to these regular management meetings,
the Senior ExCo members hold formal quarterly
governance and business oversight meetings. The
key areas of discussion and focus at the meetings
held in 2020 are set out below:
• Noted key decisions made at regular meetings,
including:
– Key themes arising from the 2020 staff survey
– Plans around the co-location of staff based in
London to Riverbank House in 2021
– Closures/re-opening of offices globally,
taking account of local government advice
– Succession planning
– Leadership changes within business units
– Establishment of Man Group’s Quantitative
Alpha Research Lab in Bulgaria
– Creation of Man Data Science
• Considered areas of discussion at, and actions
arising from, Man Group plc Board and
Committee meetings and agreed plans to
address these actions
• Reviewed and discussed the output of quarterly
business presentations from Man GLG, Man AHL,
Man FRM/Man Solutions, Sales, Central Trading
and Alpha Technology
• Reviewed output of ExCo offsite held in early 2020
• Received updates on and discussed the Group’s
financial performance
• Received People and Culture updates and
discussed issues relating to HR, Talent, and
Diversity and Inclusion
• Considered matters relevant to each of the ‘UK/
EEA’ and ‘Rest of World’ sub-groups
Background and career: Robyn is Group COO and
General Counsel of Man Group. She was previously
Man Group’s Chief Administrative Officer and, before
that, was Global Head of Legal and Compliance having
previously been Man GLG’s Chief Compliance Officer.
Key areas of responsibility: Infrastructure,
which covers: Operations, Core Technology,
Compliance, Legal, Human Resources, Talent,
Business Operational Risk and Resilience,
Financial Crime and Corporate Real Estate.
Before joining Man GLG in 2010, Robyn held
senior positions at Barclays Capital and, prior
to that, at Lehman Brothers and LIFFE.
Background and career: Shanta is President of Man
Group. He was previously CEO of Man Numeric and,
before that, was Head of Research at Man Numeric.
Key areas of responsibility: Man GLG, Man FRM/
Man Solutions, Man Data Science and Man Group’s
Quantitative Alpha Research Lab in Bulgaria.
Prior to joining Man Numeric in 1999, Shanta
was an electronic commerce technology analyst
at Forrester Research, a Massachusetts-based
market research firm. He also helped to start an
electronic commerce company which focused
on the analysis of online buying behaviour.
Background and career: Sandy is Chief Investment
Officer of Man Group. He is also a member of the Man
Group Responsible Investment Committee. He was
previously CEO of Man AHL from 2013 to 2017, and
CIO of Man Systematic Strategies from 2010 to 2013.
Before joining Man Group in 2007, Sandy spent 15
years at Goldman Sachs where he was a Managing
Director in charge of the Fundamental Strategy
Group. He also ran Equity Derivatives Research
at Goldman Sachs in London and New York.
Sandy is a co-inventor of the VIX index and is a director
of MSCI Inc.
Key areas of responsibility: Man AHL, Man
Numeric, Central Trading and Alpha Technology.
Luke Ellis
CEO
Mark Jones
CFO
Biographies for the CEO and CFO are set out in the
Board of Directors section on page 64.
Robyn Grew
Group COO and General Counsel
Shanta Puchtler
President
Sandy Rattray
CIO
66
Man Group plc Annual Report 2020
Corporate governance
Governance
structure
Key
Flow of information
to the Board
Delegated authority
from the Board
Role of the Board
The Board’s core role is to act in the best interests
and promote the long-term success of the Company
for the benefit of its members, with due regard to the
interests of other stakeholders.
This requires it to:
• Determine and review business strategy and Man
Group’s appetite for risk
• Monitor management performance in delivering
against that strategy
• Ensure that risk management measures and
internal controls are appropriate and effective
Board
• Oversee and monitor the embedding of and
adherence to the Company’s business values
• Ensure that the Company’s financial structure,
resources, talent and culture will support long-term
growth
In discharging this role, the Board also has regard to
the interests of a wide range of stakeholders, including
employees, customers, suppliers and broader
communities, in order to build mutual trust and support
the long-term sustainability of the business.
Matters reserved for the Board
To discharge its role, the Board has reserved certain
key areas of decision making including business
strategy, risk appetite, material acquisitions and
disposals, capital structure and funding, financial
reporting and dividend policy. A full list of the Board’s
reserved matters is available on our website at
www.man.com/corporate-governance.
Audit and Risk Committee
• Reviews the integrity of the
Company’s financial reports
and statements, and
recommends their approval to
the Board
• Recommends to the Board the
appointment of the external
auditor and reviews their
effectiveness and
independence
• Approves the Internal Audit
plan and reviews the
effectiveness of the Internal
Audit function and
management’s response to
their findings
• Reviews and reports to the
Board on the effectiveness of
Man Group’s risk management
and internal controls framework
Go to
page 80.
Board Committees*
Remuneration Committee
• Determines and recommends
to the Board the principles and
structure of the Directors’
Remuneration Policy
• Approves the total annual
compensation for individual
executive directors including
salary, variable cash and
deferred bonus, and LTIP
awards
• Approves the quantum of the
Company’s annual variable
compensation pool and deferral
policies
• Approves the total annual
compensation for Executive
Committee members and
Remuneration Code staff
• Reviews feedback from
shareholders and oversees the
Company’s engagement on
directors’ remuneration and
reporting
Go to
page 90.
Nomination Committee
• Keeps the Board’s size,
structure, composition and
diversity under review in
response to business needs
and opportunities
• Considers the skills, experience
and knowledge required for
Board appointments
• Conducts the search and
selection process for new
directors, taking advice from
independent search consultants
• Recommends to the Board
preferred candidates for Board
appointment
• Reviews Board and senior
management development and
succession planning to ensure
continuity of resource
Go to
page 86.
* Full Committee terms of reference, which are reviewed and approved by the Board on an annual basis, can be found on our
website. Details of the work of the Committees during the year are given in the separate Committee reports in this Annual Report.
Senior Executive Committee
The CEO is assisted in the day-to-day management of the firm by the Senior ExCo, from which the Board
receives updates at each meeting through the CEO report. The Senior ExCo is responsible for implementing
the Company’s global business strategy and ensuring the strategy is appropriately disseminated and actioned
accordingly within the Company’s two distinct sub-groups in line with the delegated authorities framework.
Further details on the Senior ExCo are available on the opposite page.
Board delegation
to the CEO
All business decisions and
activities which are not
reserved for the Board
and its committees are
delegated to Luke Ellis as
CEO.
CEO
CEO’s operating
authorities and
procedures
To help manage and
control the business on
a day-to-day basis, the
CEO has implemented a
framework of delegated
authorities and
procedures which
applies throughout
the firm. This framework
sets out authority levels
and controls in respect
of material business
change, the development
of Man Group’s product
range, non-budgeted
expenditure, recruitment
and compensation, legal
agreements, financial
guarantees and use
of the Company’s
balance sheet.
Man Group plc Annual Report 2020
67
Governance Corporate governance continued
Board roles
and responsibilities
Chair
• Leads the Board, sets its
agenda and ensures it
discharges its role effectively
• Supports and constructively
challenges the CEO,
promotes effective
relationships between
executive and non-executive
Board members, and creates
a culture of open debate
• Leads, with the support of
the Nomination Committee,
effective Board succession
planning and the search for
and appointment of new
directors, taking account of
the need for the development
of Board skills, experience
and diversity
• Ensures that the Board
maintains effective
engagement with
shareholders and takes
account of the interests
of all stakeholders in its
decision making
Chief Executive Officer
• Has responsibility for the
day-to-day management of the
business with appropriate
delegated authorities, risk
management and internal
controls
• Develops, for Board approval,
business strategy and
management’s delivery
against it
• Leads the Senior Executive
Committee (see page 66),
which is responsible for
developing and implementing
the Group’s strategy
• Communicates a shared
purpose and set of
business values and builds
management talent
• Works closely with the Chair
and leverages the knowledge
of non-executive Board
members
• Maintains an effective dialogue
with shareholders on the
Company’s strategy and
performance
Chief Financial Officer
• Manages the allocation and
maintenance of the Group’s
capital, funding and liquidity in
accordance with regulatory
requirements
• Has responsibility for the
preparation and integrity of the
Group’s financial information
and its reporting
• Leads the development of
annual budgets and Medium
Term Plans for Board approval
• Has responsibility for the
Group’s risk management
within the Board’s risk appetite
statements
• Maintains an effective dialogue
with shareholders and
stakeholders on the
performance and financial
structure of the Group
• Has responsibility for and leads
the Group’s corporate
development strategy,
including merger and
acquisition activity
Board key roles
Senior Independent
Director
• Maintains a broad overview of
the work of the Board and its
Committees
• Provides a sounding board for,
and advice to, the Chair on
Board matters including
development and succession
planning
• Acts as a point of contact for
communications with the
non-executive directors
as required
• Leads the annual performance
evaluation of the Chair
• Leads the search for the
appointment of a new Chair
• Engages with shareholders
68
Man Group plc Annual Report 2020
Board key roles
Board tenure
Board composition
0-3 years 40%
40%
3-6 years
20%
6+ years
Chair
Executive directors
Independent
non-executive directors 70%
10%
20%
Non-executive directors
• Contribute and provide
constructive challenge to the
development of business
strategy
• Contribute to the identification
of principal business risks and
the determination of risk
appetite
• Monitor and challenge
management performance in
delivering business strategy
and objectives
• Monitor and challenge the
effectiveness of the internal
control and risk management
framework
• Monitor the Company’s
compliance with the regulatory
principles and requirements
impacting asset management
and distribution
• Review and challenge, prior to
publication, the Company’s
financial statements and
announcements
• Keep Board composition and
succession planning under
review in light of changing
business needs and
recommend any changes to
be considered
Company Secretary
• Advises the Board on
corporate governance
matters, ensuring good
governance practices
• Supports the Board and
Committees in discharging
their respective roles
• Maintains the books and
records of the Company and
prepares minutes of Board
and Committee meetings
• Facilitates the induction, and
ongoing training and
professional development, of
non-executive directors to
support them in carrying out
their responsibilities
• Monitors and ensures
compliance with company
law, Listing Rules, Disclosure
Guidance and Transparency
Rules and the Market Abuse
Regulation
• Organises Man Group plc’s
AGM and other shareholder
meetings
• Acts as the main point of
contact for retail
shareholders
Elizabeth Woods
Company Secretary
Elizabeth joined Man Group in
February 2014 as Senior Assistant
Company Secretary. She was
appointed Deputy Company
Secretary in March 2017 and became
Company Secretary in August 2019.
Before joining Man Group, Elizabeth
held company secretarial roles
at PwC Legal and Capita, where
she was responsible for delivering
company secretarial support and
corporate governance advice to a
portfolio of clients including FTSE
and AIM listed companies, and at
Mobeus Equity Partners where
she was Company Secretary of a
number of Venture Capital Trusts.
> Board meeting attendance
The table below shows Board meeting attendance in 2020:
Board member
John Cryan
Kate Barker
Lucinda Bell
Richard Berliand
Zoe Cruz
Luke Ellis
Attendance
8/8
8/8
7/7
8/8
8/8
8/8
Board member
Andrew Horton
Mark Jones1
Ceci Kurzman
Matthew Lester
Dev Sanyal
Anne Wade
Attendance
3/3
7/8
7/7
1/1
8/8
6/6
1 Mark Jones was not able to attend the Board meeting held in June due to the birth of his
child. This meeting was held at short notice and was convened to discuss plans to enable
employees to return to the office. Mark was heavily involved in developing these plans
along with the rest of the Senior ExCo. He highlighted and discussed any Finance and
Risk related points with the Chair and CEO ahead of the meeting and was responsible for
ensuring any relevant follow-up actions were addressed and implemented.
> Other information
Certain additional information in relation to the Company’s share
capital, the powers of the directors and amendments to the Articles
of Association that is required to be disclosed in the Corporate
Governance report pursuant to D.T.R 7.2.6 may be found in the
Directors’ report on pages 118 to 119.
Man Group plc Annual Report 2020
69
Governance Corporate governance continued
Board activities
Link to strategy
1 Innovative investment strategies
2 Strong client relationships
3 Efficient and effective operations
4 Returns to shareholders
Relevant stakeholder group
S Shareholders
C Clients
E Employees
C Communities and the Environment
B Business Partners and Suppliers
> Activity
> Outcomes
> Strategy/stakeholders
Strategy and Business Development
Discussed approach to strategy and
considered topics for 2021 strategy sessions
Considered potential topics for discussion at 2021 strategy sessions, reviewed
the current strategy in the context of the industry environment, discussed
associated key risks and debated high-level alternative strategic options.
1 2 3 4
S C E C B
Assessed COVID-19 impact on business model
Discussed response to the pandemic including business continuity plans,
transition to remote working, support in place for employees, Company
performance and changes in the market environment. Reviewed Man Group’s
COVID-19 Return to Office plan against government issued guidance and
considered operational impact.
2 3
S C E C B
Considered investor engagement approach
Considered possible changes to the existing investor engagement approach
and messaging, taking account of market-wide comparatives and broker
feedback.
4
S
Discussed ESG and RI strategies and
initiatives
Reviewed climate change strategy, progress on climate-related disclosures
and targets, and integration of climate factors into emerging risk tracking.
Further details can be found within our
‘Responsible Investment’ section on pages 48 to
51 and our ‘Environmental Impact’ section on
pages 52 to 54.
Reviewed Man Group’s Sales function
Discussed the increasing importance of RI to institutional and other investors,
Man Group’s RI strategy and fund framework, performance of ESG strategies
and growth opportunities and Man Group’s proxy voting framework.
Received a demonstration of Man Group’s ESG analytics tool which analyses
and compares ESG data at a portfolio, company and index level and
discussed client feedback on the tool.
Reviewed and discussed the Sales strategy and client and product
prioritisation and engagement processes. Considered areas of focus for 2021
and beyond through promotion of newly established strategies and launch of
new products.
Reviewed AHL TargetRisk programme
Discussed commercial opportunities and potential growth in AHL TargetRisk
strategies following its strong 2019 performance.
1 2 3 4
S C C
1 2 3 4
C
1 2 3 4
C
Reviewed Central Trading programme
Discussed progress to date, potential for further possible trading-related cost
savings, opportunities resulting from the changing market environment and
areas for additional investment.
1 2 3
C
Risk Management
Analysed Man Group’s emerging and
principal risks
Further details are on page 33-37.
Assessed likelihood and impact of emerging risks and changes implemented
following Board feedback. Discussed, challenged and approved the principal
risks and risk management disclosures in the annual and interim reports.
1 2 3 4
S C E C B
Reviewed Risk Appetite and Governance
Framework
Approved revised Risk Appetite and Governance Framework which had been
adjusted, in response to Board feedback, to provide a greater focus on
qualitative risk appetite statements.
1 2 3 4
S C E C B
Assessed effectiveness of risk management
and internal controls
Further details are on page 33.
Reviewed and challenged Man Group’s systems of risk management and
internal controls and concluded that these were effective.
1 2 3 4
S C E C B
Reviewed COVID-19 risk management
processes
Received updates from the Audit and Risk Committee Chair on Man Group’s
response to COVID-19 and areas of perceived increased risk due to the
remote working environment.
1 2 3 4
S C E C B
Discussed IBOR transition programme
Received updates on Man Group’s IBOR Transition Programme, considered
industry-wide transition challenges and discussed progress made in delivering
the project ahead of the 31 December 2021 deadline.
2 3
S C B
Considered risk impact and outcomes of
possible ‘Hard Brexit’
Endorsed Hard Brexit risk mitigation plans ahead of the end of the Brexit
transition period, discussed possible impacts and risks to the financial
services industry, including liquidity and market infrastructure access and
actions taken by management to mitigate these risks.
1 2 3 4
S C E C B
70
Man Group plc Annual Report 2020
Board activities
Innovative investment strategies 26%
Strong client relationships
17%
Efficient and effective operations 21%
18%
Returns to shareholders
18%
Governance and other
> Activity
> Outcomes
> Strategy/stakeholders
Financial Performance and Returns to Shareholders
Monitored performance and capital position
Reviewed revenue and profit forecasts against budget, KPIs and strategic
priorities and considered performance against market consensus estimates.
3 4
Approved Revolving Credit Facility (RCF)
extension
Discussed and approved extension to maturity date of the Group’s $500
million RCF, considering it to be in the best interests of the Company.
S
3
B
Approved 2021 Budget and 2021-23 Medium
Term Plan (MTP)
Approved the 2021 Budget and 2021-23 MTP having reviewed the underlying
assumptions for net flows, performance, revenue margins and costs.
3 4
S C E C B
Recommended and approved final and
interim dividends
Recommended 2019 final dividend to shareholders which was subsequently
approved at the 2020 AGM and approved payment of 2020 interim dividend.
Approved $100m share buyback programme
Approved the launch of a further $100 million share buyback programme
having assessed the merits of using any projected surplus capital for further
capital return to shareholders as opposed to its retention for potential
value-adding acquisitions.
Approved change to financial KPI
Further details are on page 22.
Scrutinised and approved proposal to change net flows KPI to relative net
flows for 2020 to reflect benchmark performance against industry peers and
better represent performance that management is able to control.
Approved change to dividend policy
Further details are on pages 7 and 170.
People and Culture
Assessed and monitored culture
Considered, challenged and approved a move to a progressive dividend
policy in respect of the 2020 final dividend and all future dividends.
Assessed and monitored Man Group’s culture through regular people and
culture updates from the CEO, dedicated Board meetings focused on
people-related matters, consideration of themes arising from the employee
engagement programme and the results of the 2020 employee survey
(see below for further details).
Discussed employee engagement
Further details are on page 74.
Received updates on themes arising from employee engagement programme
as well as management’s monitoring of culture and employee well-being in the
COVID-19 environment. Endorsed management efforts to continue to deliver
its DRIVE and BEAM initiatives remotely.
Analysed 2020 employee survey results
Further details are on page 74.
Discussed output of 2020 employee survey which included specific questions
on senior management communications and leadership around the
pandemic. Assessed progress made on themes identified in the 2019 survey.
4
S
4
S
3 4
S
4
S
3
E
3
E
3
E
Approved appointment of non-executive
directors
Discussed and approved appointments of Lucinda Bell, Anne Wade and Ceci
Kurzman as non-executive directors, recognising the new perspectives they
bring to the Board to assist it in delivering on its role in shaping a strong
corporate culture.
1 2 3 4
S C E C B
Considered Corporate Social Responsibility
(CSR) initiatives
Reviewed and provided feedback on Man Group’s CSR booklet. Approved
continued sponsorship of King’s Maths School and funding to Man Group plc
Charitable Trust.
Approved Employee Sharesave Offer 2020
The Board, considering it to be an effective way of rewarding and incentivising
employees over the long term, approved the offer of the 2020 Sharesave
Scheme.
3
E C
3 4
S E
For more information on our strategy see
pages 14 and 15.
For more information on our stakeholder
groups see pages 72 to 75.
Man Group plc Annual Report 2020
71
Governance Corporate governance continued
Stakeholder engagement
Engaging with stakeholders is crucial to
Man Group’s business and enables the
Board to make better informed decisions
for the long-term benefit of the Company
and its stakeholders.
The Board seeks to engage with stakeholders in an open, constructive
and transparent manner and makes a conscious effort to ensure
stakeholder views are considered as part of its decision-making process.
Our s.172(1) statement on pages 42 and 43 identifies how the Board
has regarded the interests of stakeholders when making key decisions,
including any long-term implications and conflicting stakeholder
requirements. This section seeks to add to our s.172(1) statement by
identifying how the Board has engaged with each stakeholder group
and summarises the outcomes of such engagement efforts.
Shareholders
Business
Partners and
Suppliers
Clients
Our
stakeholders
Communities
and the
Environment
Employees
___ “The Board seeks to engage
with stakeholders in an open,
constructive and transparent
manner and makes a conscious
effort to ensure stakeholder
views are considered as part of
its decision-making process.”
72
Man Group plc Annual Report 2020
Shareholders
We are committed to proactive and ongoing engagement with
shareholders and believe it is imperative to provide our shareholders
with reliable, timely and transparent information.
How the Board engaged and responded
• As a result of the UK Government measures relating to public
gatherings, it was not possible to hold our 2020 Annual General
Meeting (AGM) with shareholders attending in person as originally
planned. The Board was, however, keen for shareholders to directly
participate and therefore decided to hold the AGM via a live
webcast. This gave shareholders the opportunity to listen to the
AGM and ask the Board questions on a real-time basis. Further
details on the 2020 AGM are set out below.
> 2020 AGM
COVID-19 prevented the Company from holding its
usual in-person AGM in May 2020. The Board
nonetheless felt that it was important to give
shareholders the opportunity to ask questions of the
directors in real time, particularly given the pandemic.
The Company released an announcement to the market
in April 2020 updating shareholders on the revised
arrangements for the AGM.
The Company held the AGM with the CFO and Company
Secretary constituting the formal shareholder quorum at the
Company’s offices with all other directors attending virtually.
Shareholders were able to watch the meeting via video
conferencing, received live presentations from the Chair,
CEO and CFO and were able to submit questions through
the ‘chat’ function.
Both the shareholders who joined, and the Financial Reporting
Council (FRC) thereafter, commended the Company on its
efforts to engage with its shareholders and deliver a seamless
meeting in challenging circumstances. In the interests of the
safety of our shareholders, employees and wider society, the
Company intends to hold the 2021 AGM in a similar format to
last year’s meeting.
• In the second half of 2020, Richard Berliand, as Chair of the
Remuneration Committee, consulted extensively with some of the
Company’s largest shareholders on a number of proposed changes
to the Directors’ Remuneration Policy. Following this engagement
process, the Remuneration Committee and Board decided to roll
forward the existing policy for a further 12 months whilst also
aligning the post-employment shareholding requirement for our
executive directors with the Investment Association’s principles.
Further details are set out on pages 111 to 117.
• The Board considered and approved an asset reunification
programme conducted by the Company’s registrar, EQ, which
aimed to reunify shareholders with their Man Group plc shares,
together with any unclaimed dividends attached to those shares.
As a result of this programme, 187,663 shares and c.£304k worth
of dividends were returned to shareholders. Further details can be
found on page 43.
• The Company has in place an Investor Relations (IR) programme
through which the Head of IR, CEO and CFO maintain a continuous
dialogue with investors on performance and strategic objectives.
Fifteen events were held throughout the year and from March
onwards, all meetings and roadshows were held virtually.
• The Board received regular IR updates on changes in Man Group’s
shareholder base and key themes on shareholder sentiment. In
addition, the Head of IR attended the Board meeting in July 2020 to
discuss particular areas of investor interest including Man Group’s
response to COVID-19, performance, drivers of future growth, cost
base and capital return policy.
Clients
Our clients are at the heart of everything that we do. Regular
engagement with our clients enables us to respond to their
evolving needs and supports us in cultivating and maintaining
long-term partnerships.
How the Board engaged and responded
• The Board has delegated engagement with clients to the senior
management team, with input from the executives where
appropriate. The Board received regular updates on key client
relationships via the CEO report presented at each Board meeting.
• The Board reviewed and discussed with the Sales team the analysis
of Man Group’s client universe, the focusing of resource on key
target relationships, the strategy to increase the value of assets held
by clients invested in more than one Man Group product and the
actions in place to protect assets perceived to be most at risk.
• The Board received an update from the Responsible Investment (RI)
leadership team on Man Group’s approach to RI within its portfolios
and received a demonstration of the ESG analytics tool which
enables clients to analyse and compare ESG data at a portfolio,
company and index level.
• The Board discussed the success of virtual client briefings and Q&A
sessions hosted by the CIO and portfolio managers which aimed to
build relationships with clients and provide updates on how Man
Group is navigating key market trends.
Man Group plc Annual Report 2020
73
Governance Corporate governance continued
Stakeholder engagement continued
Employees
Our employees are integral to the success of our organisation.
Maintaining an engaged and motivated workforce allows us to
continue to deliver a high level of service to our clients. Listening to
their views enables us to continually evolve and remain an employer of
choice. This in turn positions us to recruit and retain the best talent.
The Board has appointed Kate Barker and Zoe Cruz as the designated
non-executive directors responsible for leading the employee
engagement programme.
How the Board engaged and responded
• During 2020, the Board received updates from Kate Barker and Zoe
Cruz on the key themes and trends arising from the Board’s
engagement with employees (further details below). The Board
discussed the existing engagement model and agreed to formally
review this, together with alternative options in 2021 to ensure that it
is able to engage with employees in the most effective way.
• A number of Board members (John Cryan, Lucinda Bell, Anne
Wade and Ceci Kurzman) hosted virtual sessions with
employees where they discussed their career history and advice
they had received in their various roles and answered a range of
questions raised by employees.
• The Board considered updates on Man Group’s people at every
meeting and two additional Board meetings were held during the
year to discuss the support available to employees during the
pandemic as well as the plans in place to enable those who
wished to return to Man Group offices to do so safely.
• The Board considered the output of the 2020 employee survey
which included specific questions on senior management
communications and leadership around the pandemic and
assessed progress made on the themes identified in the 2019
employee survey.
> Employee engagement
During 2019, Kate Barker and Zoe Cruz conducted a series
of discussions with employees from various business units
across the Group. As a result of this engagement
programme, the following areas were identified as
requiring further focus in 2020:
• Increased communication from the Board on strategy
and growth
• Greater consideration by the Board on diversity within
the workforce
• Enhanced communications with regional offices
How we addressed these themes during 2020
• Members of the Board, including the Chair, held Q&A/panel
sessions with employees during the year, providing detail on
their roles, as well as how their career paths had developed.
The sessions were facilitated through Man Group’s DRIVE and
Women at Man (WAM) initiatives.
• The Chair met with Executive Committee members individually
to discuss how their teams were responding to the remote
working environment and any issues or challenges they were
facing. He also met with various individuals when he visited the
Company’s US offices in early 2020.
• In recognition of the importance of the US business, the Board
has committed to holding at least one Board meeting each year
at the Company’s US offices. Unfortunately, as a result of the
pandemic, the Board was not able to meet in the US during
2020 but intends to do so in 2021 if the circumstances allow.
• Employees were encouraged to provide their views through the
dedicated employee engagement email address.
• Weekly emails were sent by Luke Ellis updating employees
across the globe on the market environment, business
performance and personal employee news. These updates
were very well received, and many employees highlighted this in
their response to the employee survey.
74
Man Group plc Annual Report 2020
• The Board usually has the opportunity each year to meet with
Executive Committee members over dinner. Despite not being
able to do so in 2020, the Board is keen to reintroduce these
informal meetings at such time as the circumstances allow, to
enable Board members to continue to build relationships with
the senior management team.
Engagement during 2020 and our response
In 2020, Zoe and Kate continued to lead the employee
engagement programme and held virtual sessions with individuals
from across the business. As well as seeking feedback on the
themes that were identified in the 2019 engagement programme,
Zoe and Kate were keen to hear from employees on their
experience of working remotely during the pandemic. The
following themes were reported to and discussed by the Board:
• Strong and supportive culture across the organisation.
• Transition to remote working, support and flexibility had
been excellent.
• Well-being initiatives such as the ‘virtual coffee club’ and
global team quizzes had been well received by employees.
• Cross-team collaboration had been strong despite the
remote working environment.
• Supportive of the agile working model becoming the
‘new normal’.
Communities and the Environment
We believe we have a responsibility to contribute to the local
communities in which we work.
Business Partners and Suppliers
Good relations with business partners and suppliers are essential to
Man Group’s day-to-day functioning.
How the Board engaged and responded
• The Board received updates on the activities undertaken by the UK
and US Charitable Trusts and agreed to commit further funding to
these. It also received a specific update on Man Group’s
sponsorship of King’s College London Maths School and the
progress made following the donation approved by the Board the
previous year.
• The Board approved a share forfeiture programme (further details
are set out on page 43) and agreed that the net proceeds from the
exercise should be used to fund the Man Group plc Charitable Trust.
• The Board was updated on various community-wide initiatives
introduced as a result of the pandemic including the opportunity
provided to every employee to expense a £500 donation to their
local foodbank in recognition of the challenges around food
shortages experienced by many in the community.
• The Board considered and discussed Man Group’s climate change
strategy and reviewed and provided feedback on Man Group’s
Corporate Social Responsibility booklet which can be found at
www.man.com.
How the Board engaged and responded
• The Board has delegated direct engagement and oversight of
suppliers to senior management. Our Service Provider Management
Policy governs our approach on how we engage with suppliers.
For further information please see page 46.
• The Board, through its oversight of the Audit and Risk Committee,
is kept updated of any key supplier risks.
• A dedicated cyber security team oversees and assesses our
suppliers to ensure they are compliant with the Group’s security
requirements. Any material issues or risks are highlighted to
senior management and fed back to the Board, via the Audit
and Risk Committee.
• The Board reviewed Man Group’s engagement with its broader
supply chain as part of its annual approval of the Modern Slavery
Transparency Statement.
Man Group plc Annual Report 2020
75
Governance Corporate governance continued
Board effectiveness
Board leadership
Oversight, challenge and decision making
During the year, the Board held eight formal meetings, seven of which
were held virtually as a result of the COVID-19 mandated restrictions.
Of the eight meetings that were held, two were convened at short
notice specifically to consider matters relating to the pandemic. The
first of these, which was held in March, focused on the Company’s
initial response to the pandemic including the transition to remote
working, the support in place for employees, together with an update
on the Company’s performance and the changes in the market
environment. The second of these meetings was held in June, at
which time restrictions had eased, and Luke Ellis and the Senior
Executive team set out the plans that were being devised to enable
those employees who wished to return to the office to do so safely,
taking account of issued government guidance. Attendance at these
Board meetings is set out on page 69 and Committee meeting
attendance is set out in the separate Committee reports.
The Board invites the Man Group President, the CIO and the Group
COO and General Counsel to attend Board meetings in order to give
further detail and management perspective on matters discussed;
however, they do not directly participate in any decision making.
The Board meets regularly with, and seeks information from, senior
management, subject matter experts and other key teams, enabling
Board members to build their understanding of Man Group as well as
sector issues and opportunities.
The Board considers the impact on its key stakeholders as part of its
decision-making process. Further details on these groups, together
with examples of how their views have been taken into account in
Board decisions, are set out on pages 70 and 71 and in the
Stakeholder Engagement section on pages 72 to 75.
Board meetings are conducted on the basis that all written materials
submitted are thoroughly reviewed in advance in order to maximise the
opportunity for discussion at meetings. The non-executive directors
challenge proposals and approaches presented by management and
draw on their experience to suggest alternative approaches or ideas
that management may not have considered. Board meetings are
structured in a manner that allows all views to be expressed and heard.
Diversity
The Board is a highly skilled, committed and diverse group of
individuals who are focused on understanding its strengths, its
challenges and contributing to its success. The Board biographies on
pages 64 and 65 and the analysis of the Board’s composition on
pages 63 and 69 give an overview of the breadth and depth of talent
and experience on Man Group’s Board in terms of business career,
background, skills and global exposure. The non-executive directors
bring wide-ranging contributions and diverse perspectives to Board
review and decision making from their current executive or portfolio
careers. A mix of short and long tenure delivers fresh outlooks and
challenge, complemented by a longer-term understanding of the
business and its people. In order to demonstrate the diverse range of
experience and expertise on the Board, Ceci Kurzman, one of our new
directors, reflects on her first year as a non-executive director of a
financial services organisation in the Q&A section below.
>Q&A with Ceci Kurzman
First year
with Man Group
Q. What appealed to you about a
NED role at Man Group?
A. I was initially drawn to Man Group
due to its unique leadership position at
the intersection of finance and
technology. I was further compelled
by the reputation of Man Group as an
institution of the highest integrity and
one that establishes and lives by a clear
and intentional value set and purpose. In
meeting with members of the Board and
senior management, there was a
perceptible growth mindset, culture of
self-evaluation and mandate of
innovation.
Q. What have your initial
impressions of the business and
Board been?
A. Having joined the Board in February
2020, I had the unique vantage of
working alongside Man Group’s
leadership team as they navigated an
unprecedented year of geopolitical and
financial uncertainty. They guided the
business with professional poise,
humanity and compassion while
maintaining strong business
performance. The transition to an
all-virtual workforce was seamless from a
technical standpoint but also activated
immediate and ongoing systems of
support for employees and their families.
The ability to maintain a community
working environment, despite being
physically remote, is a testament to the
existing working relationships and was
key in maintaining the consistent
performance of the Company.
value to Man Group’s continued
evolution and growth.
Q. How has your background and
experience prepared you for your
role at Man Group?
A. I was encouraged by Man Group’s
proactive focus on diversifying its Board
representation, specifically as it pertains
to diverse perspectives in the
Boardroom. While my background is not
in financial services, I have advised
brands and businesses from startups to
Fortune 500 firms in how they
communicate to all stakeholders inclusive
of employees, shareholders, clients and
constituents. Evaluating and sharing best
practices across diverse sectors allows
an institution to evolve amidst the
challenges of conducting business in a
highly competitive and volatile global
economy. As financial stewards, the
integrity of Man Group’s brand is
foremost, especially as it pertains to its
fervent commitment to corporate social
responsibility. I look forward to adding
Q. Given the current remote
working environment, how have
you managed to build effective
relationships and stay informed
around the needs of the business
and its stakeholders?
A. Nothing can replace convening
in-person for a Board to optimise its
working dynamic. However, in some
ways, going virtual made the already
thorough onboarding process at Man
Group all the more robust. In addition
to the formal Board meetings, I was
able to have substantive 1-1
conversations with Executive
Committee members, each
investment engine’s senior leaders and
every member of the Board. This may
not have been practical under normal
circumstances. Not only did this serve
as a comprehensive background on
the Company but also allowed for
dynamic conversations from different
perspectives seeding topics for future
Board conversations.
76
Man Group plc Annual Report 2020
Independence and time commitment
All of the non-executive directors are considered to be independent
and the Chair was considered to be independent on his appointment
to the role. There are a number of ways in which the independence of
our non-executive directors is safeguarded:
1. Meetings between the Chair and the non-executive directors
without the executive directors being present.
2. Meetings between each of the directors and the Senior
Board continuous development
The Board is kept updated on key areas of the business and
upcoming regulatory changes through the following methods:
1. Briefings included within Board papers
2. Presentations from senior management and other employees on
specific issues
3. Educational sessions from external advisers
Independent Director to discuss feedback on the performance of
the Chair.
The main topics covered during the year were:
• Changes to Data Protection (Jersey) Law 2018 and Financial
3. Separate and clearly defined roles for the Chair and Chief Executive
Officer (as set out on page 68).
Services (Disclosure and Provision of Information) (Jersey) Law 2020
and the impact on Man Group plc and its directors
4. Formal review of independence as part of the process for renewing
• Core elements of the Task Force on Climate-related Financial
the appointment of non-executive directors.
To avoid over-boarding of our directors and minimise potential
conflicts, all Board members are required to inform the Chair of any
updates or changes to their external roles, including an indication of
the expected time commitment for any new external role so that an
assessment can be undertaken as to whether the director will continue
to have sufficient time to discharge their duties as a director of Man
Group adequately. Any potential conflicts will be assessed by the other
Board members and a decision taken on the extent to which any such
conflicts can be effectively managed. In addition, in recognition of the
wide-ranging roles and interests of the non-executive directors, the
Board carries out an annual year-end review of all such roles and
interests to ensure that they do not represent any unmanageable
business conflict or a time commitment which might prejudice
directors’ effective contribution to the Board.
During the year, Ceci Kurzman was appointed as a non-executive
director of Warner Music Group Corp. (WMG) which, as a company
quoted on Nasdaq, was considered to be a significant appointment for
the purposes of Provision 15 of the 2018 UK Corporate Governance
Code. In line with the process set out above, prior to Ceci’s
appointment to WMG, the Chair considered and assessed the
demands of the WMG role and associated time commitments, taking
into account Ceci’s other appointments, and concluded that it would
not impact her ability to effectively fulfil her role as a non-executive
director of Man Group.
Before appointing a new Chair or non-executive director, consideration
will be given to the prospective director’s other appointments and
interests to ensure that they have sufficient time to dedicate to their role
as a director of Man Group. The letters of appointment for the Chair
and non-executive directors contain provisions around the expected
time commitment to Man Group related activities.
Board induction process
All non-executive directors receive a comprehensive and tailored
induction to the business and, if required, the asset management
industry. The induction programme is structured around one-to-one
briefings with the Senior Executive, Executive Committee members and
the Company Secretary. Relevant briefing materials are circulated in
advance and follow-up meetings arranged as appropriate. New Board
members are invited to provide feedback on the programme they
receive to ensure it is useful and well targeted. They are also encouraged
to seek updates on any topics which arise in the course of subsequent
Board meetings on which they would like further information. Details
of the induction programme for non-executive directors are given on
our website.
The inductions of Lucinda Bell, Ceci Kurzman and Anne Wade were all
conducted virtually. In the Q&A section opposite, Anne Wade shares her
experience of the Man Group induction programme and the benefits
and challenges of conducting this virtually.
Disclosures (TCFD)
• Demonstration of ESG analytics tool
• IBOR transition
• Audit market reform
In addition to the above in-house sessions, opportunities continued to
be made available to non-executive directors to virtually attend
seminars and workshops on topical business and regulatory issues
offered by professional services firms.
>Q&A with Anne Wade
Induction
Q. What were the main aspects
of your induction?
A. I was introduced to the senior
leadership of the five investment
engines, as well as all the functions
that support our investment
businesses including Finance, Legal,
Sales, Marketing, Talent, Compliance
and HR. In total, it was 40 executives
who gave presentations on their
specific area, including how it relates
to other parts of the Group. There was
also an opportunity for extensive Q&A.
Q. How did your remote induction
differ from a traditional induction?
Were there any challenges or
benefits?
A. I think the delivery of the remote
induction worked really well. Certainly,
from a content perspective I don’t
think anything was lost. And the fact
that the induction programme had to
be remote probably encouraged
inclusion of some presenters from
different geographies who would not
have been present for a traditional
induction – and I benefited from that.
That said, it was over 30 hours on
screen! I would always rather be in a
room with someone. I look forward to
meeting all these folks again in person
as soon as I can.
Q. What insights into Man Group’s
culture did you gain from your
induction?
A. In some ways, the very existence of
COVID-19 and remote working gave
me a crash course into the Man Group
culture that I might not have received
otherwise. Most of the people I met
through my induction are fairly senior
and manage substantial teams. The
amount of time, care and focus that
they spent talking about how their
teams were handling this unusual year;
additional steps managers were taking
to check-in with everyone in their team;
best-practice sharing initiatives to help
the organisation manage working from
home, was pretty remarkable. It
brought into the forefront of my
induction, the level of care and
employee engagement that exists as a
part of the Man Group culture – a sense
of community that was particularly in
focus because the environment meant
that culture and community needed to
be actively sustained.
In addition, the induction gave a
strong sense for the level of innovation
happening at Man Group, particularly
in terms of how technology can be
harnessed to create investment
products and alpha. Additionally,
the risk management culture,
in order to best deliver those superior
returns safely to clients, was always
at the forefront.
Q. How did your induction
prepare you to discharge your
duties as a NED at Man Group?
A. I think the induction helped prepare
me in several important ways. First it
was broad exposure to the senior
leadership, right across the firm.
Developing these relationships I think
is key for a NED – it facilitates better
dialogue, makes it easier to know who
to ask questions of, etc. It also was an
incredibly in-depth exposure to the
different components of Man Group,
some of which I had more familiarity
with due to my background than
others. This helped establish an
excellent base-line understanding
across the investment engines,
including how they relate to each other,
and how our control and operations
support and enhance them. I came
away with a much better sense of the
‘whole’ and how that whole is more
than just a sum of the parts.
Man Group plc Annual Report 2020
77
Governance
Corporate governance continued
Board evaluation
Determining Board effectiveness
Board and Committee evaluations
In line with best practice and the requirements of the UK Corporate Governance Code 2018, the Board and its Committees undertake an
external evaluation every three years, with internal evaluations being undertaken in the intervening years. The last external evaluation was carried
out in 2018 with the next one planned for 2021. The Board has selected Clare Chalmers (CC), who has no other connection with the Company or
any individual director, to undertake the review of the Board and its Committees in 2021. The Chair and Company Secretary have met with CC
to discuss the scope of the review and key areas of focus. An internal evaluation was undertaken in 2020 in respect of the Board and its
Committees. The process and outcomes are set out below and in the separate Committee reports.
2020 internal Board evaluation
1
Design and
initiate process
2
Collation of
responses
3
Chair
review
4
1:1
meetings
5
Discussion
and outcomes
An evaluation questionnaire
was developed by the
Company Secretary and the
Chair. The questions, which
took account of the FRC’s
Guidance on Board
Effectiveness, focused on
progress made on 2019
actions and current Board
operation. The questionnaire
was circulated to all Board
members for completion.
Responses, comments and
suggestions were consolidated
by the Company Secretary on
an unattributed basis and
shared with the Chair, together
with a report summarising the
output of the evaluation and
suggested areas for focus
and discussion.
The Company Secretary met
with the Chair to discuss the
feedback and a final report,
reflecting any comments
received from the Chair,
was circulated to the Board.
The report summarising the
output of the evaluation,
together with the feedback
received as part of the 1:1
discussions, was considered
by the Board at its December
meeting. Improvement actions
for 2021 were discussed
and agreed. Further details
are contained on the
opposite page.
The Chair met with each
Board member to discuss the
evaluation feedback, personal
contributions made during
the year and identify areas
where they might bring
additional benefit.
The Senior Independent
Director also met with each
Board member to discuss the
Chair’s leadership and
management of the Board.
The feedback from these
discussions was subsequently
shared with the Chair.
Key findings
• Progress had been made on a number of the 2019 actions,
• The executive directors and management team were considered
particularly on areas such as diversity and people, with succession
planning identified as an area for further focus in 2021 (further
details set out opposite).
to be constructive, open and receptive to the views of the
non-executive directors.
• Papers and presentations provided by the management team
• Board meetings were operating well and the more frequent
meetings during the early stages of the pandemic were
appreciated by Board members.
were of a high quality.
• The induction programme had been thorough and comprehensive
(further details are set out on page 77).
• There was an open and transparent culture with rigorous debate
• There had been excellent presentations and discussions on
and challenge whilst remaining collegiate.
ESG-related matters during the year.
78
Man Group plc Annual Report 2020
> Progress made on 2019 actions
Area of assessment
Agreed actions
Progress made
Board composition
• Keep under review the overall skills on the Board to
ensure all key areas of expertise are covered.
• Continue to make progress on gender diversity on
the Board.
• The appointments of Lucinda Bell, Ceci Kurzman and Anne
Wade have strengthened the Board’s skills and experience,
particularly on financial, listed public company and
remuneration matters.
• Following a formal review of the current Board composition,
the Nomination Committee concluded that the existing mix
of skills and experience on the Board remained appropriate
and that any future non-executive searches should focus on
individuals with direct and relevant technology experience.
The output of the review was reported to and considered by
the Board.
• Significant progress made on gender diversity with gender
parity achieved on the Board during 2020.
Management succession and
development
• Continued oversight of firmwide succession planning
• Less focus on succession planning than the Board had
by the Board.
• Support and promote internal successors to senior
planned, largely due to the lack of face-to-face opportunities
during 2020. Actions for 2021 set out below.
management roles.
• The Board continues to support management’s plans to
promote internally.
Stakeholders
• Hold deep-dives into our people, client and supplier
• In-depth discussions on Man Group’s people held throughout
stakeholder groups.
• Receive regular presentations on key customer
relationships.
People and culture
• Receive papers on staff development and recruitment.
• Assess the annual employee engagement survey.
• Continue with the employee engagement process.
the year with two Board meetings arranged to focus on
people-related matters arising from the pandemic.
• Sales presentation provided an overview of the key clients with
focus on building long-term relationships. Actions for 2021 set
out below.
• Key ‘people’ updates provided at each meeting. Specific
update provided on the approach to recruitment and
onboarding during the pandemic.
• The Board reviewed and discussed the key themes arising
from the 2020 staff survey and actions proposed by
management to address identified areas for development.
• Kate Barker and Zoe Cruz continued the formal employee
engagement programme during 2020, albeit virtually (further
details set out on page 74). Actions for 2021 set out below.
> Summary of 2020 evaluation
A number of development areas were proposed and agreed for focus in 2021 as detailed below.
Area of assessment
Board discussion
Agreed actions for 2021
Strategy
People
Succession planning
Decision-tracking
The Board agreed to postpone the full-day strategy
session scheduled for June 2020 until such time as the
Board could meet in person. Given the ongoing
restrictions, it was acknowledged that this was not going
to be feasible in 2020 and so the Board decided to
allocate time in its regular meetings in the latter part of the
year to focus on strategy and agree the approach to be
taken to the strategy sessions in 2021.
The Board agreed that the focus on employees had been
excellent during the year, although noted that the
pandemic had made the formal employee engagement
process more challenging. It was noted that this was likely
to be the case for the majority of companies in 2020.
The Board acknowledged that the informal NED dinners
had historically provided the opportunity for discussion
on people issues, including succession planning.
Given the absence of such opportunities in 2020,
there had been less specific focus on succession
planning than hoped.
The Board agreed that in-depth reviews of large-scale
projects should be reintroduced to enable any ‘lessons
learned’ to be considered in the context of any future
projects.
Additional focus to be given to strategic oversight in 2021.
Two strategy sessions arranged for Q1 and Q2.
Agreed that the Board should formally review the current
employee engagement model in 2021 and consider alternative
options to ensure that the Board is able to engage with
employees in the most effective way.
Further focus to be given to succession planning during 2021.
Specific discussions on executive and senior management
succession plans and non-executive director succession plans to
be scheduled for Nomination Committee meetings in 2021. Board
sessions on wider succession planning process to be arranged.
Review ‘two years on’ of the corporate reorganisation completed
in 2019 arranged for 2021.
Shareholder/stakeholder
relationships and competitors
The Board agreed that it had a good understanding of
key shareholders but that further work was required on
other stakeholder relationships and competitors.
Board session to be arranged in 2021 focusing on investor
relationships. Regular updates focusing on key clients to be
reintroduced and specific session on competitor dynamics
to be arranged.
Man Group plc Annual Report 2020
79
Governance Audit and Risk Committee report
Lucinda Bell
Chair, Audit and Risk Committee
Summary of ARCom’s main activities
during 2020
• Monitored the integrity of the financial information within
the Group’s 2020 interim and annual financial
statements and challenged the key accounting policies,
judgements and estimates adopted by management
• Considered whether the Group’s 2020 interim and
annual financial statements were fair, balanced and
understandable, and recommended their approval to
the Board
• Monitored and reviewed the effectiveness of the Group’s
systems of risk management and internal controls
• Conducted a robust assessment of the key risks facing
the Group, including the implications of the COVID-19
pandemic, and considered the management and
mitigation of these risks
• Approved the 2020 Internal Audit Plan and reviewed the
effectiveness of the Group’s Internal Audit function
• Received regular updates on the progress and status of
Internal Audit reviews and monitored management’s
response to address audit actions
• Recommended the reappointment, and approved the
remuneration, of Deloitte LLP (Deloitte) as external
auditor, including a review of their performance and
independence and the provision of non-audit services
• Oversaw the transition of the lead audit engagement
partner at Deloitte
• Reviewed and approved the 2020 External Audit Plan
Proportion of ARCom time spent
on key responsibilities
Risk management
Financial reporting
External audit
Internal audit
55%
25%
10%
10%
80
Man Group plc Annual Report 2020
___“The Audit and Risk
Committee is fundamental
to Man Group’s governance
framework through its monitoring
of the Group’s financial reporting,
the Company’s relationship
with its external auditor,
the effectiveness of risk
management and internal
controls, and the Internal Audit
and Compliance functions.”
Dear Stakeholder
I am pleased to present my first report as Chair of the Audit and Risk
Committee (the ARCom). I would like to thank my predecessor,
Andrew Horton, for enabling a smooth transition. I would also like to
thank Matthew Lester for his valuable contributions whilst being a
member of the ARCom.
The ARCom plays a key role in assessing the integrity of the Group’s
financial reporting, monitoring the effectiveness of the Group’s systems of
risk management and internal controls, and reviewing and monitoring the
activities of the Group’s Internal Audit function and its external auditor.
Key achievements for 2020
Since the onset of COVID-19, the ARCom has devoted significant time
to considering the impact of the pandemic on the Group’s risk and
control environment. We evaluated areas of new and heightened risk,
considered the Group’s business continuity arrangements and were
satisfied that the control environment continued to operate effectively.
Alongside this, the Committee has continued to monitor the change in
the Group’s regulated environment, stemming from its corporate
reorganisation in 2019, and collaborated with management to update
the risk appetite articulation in the Group’s Risk Governance and
Appetite Framework to reflect the level of risk focus for the Board.
The ARCom has also remained alert to the growing regulatory agenda
on climate change and performed a comprehensive review of Man
Group’s climate change related risks as well as management’s
approach to align the Group’s climate change disclosures with the
Task Force on Climate-related Financial Disclosures (TCFD) in our
Annual Report.
Focus areas for 2021
For 2021, as well as considering the standing items of business, the
ARCom will focus on the following areas:
• monitoring of ongoing implications of COVID-19;
• monitoring developments in respect of the future of the UK audit and
financial oversight regime;
• undertaking additional thematic risk-focused reviews; and
• ensuring that the balance between audit and risk matters
considered by the ARCom remains appropriate.
I hope you find this report a useful insight into the work of the ARCom
and I look forward to continuing our work in 2021.
Lucinda Bell
Chair, Audit and Risk Committee
Membership and meeting attendance
The members of the ARCom and their meeting attendance during 2020
are set out below.
The ARCom as a whole has competence relevant to the sector in
which the Group operates and I am considered to have recent and
relevant financial experience for the purposes of the 2018 UK
Corporate Governance Code (the Code). Further details of the ARCom
members’ experience and areas of expertise are provided on pages
64 and 65.
Roles and responsibilities
The ARCom is fundamental to Man Group’s governance framework
through its monitoring of the Group’s financial reporting, the
Company’s relationship with its external auditor, the effectiveness
of risk management and internal controls, and the Internal Audit and
Compliance functions. A high-level summary of the ARCom’s roles and
responsibilities is outlined below, together with an explanation of how it
has discharged its responsibilities during the year. Full terms of reference
for the ARCom, which are reviewed on an annual basis and referred to
the Board for approval, are available on the Company’s website.
The Board Chair, CEO, CFO and Group COO and General Counsel
are invited to attend ARCom meetings along with the Head of Internal
Audit and representatives from Deloitte, the Group’s external auditor.
Other members of the management team attend for those items that
are relevant to them. The ARCom meets periodically during the year
with the Head of Internal Audit and representatives from Deloitte
without management present.
Attendance
Committee member
Lucinda Bell1
Richard Berliand
Dev Sanyal
Andrew Horton2
Matthew Lester3
Meetings attended
4/4
5/5
5/5
2/2
1/1
1 Lucinda Bell attended the meeting on 13 February as an incoming Board member prior to her
appointment on 28 February 2020.
2 Andrew Horton stepped down from the ARCom following his retirement from the Board
on 1 May 2020.
3 Matthew Lester stepped down from the ARCom following his retirement from the Board
on 26 February 2020.
How the ARCom operates
Forward
agenda
Agenda
setting
meeting
Briefing
sessions
• Covers key events in the financial reporting cycle, specific
risk matters and standing items set out in the terms of
reference.
• Reviewed and updated in response to changing business
risks and priorities.
• Held in advance of each ARCom meeting to identify key
issues impacting the business that may require consideration
by the ARCom.
• Attended by ARCom Chair, CFO, Group COO and General
Counsel, Head of Internal Audit, representatives from
Deloitte and the Committee Secretary.
• Prior to each ARCom meeting, the ARCom Chair has
one-to-one briefings with the presenters of each material
item as well as briefings with the CFO, Group COO and
General Counsel, and Committee Secretary to fully
understand any matters of concern and identify those
matters which require meaningful discussion at Committee
meetings.
Committee
meetings
At each meeting, the ARCom considers:
• Standing governance items.
• Dashboards and/or metrics which highlight and monitor
changes in the key risks impacting the business, compliance
matters, the financial controls framework and internal controls.
• Reports and presentations on key financial reporting, risk,
compliance and audit matters from management.
Board
reporting
• The Board is updated by the ARCom Chair on the key areas
of discussion with recommendations made as appropriate.
Training
• ARCom members periodically attend training sessions
delivered by industry experts on audit and regulatory matters
as well as other matters of interest.
Roles and responsibilities
Financial
reporting
• Review the integrity of the Company’s financial reports and
statements, and recommend their approval to the Board.
Risk
management,
internal
controls and
compliance
• Review and report to the Board on the effectiveness of the
Group’s systems of risk management and internal controls.
• Review the effectiveness of the Group’s Compliance
function, regulatory reporting activities and channels
available for its workforce to raise concerns.
Internal Audit • Approve the annual Internal Audit plan and review the
effectiveness of the Internal Audit function and
management’s response to their findings.
External
audit
• Recommend to the Board the appointment, and approve the
remuneration, of the external auditor, including reviewing the
external auditor’s effectiveness and independence.
How the ARCom has discharged its roles
and responsibilities
Financial reporting
Key accounting judgements and estimates
As part of the process for monitoring the integrity of the financial
information contained in the interim and annual financial statements,
the ARCom reviewed the key accounting policies, judgements and
estimates adopted by management and confirmed that these were
appropriate. The significant areas of judgement and estimation
identified by the ARCom, in conjunction with management and the
external auditor, are set out in the table on page 82.
Viability and going concern
The ARCom reviewed the viability statement (as set out on page 31)
and the processes supporting the viability assessment. After
significant discussion and having considered the Group’s prospects,
emerging and principal risks, forecast capital position and liquidity
resources and requirements, the ARCom concluded that the
three-year assessment period, in line with the Group’s business
planning horizon, continued to be appropriate and recommended the
draft viability statement to the Board for approval.
The ARCom also reviewed the going concern disclosure (as set out on
page 135), considering in detail the implications of COVID-19 on the
Group’s business and reasonably foreseeable stressed scenarios, and
concluded that the Group and the Company had adequate resources
to continue in operational existence for the foreseeable future and
confirmed to the Board that it was appropriate for the Group’s financial
statements to be prepared on a going concern basis.
Fair, balanced and understandable assessment
At the request of the Board, the ARCom reviewed the interim and annual
financial statements in conjunction with the narrative sections of the Interim
and Annual Reports to ensure that there was consistency in the
information reported, that sufficient weight had been given to both positive
and negative aspects of business performance, that there was an
appropriate balance between statutory and adjusted performance
measures, and that key messages had been presented coherently. The
ARCom concluded that, taken as a whole, the Interim and Annual Reports
were fair, balanced and understandable and provided the information
necessary for shareholders, and other stakeholders, to assess the
Group’s position and performance, business model and strategy.
Man Group plc Annual Report 2020
81
Governance Audit and Risk Committee report continued
Key accounting judgements and estimates
Matters considered
Action
Outcome
Impairment assessment of goodwill and
acquired intangibles
Goodwill and acquired intangibles for each of the
Group’s cash-generating units (Man AHL, Man GLG,
Man Solutions/FRM, Man Numeric and Man GPM) are
tested for impairment at least annually through the
application of a ‘value in use’ model. This requires
estimates concerning future cash flows, growth rates
and associated discount rates to be taken into
account.
Please refer to Note 10 in the Group financial
statements for further details.
The ARCom considered reports from management
outlining the methodology for the impairment
assessment and challenged the assumptions
underpinning the goodwill valuation model including
cash flow projections, discount rates, the cost
allocation methodology, and levels of headroom
availability.
The ARCom noted the levels of headroom in each of
the cash-generating units, and reviewed the underlying
forecasts, including the impact of COVID-19 on the
growth forecasts of each of these. The $55 million
goodwill balance for Man GPM was impaired in full at
30 June 2020. The ARCom confirmed that an
impairment charge of $55 million was appropriate as
no further impairment was indicated.
Fair value of contingent consideration
The valuation of the contingent consideration is
dependent on estimates concerning the projected
future growth rates and cash flows based upon
management’s view of future business prospects and
associated discount rates.
The ARCom considered management’s fair value
assessment of the contingent consideration creditors
of the Aalto and Sanlam earn-outs. The $22 million
credit to the income statement represented a decrease
in the fair value of the contingent consideration
creditors, driven by lower than actual and forecast
growth for Aalto (included within Man GPM).
The ARCom confirmed that it was comfortable with the
proposed accounting treatment and that the decrease
in the fair value of the contingent consideration was
appropriate. A fair value adjustment of $22 million has
been recognised in the income statement.
Please refer to Note 25 in the Group financial
statements for further details.
Consolidation of investment in funds
The Group holds seeding investments in a number of
funds which it manages. Judgement is required to be
exercised in terms of assessing whether these
investments are controlled by the Group and therefore
need to be consolidated into the Group’s financial
statements.
Please refer to Note 13.2 in the Group financial
statements for further details.
Deferred tax assets (DTA)
The Group has deferred tax assets in the US which
largely represent historical tax losses and future
deductions for amortisation of goodwill and other
intangible assets that will reduce the tax payable in the
US. The value of the US DTA recognised requires
judgement regarding the assessment of probable
future profits.
Please refer to Note 7 in the Group financial statements
for further details.
Impairment of right-of-use lease asset –
investment property
The Group sub-leases a portion of its Riverbank House
premises and annually assesses whether the carrying
value of the associated right-of-use lease asset should
be impaired. This requires an estimate concerning
future sub-lease cash flows.
Please refer to Note 18 in the Group financial
statements for further details.
The ARCom reviewed management’s assessment of
any new judgements made in relation to the Group’s
assessment of investments it is deemed to control in
accordance with IFRS 10.
The ARCom concluded that it was satisfied with
management’s assessment of the entities which are
deemed to be controlled by the Group and the
associated accounting treatment. Nineteen
investments have been consolidated on a line-by-line
basis with a grossing up impact on the balance sheet
of $247 million.
The ARCom reviewed the assumptions underpinning
the future forecast profits which supported the
valuation of the US DTA and considered
management’s assessment of the expected timing of
forecast profits, including considering the expiry of
certain US tax losses over time.
The ARCom confirmed that it was satisfied that the
existing methodology continued to be appropriate. A
related income statement expense of $8 million was
recorded, made up of $14 million of state tax losses
being derecognised as these are forecast to expire
before consumption, partially offset by net
consumption of $6 million during the year.
The ARCom discussed and challenged
management’s assumptions, including the timing and
rental rates which drive future cash flows and the
discount rate applied, in order to determine the
recoverable amount of the sub-lease portion of the
right-of-use lease assets (classified as investment
property), in particular considering the COVID-19
related uncertainty in the current UK commercial
property market.
The ARCom noted that there had been a classification
restatement in order to present the Group’s
right-of-use lease assets (along with associated
leasehold improvements) with operating sub-leases as
investment property on the Group’s balance sheet,
and that as a result the impairment assessment was
performed at a sub-lease level. After a full discussion,
the ARCom confirmed that it agreed with
management’s judgements in calculating the
recoverable amount of the associated right-of-use
lease asset for investment property and that an
impairment expense of $25 million was required for the
year ended 31 December 2020.
The ARCom noted that adjusted and core profit over
the last five years was broadly consistent with cash
inflows from operating activities and therefore
concluded that the APMs, including adjusted and core
profit before tax, were appropriate, provided a fair
assessment of the underlying profitability of the
business and were appropriately defined and
reconciled to statutory measures as disclosed on
pages 166 to 169.
Alternative performance measures (APMs)
Man Group assesses the performance of the Group
using a variety of APMs, most significantly adjusted
profit before tax. The directors focus on adjusted profit
as this reflects the underlying trends in the business
and the revenue and costs that drive the Group’s
cash flow.
The ARCom reviewed and discussed the
APMs contained in the Interim and Annual Reports
and also considered a paper prepared by
management which compared adjusted profit (which
is the same as core profit in 2020 due to the roll-off of
legacy business profits) to operating cash flows for the
last five years in aggregate.
Please refer to pages 166 to 169 for further details.
82
Man Group plc Annual Report 2020
Correspondence with the Financial Reporting Council (FRC)
The FRC Corporate Reporting Review team wrote to the Company in
December advising that they had conducted a limited scope review of
the Company’s 2019 Annual Report in relation to a thematic review of
IFRS 16 ‘Leases’ application and disclosures. No questions or queries
arose from this review specific to Man Group’s reporting that required
a substantive response, however a limited number of disclosure
enhancements have been made in the Company’s 2020 Annual
Report in response to the findings of the broader thematic review.
Risk management and internal controls
Monitor and review of risk and control environment
– key business areas
In response to the emergence of the pandemic, the ARCom
extensively reviewed Man Group’s business continuity arrangements
and scrutinised the robustness of the Group’s control environment.
During the year, senior representatives from Man AHL, Man GLG and
Man GPM also delivered presentations to the ARCom that focused on
their risk and control environments coupled with an overview of how
areas of heightened risk arising from COVID-19 were managed and
mitigated. Key areas of discussion are set out below.
COVID-19 – business continuity
The ARCom closely monitored the evolving situation across Man
Group’s global footprint and assessed its business continuity
arrangements. There was particular focus on heightened and new
risks posed by operating within a remote working environment and
the mitigating action plan implemented by management to ensure
controls remained secure and effective. The ARCom was also
briefed on the resilience of the Group’s material third-party service
providers to such risks and recognised Man Group’s concerted
efforts to minimise disruption to service levels.
During the latter part of 2020, as it became apparent that the 2020
annual reporting cycle of the Group and associated external audit
by Deloitte in early 2021 would likely need to be performed
remotely, the ARCom discussed with management the necessary
arrangements in order to ensure that reporting and audit quality
were maintained. Management confirmed that although reporting
timetables and quality had not been adversely impacted by the
pandemic to date, as a protective measure a number of elements
of the year-end reporting had been prepared in advance. The
Company increased the detail of its joint timetable together with
Deloitte in order to provide greater transparency on any delays
earlier in the process, enabling any corrective action if required.
Where possible, deliverables were accelerated earlier in the
process to provide more flexibility for unforeseen events. The
Company is pleased to report that the advance preparation and
detailed planning facilitated the team’s delivery of a smooth and
high-quality annual reporting and audit process.
Risk and control reviews of investment management
businesses
At April’s meeting, the ARCom received an update on the risk and
control profiles of Man AHL and Man GLG. In addition to evaluating
each manager’s specific procedures and controls, the timing of the
presentation afforded the ARCom with an opportunity to assess
how such controls had withstood the COVID-19 driven market
volatility. In July’s meeting, the ARCom deepened its
understanding of the risk and control environment of Man GPM
and assessed its governance framework. An overview of the
recent changes to the Man GPM management structure, the
automation of key operational processes and its approach to
mitigate risks faced by the pandemic were considered.
Monitor and review of risk and control environment – key
functional areas
The ARCom also considered presentations from each of the Group’s
key functional areas.
Risk
At its April meeting, the ARCom received an update on the Risk
functions and discussed their role in supporting the Group’s
governance processes. The ARCom also considered a presentation
on the Group’s response to the COVID-19 driven market volatility and
noted the robustness of its controls from a market, liquidity and
operational risk perspective.
During the year, the ARCom discussed and challenged a number of
proposed amendments to the Risk Governance and Appetite
Framework (the Framework) that were focused on updating the risk
appetite articulation to reflect the level of risk focus for the Board,
including additional qualitative statements where appropriate. The
ARCom endorsed the revised Framework and recommended it to the
Board for approval (a summary of the Group’s risk appetite statements
is available on the Company’s website). A presentation was also
delivered to the ARCom on the FCA proposals to introduce the UK
Investment Firm Prudential Regime for FCA regulated firms, and the
ARCom discussed the potential capital and liquidity implications for the
UK/EEA sub-group arising from these proposals which were not
considered to have a significant commercial impact.
At its December meeting, the ARCom received an update from the
Head of Central Risk on the Group’s exposure and approach to
mitigate climate change related risks, both physical and transitional,
and assessed its risk profile compared to other industries and peers.
The ARCom also scrutinised Man Group’s approach to align its climate
change disclosures with the TCFD.
Finance
The ARCom received a presentation from the Group Financial
Controller on the Finance function’s governance arrangements and the
key areas of focus during 2020. The ARCom discussed the financial
control environment, personnel changes in the Finance team,
resourcing levels and priorities for 2021. During the year, the
Committee also received an update on financial fraud risks and
discussed the efforts undertaken by management to continuously
scrutinise and enhance existing controls in this area, including the risk
of collusive fraud and strength of controls over the Group’s cash
balances. At the December meeting, the Head of Tax was invited to
present on the Group’s tax position and highlight the key projects
undertaken by the tax team during 2020.
Compliance
During the year, the Global Head of Compliance & Regulatory
presented the 2020 Compliance overview. Particular focus was given
to developments in financial regulation and the continuing obligations
of the Senior Managers and Certification Regime (SMCR) which was
implemented in December 2019. Consideration was also given to
resourcing levels, global themes around regulatory risk, current
priorities of key regulators and Compliance initiatives. The ARCom
continued to monitor steps taken by the management team to improve
awareness of the channels available to Man Group’s workforce to raise
concerns. A presentation was also delivered to the ARCom on Man
Group’s controls for the deterrence, detection and prevention of insider
trading which highlighted the governance framework implemented
across the Group and the technology to support this.
In addition, the Money Laundering and Reporting Officer (MLRO)
presented his 2019 annual report at the February 2020 meeting and
confirmed that Man Group had established and maintained effective
anti-money laundering and counter terrorist financing systems
and controls. The ARCom was also updated on the actions taken
during the year in response to legal and regulatory developments
in these areas.
Man Group plc Annual Report 2020
83
Governance Audit and Risk Committee report continued
Technology
Senior representatives from Man Group’s technology department
updated the ARCom on the key priorities for the Group’s trading
platforms and core technology, together with the associated risks
and mitigants including planned improvements to the Group’s order
management systems and its identity access management processes.
Focus was also given to the initiatives being undertaken to expand
Man Group’s remote working capabilities whilst maintaining
effective controls.
Cyber security
Cyber security remained an area of focus for the ARCom throughout
the year and it continued to receive regular reports on key themes and
trends in cyber security. At the April meeting, the ARCom received an
in-depth analysis of a high-profile external cyber security breach which
was used to assess Man Group’s defences against a similar attack,
and the ARCom agreed with management’s assessment that a robust
control environment had been implemented in this respect.
Brexit
The ARCom considered the impact of Brexit to the Group throughout
the year and received an update on Brexit from the Chief of Staff of
Infrastructure at its December meeting. As part of this update, focus
was given to Man Group’s preparedness, through its regulated Irish
entity, to deal with a range of Brexit scenarios that may impact its
employees, business or its clients, including a no-deal at the end of the
transition period.
Ongoing monitoring of the Group’s systems of risk
management and internal control
The ARCom is satisfied that, through its regular review of reports and
dashboards, its in-depth assessment of key business areas and
functions, its consideration of changes to the Risk Governance and
Appetite Framework and its ongoing review of progress against the
Internal Audit Plan (as described below), it is monitoring the
effectiveness of the Group’s systems of risk management and internal
control on an ongoing basis. Further details can be found in the Risk
management section on pages 32 and 33.
During the year, a number of operational and regulatory matters that
had occurred were reported to the ARCom. A paper summarising
these matters was considered by the ARCom at its December 2020
and February 2021 meetings. Whilst the Group sought to improve its
processes in response to the matters identified, they were not
considered sufficiently material in number or nature either to require
separate disclosure in the financial statements or to indicate that the
control environment had not been operating effectively. The ARCom
also concluded that there were no specific matters to bring to the
Remuneration Committee’s attention which may impact its decision
on discretionary remuneration payments.
Internal Audit
Internal Audit Plan
The Group’s Internal Audit function continues to be performed by
KPMG. During the year, the ARCom reviewed and approved the 2021
Internal Audit Plan (the 2021 Plan) which included details of the
planned audit reviews for 2021 and the team responsible for delivering
the 2021 Plan, led by Stuart Wooldridge.
The ARCom received and discussed Internal Audit reports presented
by the Head of Internal Audit at each meeting, reviewed progress
against the 2020 Internal Audit Plan and monitored the closure of
management actions arising from Internal Audit’s recommendations to
address control enhancements. Whilst no significant weaknesses
were identified in any of the Internal Audit reports, a number of
improvements to certain processes and controls were implemented in
response to the recommendations put forward.
The ARCom also focused on how the 2020 Internal Audit Plan had
been adapted to review any areas of perceived heightened risk arising
from the COVID-19 remote working environment.
84
Man Group plc Annual Report 2020
Effectiveness of Internal Audit function
During the year, an internal review of the Internal Audit function was
undertaken by the ARCom in order to assess the effectiveness of the
Internal Audit function. The review, which was facilitated internally,
evaluated areas such as resourcing, delivery, reporting and adding
value, and the independence of Internal Audit. A questionnaire
covering these areas was circulated to ARCom members and key
stakeholders, including subsidiary board members to whom Internal
Audit had reported to during the year. The output of the review
indicated that, overall, the Internal Audit function continued to be
effective and provided an independent perspective on the Group’s
control environment which was of the quality, experience and expertise
appropriate for the business.
External audit
2020 External Audit Plan
At the October meeting, the 2020 External Audit Plan was presented
by Stuart McLaren, who took over the role of lead engagement partner
during the year. The plan, which was discussed and approved by the
ARCom, set out the proposed materiality threshold, the scope of the
audit and the significant audit risks that had been identified.
Auditor independence and the provision of non-audit services
In order to safeguard the independence and objectivity of the external
auditor, the ARCom is responsible for the development,
implementation and monitoring of the Group’s policies on the provision
of non-audit services and oversight of the hiring of personnel from the
external auditor should this occur. The Company’s non-audit services
policy was amended during the year to take account of the list of
permitted non-audit services prescribed by the Revised Ethical
Standard 2019 which was issued by the FRC in December 2019.
The ARCom reviewed and approved both policies during the year.
Summary of non-audit services policy
In accordance with the non-audit services policy, any potential
services to be provided by the external auditor, which are not
excluded under the non-audit services policy and are prescribed
by the FRC’s Revised Ethical Standard 2019 but which have an
expected value of $75,000 or more, must be approved by the
ARCom in advance. The non-audit services fees in aggregate
must not exceed 70% of the statutory audit fee for the previous
three years, which is equivalent to $1.5 million for 2020. Further
details can be found on the Company’s website.
The table below shows the remuneration paid to Deloitte in 2019 and
2020.
Fees payable to the external auditor for the
audit of the Company and the consolidated
financial statements
Other services:
The audit of the Company’s subsidiaries
pursuant to legislation
Audit-related assurance services
All other services
Total auditor’s remuneration
2020
$’000
2019
$’000
593
607
1,786
372
1
2,752
1,783
490
701
3,581
The decrease in the remuneration paid to Deloitte in 2020 is primarily
due to a reduction in non-audit services. The majority of the non-audit
fees incurred in 2019 related to Deloitte acting as Reporting
Accountant in relation to the Group’s corporate reorganisation. These
were separately approved by the ARCom in 2019 in accordance with
the non-audit services policy.
Following a formal assessment of the external auditor’s independence
and objectivity in February 2021, the ARCom concluded that Deloitte
continued to be independent and objective.
Following the ARCom’s review of the effectiveness of the external audit
process and its assessment of the external auditor’s independence
and objectivity, it has recommended the reappointment of Deloitte as
the Group’s external auditor to the Board for recommendation and
approval by shareholders at the 2021 Annual General Meeting.
How the ARCom has assessed its effectiveness
Outlined in the table below are the four key areas that were identified in
the ARCom’s 2019 evaluation as requiring further consideration and
development during 2020, together with the progress that has been
achieved in 2020.
2020 progress on 2019 actions
2019 evaluation
2020 progress
Identification of
follow-up actions from
thematic risk deep-dives
Integration of competitor
benchmarking into
reporting
Continued focus on
ARCom paper format in
order to highlight key
points to ARCom
During its thematic risk reviews carried out during
the year, the ARCom identified certain areas for
further scrutiny. This was exemplified by a case
study presentation requested by the ARCom,
following a review of Man Group’s cyber controls,
on a high-profile external cyber security breach.
ARCom paper authors and presenters were
requested to, as far as possible, assess Man
Group’s controls in the context of its peers to
ensure that best practice could be delivered.
Updates from Deloitte (as external auditor) and
KPMG (as the outsourced Internal Audit provider)
proved particularly valuable in this regard.
Paper submissions continued to be adapted and
streamlined in order to focus on specific areas
requested by the ARCom. The Compliance
reporting was adapted to integrate a RAG rating
summary of reportable matters, while a more
discursive approach was also implemented to
the Risk reporting.
Risk and control reviews
of investment
management businesses
As detailed earlier in the report, the ARCom
conducted risk and control reviews of Man AHL,
Man GLG and Man GPM during the year.
In December 2020, the ARCom conducted a further evaluation of its
effectiveness, which was facilitated internally. Questionnaires covering
topics such as composition, meeting effectiveness and engagement
with Deloitte and the Internal Audit and Risk functions were circulated
to all members and regular attendees. The results of the evaluation
confirmed that the ARCom was operating effectively, and responses
indicated that meetings were well structured with an appropriate level
of constructive challenge and debate provided by all members. Areas
identified for focus in 2021 included inviting subject matter experts to
provide periodic updates on sector and regulatory trends and the
inclusion of additional thematic risk deep-dives at future meetings.
Lucinda Bell
Chair, Audit and Risk Committee
Effectiveness of external audit process
At the April 2020 meeting, the ARCom considered responses to a
questionnaire which had been completed by ARCom members and
various members of the management team in order to facilitate the
ARCom’s formal assessment of the effectiveness of the external audit
process. The questionnaire focused on several components of the
external audit process including the quality of the audit partner and
team, planning and execution of the audit, communication with the
ARCom and the external auditor’s independence and objectivity.
The responses indicated that, overall, Deloitte was performing in line
with expectations, with the audit team demonstrating appropriate
challenge and a rich understanding of Man Group’s business. An
example of an area where Deloitte challenged management’s
assumptions and judgement was in relation to the goodwill impairment
and going concern assessments. Deloitte considered the key Medium
Term Plan forecast assumptions and discussed these with various key
management personnel within the business, comparing these to
historical trends and external metrics for reasonability, and challenged
the appropriateness of our downside scenario modelling in light of
COVID-19. Other areas where Deloitte also challenged management
include the valuation of US deferred tax assets and the valuation of
right-of-use lease assets for investment property. In all areas, Deloitte
concluded that the assumptions and judgements applied by
management were appropriate.
The output of the effectiveness review also highlighted that certain
areas of focus that had been identified in the previous year’s
assessment, particularly around the streamlining of reports to the
ARCom, had been addressed in the 2019 audit. A number of areas,
including any COVID-19 related impact to the 2020 audit, were
identified as requiring further consideration and Deloitte’s plans to
address these issues were set out in the 2020 external audit plan. After
discussion, the ARCom concluded that the external audit process in
respect of the 2019 financial statements had been effective.
As a result of the vacancy of some of the Group’s previously sub-
leased space in 2020, Deloitte undertook a technical accounting
consultation during the year which established that the sub-lease
portion of Man Group’s right-of-use lease assets should, upon
adoption of IFRS 16 ‘Leases’ from 1 January 2019, have been
classified as ‘investment property’ under IAS 40 ‘Investment Property’.
Management concurred with this assessment. This resulted in a
reclassification restatement of $130 million of right-of-use lease assets
to ‘investment property’ at 31 December 2019, together with related
leasehold improvements, with no impact on the Group’s income
statement or total assets (please refer to Note 18 to the Group financial
statements for further details). The ARCom discussed the nature of this
classification error with Deloitte, noting that this technical interpretation
was expected to result in reclassifications of right-of-use lease assets
for other corporates who sub-lease property. The ARCom was
satisfied that this restatement did not indicate a material weakness in
the Group’s financial reporting controls.
Reappointment of Deloitte as external auditor
Deloitte was appointed as the Group’s external auditor in 2014,
following a tender process led by the ARCom in 2013. In accordance
with the Code and the Competition and Markets Authority’s Order
2014 (the Order), the Company will be required to put its external audit
out to tender again in 2023 at the latest. The ARCom will continue to
assess the external audit process annually and, on the basis that it
remains effective and the audit fee represents good value to
shareholders, it is expected that the next tender process will be
undertaken at that time with mandatory rotation of the external auditor
required by 2033 pursuant to the EU Audit Regulation. The ARCom
confirms that the Company has complied with the provisions of the
Order for the financial year under review.
Man Group plc Annual Report 2020
85
Governance
___“The Committee is pleased
that its drive to promote and
embrace diversity has resulted
in gender parity on our Board.”
Dear Stakeholder
2020 was another busy year for the Committee. Activity in the early part
of the year focused on the appointment of three new non-executive
directors and in February we recommended to the Board the
appointments of Lucinda Bell, Ceci Kurzman and Anne Wade as
non-executive directors. Our new directors bring significant asset
management, financial and listed company experience, remuneration
focus and entrepreneurial skills as well as enhancing diversity on our
Board. We will continue to review and monitor the composition of our
Board to ensure that this remains sufficiently diverse.
As a result of the pandemic, we have been unable to hold our regular
informal non-executive dinners which normally provide us with an
opportunity to discuss with Luke Ellis, development and succession
planning for the top management roles below Board level. Focus on
succession planning will remain a key priority for the Committee in
2021 and we have plans in place to ensure that we will have sufficient
opportunity to discuss this important issue.
John Cryan
Chair
Role of the Committee
• Keep the Board’s composition in terms of size, structure, skills,
experience and diversity under regular review in response to
changing business needs and opportunities
• Identify the particular skills, knowledge and experience required
for a specific Board appointment and conduct the search and
selection process
• Recommend the appointment of new candidates to the Board and
the renewal, where applicable, of existing non-executive director
appointments
• Review plans for executive director and senior management
development and succession
The Committee’s full terms of reference, which are reviewed by the
Committee and submitted to the Board for approval on an annual
basis, are available on the Company’s website.
Nomination Committee report
John Cryan
Chair, Nomination Committee
Summary of the Nomination Committee’s
activities during 2020
• Reviewed the size, composition and skillset of the
Board and its Committees
• Recommended to the Board for approval the
appointments of Lucinda Bell, Ceci Kurzman and
Anne Wade as non-executive directors
• Recommended to the Board for approval the renewal
of John Cryan and Zoe Cruz’s appointments for a
further three years subject to annual shareholder
approval
• Considered approach to succession planning for the
Board and senior management in 2021
Membership and meeting attendance
Committee member
John Cryan (Chair)
Richard Berliand
Andrew Horton
Lucinda Bell
Meetings attended
4/4
4/4
3/3
1/1
Where appropriate, Luke Ellis is invited to attend meetings of the Committee.
How the Committee spent its time in 2020
Board composition
Board search/
appointment
Renewal of NED
appointments
Succession planning
Governance and other
18%
54%
14%
9%
5%
86
Man Group plc Annual Report 2020
Committee activities
Appointments of Lucinda Bell, Ceci Kurzman and Anne Wade
The Committee meetings held in January and February were
convened specifically to discuss the appointment of three additional
non-executive directors. A timeline of the process and key areas of
discussion are set out below.
Review of Board composition
The Committee formally reviewed the size, composition and skillset of
the Board and its Committees taking account of the feedback received
as part of the Board evaluation process. It agreed that the Board
composition remained appropriate and that in any future non-executive
search, particular focus should be given to individuals with direct and
relevant experience in technology.
Q4
2019
• Reviewed the current composition of the Board and agreed
the skills required for additional non-executive directors which
included individuals with requisite skills and experience to take
over as Chair of the Audit and Risk Committee and individuals
with experience in technology and people-related areas
• Appointed Heidrick & Struggles (H&S) as the independent
executive search firm (H&S has no other connection with the
Company or any individual director)
• Reviewed shortlist of candidates
• Interviews held with prospective candidates
Q1
2020
• Further interviews held with prospective candidates
• Agreed the appointment of Lucinda Bell, Ceci Kurzman and
Anne Wade and recommended their appointments to the
Board for approval
• The Board approved the appointments and these were
announced to the market
• Lucinda and Ceci attended the Board meeting held on
26 February 2020 in anticipation of their appointment on
28 February 2020
Q2
2020
• Comprehensive induction programmes arranged and held
remotely. (Further details are set out on page 77)
• Anne attended the Board meeting held on 30 April 2020,
being the date of her appointment
Committee appointments
As set out earlier in the report, Lucinda Bell took over as Chair of the
Audit and Risk Committee (ARCom) on 1 May 2020 and it is the
intention that Anne Wade will take over from Richard Berliand as
Remuneration Committee (RemCom) Chair on the conclusion of the
2021 AGM. The Committee considered the proposed appointments
and agreed to recommend them to the Board for approval. The
Committee also agreed to recommend to the Board for approval the
appointment of Lucinda and Anne as members of the Committee
following their appointments as Chair of the ARCom and Chair of
the RemCom.
Renewal of existing NED appointments
The Committee reviewed the profile of Board tenure of our non-
executive directors in light of its future needs. As part of this, it
considered the renewal of John Cryan’s appointment as Chair, whose
second three-year term was due to expire in early 2021, and the
renewal of Zoe Cruz’s appointment, whose first three-year term was
due to expire in the first half of 2021.1 It agreed, taking account of the
current cycle of Board development and succession and the feedback
on their contributions in the 2020 Board evaluation, to recommend to
the Board for approval the renewal of each appointment for a further
three-year term, subject to annual reappointment by shareholders at
the AGM.
1 Neither of the directors took any part in the consideration of the renewal of their own appointment.
Man Group plc Annual Report 2020
87
Governance Nomination Committee report continued
Committee evaluation and priorities for 2021
The Committee reviewed progress on the actions agreed by the
Committee last year for 2020 and the feedback on the 2020
Committee evaluation as summarised below.
Action
Progress
Additional non-executive
skills – conduct a search
for non-executive directors
with exposure to asset
management or related
businesses with a focus on
technology or people issues
Appointed three new non-executive directors to
the Board: Lucinda Bell, Ceci Kurzman and
Anne Wade, who bring valuable public company,
asset management, entrepreneurial and people
experience. Any further appointments should
focus on individuals with direct technology
experience in order to further strengthen the
Board’s skills and experience in this area.
Diversity – continue to
focus on diversity, including,
but not limited to, gender
diversity as part of the above
search by seeking diverse
shortlists
Appointed three female non-executive directors
and, as a result, achieved gender parity on the
Board. The Board also exceeds the ethnic
diversity targets set by the Parker Review.
Further details on Board diversity can be found
in the charts shown on page 63.
Management and Board
succession – continue to
focus on succession
planning
Specific discussions on succession planning
were not as extensive as intended, largely due to
the lack of face-to-face opportunities as a result
of the pandemic. However, further focus will be
given to management and Board succession in
2021 with Committee meetings to be held at
least bi-annually to allow time for further
discussion and specific Board sessions
arranged to review talent management and the
succession planning process.
The following were agreed as priority areas of focus for the Committee
in 2021:
• Continue to strengthen focus on succession planning at Board and
senior management level.
• Consider any changes to the remit of the Board Committees (for
example, extending the remit of the Committee to include specific
responsibilities for corporate governance) taking account of industry
best practice and feedback obtained as part of the external Board
and Committee evaluation to be undertaken in 2021.
Board diversity policy
Overview
The Board embraces and seeks to promote diversity in its broadest
sense, both in terms of its own composition and within Man Group’s
senior management and employee base as a whole. It sees diversity
as the combination and interaction of people with different
knowledge, skills, experience, backgrounds and outlooks and
believes that this creates greater value and leads to better decision
making and performance at all levels of the organisation.
The Board is responsive to diversity challenges within the financial
services industry and endorses the steps initiated and implemented
by the executive management team to help navigate these
challenges. In addition to the internal diversity and inclusion initiatives
within Man Group, the Chair and CEO are members of the 30%
Club, Man Group is represented on external inclusion focused
committees and working groups and is also a signatory to the
Women in Finance Charter and Race at Work Charter.
The Board supports the recommendations for the adoption of
voluntary targets for building gender and ethnic diversity into FTSE
company boards and senior management and is pleased to report
that it has exceeded the previously disclosed gender diversity target
of at least 33% female representation on the Board in the medium
term. The Board is keen to maintain an appropriate gender balance
and is therefore committed to ensuring that there is at least 40%
representation of either gender on the Board, whilst recognising that
during periods of transition on the Board, this balance may not,
temporarily, be maintained. The Board also confirms that it has more
than one Board member from an ethnic minority background as set
out in the Parker Review and is committed to ensuring that the Board
remains ethnically diverse. Page 63 provides further details on
current Board diversity metrics. Set out below are three main areas
on which we are focusing in pursuing our policy objectives.
Board appointments
When seeking to make a new appointment, the Board will focus
first on identifying an individual with the capability, expertise and
experience which are required to discharge the specific role, and will
88
Man Group plc Annual Report 2020
select the best candidate on that basis. Within this remit, it recognises
the added value to be derived from all forms of diversity, including
diversity of gender, gender identity, sexual orientation, ethnicity, social
background, and cognitive and personal strengths. To support this
objective, we adopt a formal approach to Board searches which
includes insisting on strong representation of under-represented
groups on search firms’ long and short lists and remaining conscious
of any potential for bias in the interview and selection process. We will
also consider and explore alternative routes to the supply of
appropriate candidates.
Implementation in 2020: Following discussion and recommendation
by the Committee, the Board broadened its knowledge and
experience base with the appointments of Lucinda Bell and Ceci
Kurzman on 28 February 2020 and Anne Wade on 30 April 2020 as
non-executive directors, following which the Board comprised 50%
women and 50% men. In addition to the gender parity achieved on the
Board as a result of the appointments, Lucinda, Ceci and Anne
strengthen the existing skillset on the Board as well as bringing
complementary areas of expertise.
Oversight of recruitment, development and inclusion
The Board continues to encourage and oversee the output from a
wide range of recruitment and people development policies and
initiatives led by the executive management team which aim to grow
the diversity of Man Group’s talent pool, provide development
opportunities for all and embed an inclusive culture. While we cannot
lead such initiatives directly, our role is to monitor and challenge the
impact they are having on the firm. As part of this oversight we review
the level of gender diversity introduced through our summer internship
and graduate programmes and women’s progression over time
through mentoring, retention and Returner initiatives. We also keep
updated on Man Group’s relationships with partners who can help
source talent from more diverse backgrounds and under-represented
groups and Man Group’s sponsorship of events which encourage
more diverse talent into financial careers.
In addition, a key role of the Nomination Committee is to monitor and
discuss with the CEO the career development and succession plans
for senior management across the firm, including the progress of
any under-represented groups. This enables us to promote the
development of a strong and diverse pipeline of talent for future
executive leadership and Board positions.
Implementation in 2020: The Board received regular updates on
specific people hires and promotions and discussed Man Group’s
diversity and inclusion network activities to promote and support
a diverse culture within the organisation. Further details are set out
on pages 56 to 60. The Board also reviewed and provided feedback
on Man Group’s Corporate Social Responsibility booklet (available
at www.man.com) which sets out Man Group’s commitment to
improving diversity within the Company and more broadly across
the industry, and the broad range of initiatives in place to support
this. Despite reduced face-to-face opportunities for specific Board
discussion on management development and succession, the Board
was able to increase its exposure to executives below Board level
and to assess the strength, breadth and diversity of management
resource available to the business through updates at Board and
Committee meetings from Executive Committee members and other
members of the management team on the areas of the business for
which they are responsible.
Review and reporting
The Board is committed to the development of diversity on the Board
and among Man Group’s employees. It will seek feedback on Board
balance, including the balance of skills and experience, in its annual
Board evaluation and will keep the review and challenge of Man
Group’s people development, inclusion and diversity programmes
firmly on the Board agenda. An account of the Board’s activities and
progress against its objectives in these areas will be given in the
Annual Report each year.
Implementation in 2020: Feedback from the 2020 Nomination
Committee and Board evaluations has confirmed the positive
progress made over the past year while highlighting the need to
bring additional technology skills and expertise onto the Board
and continued focus on senior management development and
succession planning as noted above.
Man Group plc Annual Report 2020
89
Governance Contents
Chair’s annual statement
Remuneration at a glance
Directors’ Remuneration Policy summary table
Remuneration outcomes for 2020
Executive director pay in the context of Man Group’s shareholders
Executive director pay in the context of Man Group’s employees
91–94
95–98
95
96-97
97
98
Remuneration outcomes in 2020
Single total figure of remuneration for executive directors
Annual bonus in respect of 2020 performance
Relative importance of spend on pay
Review of past performance
Percentage change in directors’ remuneration
CEO pay ratio
Retirement benefits
Single total figure of remuneration for non-executive directors
Payments for loss of office and payments to past directors
Directors’ interests
Directors’ interests in shares and options under Man Group
long-term incentive plans
Shareholder voting and engagement
99–106
99
99–100
101
101
102
102
103
103
103
103
104–105
106
Implementation of Directors’ Remuneration Policy for 2021
Base salary
Annual bonus for 2021
Long-Term Incentive Plan for 2021
Non-executive directors’ Remuneration Policy for 2021
107
107
107
107
107
Remuneration Committee
Membership and attendance
Independent advisers
Committee activities during 2020 and the early part of 2021
2020 Committee evaluation
Benchmarking and peer groups
Directors’ Remuneration Policy
Executive directors’ Remuneration Policy
Illustrative pay for performance scenarios
Performance measures selection and approach to target-setting
Differences between executive directors’ and employees’
remuneration
Approach to recruitment remuneration
Service contracts and exit payment policy
External appointments
Non-executive directors’ Remuneration Policy
Recruitment of non-executive directors
Consideration of conditions elsewhere in the Company
Consideration of shareholder views
108–110
108
108
109
109
110
111–117
111-113
114
114
114
115
116
117
117
117
117
117
Directors’ Remuneration report
1.
Chair’s annual
statement
Richard Berliand
Chair of the Remuneration Committee
Summary of the Remuneration
Committee’s activities in 2020
• Reviewed and consulted with shareholders on the
Directors’ Remuneration Policy.
• Determined the total annual compensation for the
executive directors, Executive Committee members
and Remuneration Code staff.
• Reviewed the remuneration of the Chair and
determined that no changes should be made.
• Considered compensation below the Board, including
by reference to both gender and ethnicity metrics.
• Reviewed and approved the 2019 DRR.
Attendance
Committee member
Richard Berliand (Chair)
John Cryan
Zoe Cruz
Dame Katharine (Kate) Barker
Anne Wade1
Meetings attended
7/7
7/7
7/7
7/7
4/4
1 Anne Wade was appointed to the Board on 30 April 2020 and attended
all meetings after that date.
How the Committee spent its time in 2020
Executive directors’
36%
remuneration
Employee remuneration 13%
Senior management
compensation
Shareholder engagement,
DRR and remuneration
policy
Governance and other
Financial regulation
26%
11%
7%
7%
90
Man Group plc Annual Report 2020
___“We believe rolling forward
the existing policy for a further
year is the appropriate
approach at this time.”
Dear Stakeholder
On behalf of the Board, I am pleased to present the Directors’
Remuneration report (the DRR) for the year to 31 December 2020.
For ease of reference, this report contains the following sections:
• a detailed index to help you find the sections you need (page 90);
• this annual statement (pages 91 to 94);
• the remuneration ‘at a glance’ section, summarising how the
Remuneration Policy has been implemented in 2020 (pages 95 to 98);
• the annual report on remuneration (pages 99 to 110); and
• the Directors’ Remuneration Policy on which shareholders will be
asked to vote at the 2021 AGM (pages 111 to 117).
1.1 Introduction
The unexpected backdrop to 2020 has been the impact of the
global pandemic; since its onset, the Board has acted to position
the business for long-term success and our strong balance sheet has
allowed us to concentrate on our people and our clients. As an active
investment management firm, our priority is delivering superior risk
adjusted performance for our clients which will translate into clients
choosing to allocate further capital to the firm, driving net inflows
and growing profitability and value creation for our shareholders.
Throughout the crisis, our foremost priorities have been the health
and well-being of our colleagues and the performance of our clients’
assets. We were able to implement working from home with minimal
disruption for almost the entire workforce from early in the year, which
meant we have been fully operational throughout, supporting clients
through challenging markets. We have not requested or received any
government support and grew our workforce during 2020. We have
paid all dividends as normal, completed the $100 million share
buyback announced in October 2019 as planned and initiated a further
share buyback in September 2020. We were also very pleased to be
able to provide significant expertise in technology and quantitative
modelling for the purpose of modelling the pandemic, following calls
for support from the Royal Society. Investing in our talent and
technology, combined with our deep relationships with clients,
is what will drive our future growth as the recovery develops.
Luke Ellis has informed the Board that he intends to donate his
entire 2020 cash bonus to charities supported by Man Group plc.
The decision has been taken in recognition of the impact that the
pandemic has had on the financial position of individuals and
businesses, including many charitable organisations.
During the past year, we conducted a review of our Directors’
Remuneration Policy, ahead of the three-year renewal of approval by
shareholders due at the AGM in May 2021. In the early autumn of
2020, we began an initial consultation with our biggest shareholders
on some relatively limited changes to the current policy. During the
course of that consultation it became clear that the forthcoming AGM
season is likely to be a particularly busy one as businesses grapple
with the impact of the pandemic and shareholders are called upon to
vote on their decisions in unprecedented circumstances. Indeed,
investors’ willingness to engage and the depth of any engagement was
lower than we have seen in prior years. Consequently, although we
believe that the small changes we were proposing were appropriate,
we will wait until next year to consult further on making them, when we
can also build into the new policy any necessary changes to comply
with the upcoming Investment Firms Prudential Regime (IFPR). We are,
therefore, asking shareholders to approve a roll-over of the current
policy for a further 12 months. The only change that is now proposed
is to extend the post-employment shareholding requirements to align
with best practice corporate governance and the Investment
Association’s remuneration principles, as set out in more detail below.
1.2 Directors’ Remuneration Policy
The Committee considers that the current policy has operated
broadly as intended since its approval in 2018 and does not require
fundamental change. The main change on which we began our
consultation with shareholders was to equalise the variable pay
opportunity between the short and long-term incentive opportunities,
such that each would represent 300% of salary. We were also
intending simultaneously to increase the amount of bonus deferred to
55% to maintain long-term pay broadly in line with the current ratios.
We believe an equal split between bonus and long-term incentives
would better align the executive directors with both employees and the
sector more widely. Although we received some form of response from
a majority of the largest shareholders contacted in our consultation,
many advised us that they had no comment or could not comment on
whether they would support the changes until they had reviewed them
in the context of public disclosures to be included in the DRR. We were
also conscious that the timing of the proposed changes was being
driven by the standard three-year policy renewal but that it was
possible we would need to revert to shareholders again in one year’s
time to update the policy to be compliant with the new IFPR. The
Financial Conduct Authority (FCA) has confirmed that the IFPR will
come into force on 1 January 2022 but the detailed requirements and
an understanding of their impact for Man Group, and specifically for the
structure of executive director remuneration, are still being considered.
Consequently, the Committee has now decided that the most
appropriate approach is to ask shareholders to support a roll forward
of the current policy for a further year. Our intention is to revert to
shareholders again this time next year with a policy that is likely to
encompass the changes on which we have already started to consult:
namely changes to the weightings of the incentive arrangements, as
well as incorporating any changes required to comply with IFPR.
Following feedback from shareholders this year, the Committee does,
however, consider it appropriate to bring the post-employment
shareholding requirement into line with market-leading practice and the
Investment Association’s principles. Consequently, the executive
directors will now be required to retain their shareholdings in full for two
years after departure from Man Group plc; this will be at the lower of
either their required or actual shareholding on leaving. The Committee
believes it has established an effective approach to ensuring
compliance with the requirement to retain shares following a director’s
departure, whatever the circumstances. As a condition of their
participation in the variable incentive arrangements each year,
executive directors are required to sign a letter acknowledging their
obligations to retain shares after their departure. Shares are held on
behalf of directors in a brokerage account established by the
Company. The contracts of the current executive directors were
agreed before the requirements around post-cessation shareholdings
were introduced so the annual letter gives contractual effect to this
requirement. In the future, new executive directors’ contracts will
include the requirement. On departure, where the Company enters
into a termination agreement with the director this will again include this
requirement, as was, for example, the case on the departure of the
former President of Man Group plc during 2019.
Man Group plc Annual Report 2020
91
Governance For the bonus, the PBT measures are to be replaced with equivalent
EPS measures (Core Management Fee EPS and Core Total EPS)
following the Board’s review of the Group’s financial KPIs. This
increases alignment with the metrics we use in our LTIP awards today
and we believe it more comprehensively supports the delivery of our
strategic priorities to deliver efficient and effective operations and
returns to shareholders. The Company’s strategy has generated
significant cash flow over time. Some of these cash flows have been
used over recent years to buy back shares, thereby reducing the share
count and increasing the amount of profit per share. On a longer-term
view some of these cash flows were used to acquire businesses,
increasing Group revenues, profit before tax and also earnings per
share. The current metric does not capture the benefit to shareholders
of returning capital via buybacks, but does capture the benefit to
shareholders from acquiring businesses. Core EPS measures the
benefit of either capital allocation decision equally and we think is
preferable in this regard.
Directors’ Remuneration report continued
1. Chair’s annual statement continued
1.3 Performance metrics
As part of its consideration of the policy, the Committee brought
forward its normal annual review of the incentive metrics to ensure
they are appropriately incentivising delivery of Man Group’s short
and long-term goals without encouraging inappropriate risk-taking.
This is not a policy change, since the policy allows the Committee
the flexibility to adjust the metrics and their weightings in both the
incentives to ensure they drive the delivery of performance over time.
For the Long-Term Incentive Plan (LTIP), the weightings of the Core
Management Fee EPS and Core Total EPS measures will be changed
to 10% and 30% respectively (currently at 20% each). This will first
impact the LTIP award to be granted in March 2021. We believe
this more closely aligns long-term outcomes to overall Company
performance and shareholder experience; to be clear, it does not
indicate that the Committee is downgrading the importance of
management fees but we believe it is appropriate to slightly increase
the weighting of performance fees, via their inclusion in Core Total
EPS. We consider that performance fees are currently underweighted
and, although volatile, they remain an important and valuable income
stream over time. In the long run it is the overall profitability of the
firm, whether from management or performance fees, that drives
shareholder returns and we think the slight increase in weighting is
an appropriate recognition of this. Management fees are an important
indicator of progress in growing the long-term profitability of the
business; they represent the majority proportion of Total PBT (59%
on average over the past five years). Total PBT is still therefore driven
more by management fee PBT profits than performance fee profits.
The impact of the switch in weightings is illustrated in the table below
which shows that the amount of the combined incentive outcome
driven by management fee performance falls from 32% currently
to 29% in the new policy (assuming the five-year average proportion
of management fee PBT versus performance fees).
Variable pay metrics – impact of weighting changes
Metric
Relative Investment Performance
Relative Net Inflows
Relative TSR
Strategic and personal
Core Management Fee PBT/EPS
Core Total PBT/EPS2
Estimated management fee component
Estimated performance fee component
Total
% Salary
Management fee related
Performance fee related
Current weightings
New weightings
Bonus
0%
30%
0%
30%
20%
12%
8%
100%
250%
32%
8%
LTIP
25%
10%
25%
0%
20%
12%
8%
100%
350%
32%
8%
Aggregate
weighting1
15%
18%
15%
12%
Bonus
0%
30%
0%
30%
20%
20%
12%
8%
100%
32%
8%
12%
8%
100%
250%
32%
8%
LTIP
25%
10%
25%
0%
10%
18%
12%
100%
350%
28%
12%
Aggregate
weighting1
15%
18%
15%
12%
14%
15%
11%
100%
29%
11%
Variance
0%
0%
0%
0%
-6%
+3%
+3%
–
-3%
+3%
1 Aggregate weighting shows the overall weighting when consolidated across both the bonus and LTIP opportunities.
2 The management fee component of Core Total PBT/EPS is assumed to make up 59% of the total, based on five-year average performance, with performance fees making up the remaining 41%.
Core Total PBT/EPS starts with Core Management Fee PBT/EPS and then adds Adjusted Performance Fee PBT/EPS.
92
Man Group plc Annual Report 2020
The performance metrics selected for use in the short and long-term incentive arrangements in the Directors’ Remuneration Policy have been
chosen to reflect Man Group’s strategic priorities; they are aligned with Man Group’s financial key performance indicators (KPIs) which illustrate
and measure the relationship between the investment experience of Man Group’s clients, our financial performance and the creation of shareholder
value over time. That alignment ensures that the link between strategy, performance and reward is clear, as shown in the table below.
Strategic priority
Innovative
investment
strategies
Strong client
relationships
Efficient
and effective
operations
Returns to
shareholders
Bonus metrics
Relative Net Inflows
Core Management Fee EPS
Core Total EPS
Strategic and Personal Objectives
LTIP metrics
Relative Investment Performance
Relative TSR
Cumulative Relative Net Flows
3-year Cumulative Core Management Fee EPS
3-year Cumulative Core Total EPS
1.4 Shareholder engagement in 2020
As indicated above, the Committee consulted widely before deciding
to roll the current Directors’ Remuneration Policy forward for a further
year. During autumn 2020, letters were sent to some 20 of our top
shareholders, representing almost 60% of our shareholder base,
setting out the proposed changes and seeking feedback on our
proposed new Directors’ Remuneration Policy. We received some
form of response from a number of those contacted and I met virtually
with three of our biggest shareholders as well as the Investment
Association, Glass Lewis, ISS and PIRC. We really appreciated the
thoughtful and constructive feedback from those investors that were
willing to engage, which has helped to inform our thinking and resulted,
amongst other things, in us providing further details of the rationale for
the change in the weightings of the LTIP metrics, described earlier.
However, we were disappointed that some of our largest shareholders
did not take up our offers to meet, even if virtually, and chose to
reserve any comment on the proposed policy changes until after
publication of the DRR. We considered that timing would be too late
in the process to enable us to respond to any concerns that may
have been identified then.
When we decided that it was not appropriate to seek any further time
or input from shareholders, in what will inevitably be a particularly busy
year for them as a result of the impact of the pandemic, we again
wrote to our top shareholders and their representative bodies. That
letter set out the reasons for our decision to roll the current Directors’
Remuneration Policy for a further year.
1.5 The link between the pay of executive directors
and the workforce
As set out in last year’s report, the Remuneration Committee has
engaged directly with employees by providing a simple document
explaining how the remuneration of the executive directors is
determined and how that links with the way employees are
remunerated. A dedicated email address was also established to
provide employees anywhere in the Company with a quick and easy
way to raise any questions with the Remuneration Committee. In the
context of the pandemic it was decided that nothing additional would
be undertaken during 2020 and that the effectiveness of the approach
would be reviewed in 2021.
In setting its priorities for 2020, the Remuneration Committee identified
that deepening its understanding of compensation below the Board,
including by reference to gender and ethnicity diversity metrics,
would be a specific area of focus. During the year the Committee
was presented with detailed analysis which enabled it to review
compensation patterns across both gender and ethnicity metrics.
This was the first time such detailed data was available, as a result
of the new Finance and HR system implemented during 2019, and it
is intended that this information will be presented to the Committee
at least annually in future so that a picture can be progressively built
up and it can be used as part of tracking the effectiveness of our
diversity objectives.
As part of further developing its understanding of the approach to
all-employee remuneration, the Committee again undertook the
following actions:
• reviewed the approach to variable remuneration across all Man
Group’s businesses;
• reviewed the ratio of CEO pay to the UK employee population
and discussed the reasons for the movement since 2019 as set
out in the commentary under table R6 on page 102;
• approved the total bonus pool to be allocated to staff;
• carried out a detailed review of bonus proposals and evaluations
for the Executive Committee and individuals covered by the
Remuneration Codes; and
• reviewed annual performance ratings and compensation outcomes
by gender and ethnicity to ensure decision making was objective
and without bias.
1.6 Review of performance in 2020
2020 was a testing year for each of us individually but also for how
business models coped with the challenges of the pandemic and its
impact on the economy. We have a robust and sustainable business
model and are pleased to report that we have performed well in this
difficult environment. We have seen growth in our management fee
profits as our cost discipline has supported profitability despite lower
management fee revenues year-on-year. We have also delivered solid
performance fee profits in an environment which was challenging to
navigate, albeit down on a very strong year in 2019. Net inflows over
the course of the year have been positive and outperformed those of
our industry peers as clients continued to recognise the quality of our
product offering. The strength of the business model has allowed us to
continue to return capital to shareholders via both dividends and
buybacks. Our confidence in the strength of both our balance sheet
and cash flows meant Man Group continued to pay dividends as usual
and was one of the earliest companies in the FTSE to initiate a new
buyback programme. We end the year at record high FUM levels and
with good momentum into 2021. In addition to strong performance
outcomes we have always maintained our focus on looking after our
clients and our staff. Over the long term it is our focus on looking after
and delivering for clients and ensuring we remain a great place for
talented staff to build their careers that will drive our business.
Man Group plc Annual Report 2020
93
Governance Directors’ Remuneration report continued
1. Chair’s annual statement continued
1.7 Remuneration outcomes for 2020
In a turbulent year for markets, strong relative net inflows were
achieved, resulting in a solid performance in Core Management Fee
PBT. Relative net inflows of 4.6% were delivered, comfortably
exceeding the target of 3.5% and well ahead of the industry. Core
Management Fee PBT of $180 million was ahead of both the target for
this metric and of the prior year. This increase in profit was achieved
despite the lower management fee revenues seen as a result of the
challenging economic environment and resulted from good cost
discipline. Following a year in which record core performance was
delivered in 2019, performance fees were lower in 2020 but exceeded
the threshold for this metric. This resulted in an overall outcome on the
financial component of the bonus of 44.4% out of a maximum of 70%.
Further details of 2020 performance in the context of historic
outcomes and of the targets set for 2020 are shown in graphical form
on pages 96 and 97 of this report in the ‘Remuneration at a glance’
section and in table R2 on page 99.
The strategic and personal objectives of each executive director, which
account for 30% of the overall bonus outcome, are selected to ensure
delivery of sustained performance over time and include a range of
strategic, risk and ESG priorities. Both directors demonstrated
exceptional leadership through the last year, prioritising the well-being
of colleagues and the protection of clients’ assets whilst continuing to
make progress on previously identified priorities. Details of the actual
delivery against the individual objectives is shown in table R2 on page
99 and resulted in overall outcomes of 25% and 24%, out of a
maximum of 30%, for the CEO and CFO respectively.
For the avoidance of doubt, we want to confirm that both the financial
and non-financial objectives were set well before the implications and
impact of the pandemic became known and have not been adjusted
subsequently. In determining whether the bonus outcome was
appropriate, the Committee considered the wider environment as well
as the experience of Man Group’s stakeholders. In that context, it did
not consider that it was appropriate to apply any discretion to the
formulaic outcome.
During the year, the Committee undertook its routine annual review
of the CFO’s salary. Having been brought in on an initial salary which
was well below his predecessor, Mark’s salary has been increased
in line with or below the average employee increase in each of the
last two years. Whilst it remains significantly below his predecessor,
the Committee decided that it was not appropriate to make any
adjustment at this time. It will continue to keep his salary under review.
Routine reviews were also undertaken of the Chair and NEDs’ fees
and again no changes were made. During 2020 average employee
salaries increased by 4%.
As a reminder, the first award was made under the LTIP in March 2019,
replacing the Deferred Executive Incentive Plan (DEIP), the former
long-term plan in which awards were made at the end of the
performance period. The first LTIP award will vest in March 2022.
Consequently, no long-term remuneration has been reported in the
single figure table (page 99), as required by the DRR regulations.
However, a table has been included in the ‘Remuneration at a glance’
section (page 96) to illustrate this impact in more detail, by assuming
a ‘fair value’ for the LTIP.
At the time the LTIP award was made to the executive directors in
March 2020, global financial markets were experiencing significant
volatility in response to fears about the pandemic. Consequently, the
Committee notified the Directors that, rather than scaling back the
award level upfront, when it assesses the outcome under the
performance conditions at the end of the performance period, it
will also consider whether market-driven (rather than underlying
performance-driven) increases in share price would result in a windfall
gain as a result of the unusual circumstances at the time of grant.
94
Man Group plc Annual Report 2020
In the event that the Committee considers that such a windfall gain
has been made, it reserves the right to reduce the number of shares
under the award, prior to assessing the performance conditions based
on that reduced number of shares.
The metrics and targets for the LTIP award to be granted in March
2021 are shown in table R19 (page 107). The level of vesting for the
LTIP at threshold is 0%, meaning the directors must exceed threshold
to receive any award; this represents a much tougher hurdle than in
most listed businesses. The targets have been set in line with prior
year except the threshold for Relative Net Inflows has been set at 0%
meaning the directors will only receive a payment under this metric
if they beat their industry peers. Target and maximum are set at 9%
and 18% respectively, representing significant outperformance
against the industry if achieved.
In considering whether the overall remuneration of the executive
directors for 2020 was appropriate, the Committee considered
a number of factors, including:
• 2020 proved to be a significant test of leadership with an almost
overnight move to virtual working; the Board considered that
the executive directors had responded extremely well to the
challenging circumstances ensuring both employees and clients
felt supported throughout whilst the potential for increased risk
was carefully managed.
• The experience for Man Group’s shareholders during a period in
which solid profitability was delivered, the dividend maintained and
a new share buyback programme initiated.
• The experience of Man Group’s employees who participated
in record numbers in the staff survey and delivered overall
engagement scores of 8.3/10; several employee well-being initiatives
were rapidly implemented to support the new ways of working.
Although staff bonuses were lower than prior year, this resulted from
the exceptional level of performance fees delivered in 2019 which
were not fully reflected in the executive directors’ bonuses at that
time because of the different structure of their remuneration. By
contrast, in 2019 staff bonuses increased by 10% on the previous
year whereas the directors’ bonuses fell.
• The Committee also considered the wider societal context and is
cognisant of the devastating impact that COVID-19 has had on
individuals and organisations across the globe. Man Group plc is
fortunate to operate in a sector that has not been severely impacted
by the pandemic although our employees and clients have all been
affected to some extent. Both directors demonstrated excellent
leadership in unprecedented circumstances and the Committee
considered their variable reward outcomes were an appropriate
reflection of that performance.
1.8 Conclusion
I hope that you find the information in this letter, and the sections of
the DRR that follow, to be clear and useful and I would welcome any
feedback you may have. At the next AGM and after five years in the
seat, I will be handing over the role as Chair of the Remuneration
Committee to Anne Wade, who joined the Board in April 2020 and has
served as a member of the Committee since then. I will continue to be
a member of the Committee and look forward to supporting Anne in
her new role. We hope that Anne’s appointment, combined with a
further review of the Policy, will provide an opportunity for further
meaningful engagement with shareholders in the coming year.
We look forward to welcoming you at our AGM and receiving your
support for the renewal of our Directors’ Remuneration Policy for
one year and for our 2020 DRR at that meeting.
Richard Berliand
Chair of the Remuneration Committee
2. Remuneration at a glance
2.1 Directors’ Remuneration Policy summary table
Key elements
2020
2021
2022
2023
2024
2025
2026
Remuneration Policy
Implementation in 2020/21
Salary
– Overall policy maximum of
Fixed pay
Cash
bonus
Deferred
bonus
Long-term
incentive
Share
ownership
Malus and
clawback
Pension
allowance
Benefits
Maximum
opportunity
Operation
Maximum
opportunity
Operation
Salaries effective from 01/01/20:
– CEO $1.1m
– CFO $625k
Salaries effective from 01/01/21:
– CEO $1.1m
– CFO $625k
$1.1m will apply to all executive
directors, meaning no increase
for the CEO over the life of
the policy
– Policy maximum 14% salary1
– Actual 14% salary
– Includes family private medical
insurance, life assurance and
permanent health insurance
– 250% of salary
KPIs (%)
– Awarded as a combination
of cash (50%) and deferral
(50%) into shares vesting
in equal tranches in each
of the following three years
– Opportunity to defer up to
half the deferred amount
into funds, once the share
ownership requirements
are met
– Malus and clawback apply
Net Inflows
Core Management
Fee EPS
Core Total EPS
Strategic and
Personal Objectives
– 350% of salary
KPIs (%)
– Man Group Long-Term
Incentive Plan (LTIP)
– Forward-looking three-year
performance conditions with
share grant at year 0, vesting
year 3 with subsequent two-
year holding period
– Malus and clawback apply
Relative Investment
Performance
Relative TSR vs FTSE 250
3-year Cumulative Core
Management Fee EPS
3-year Cumulative Core
Total EPS
Cumulative Net Inflows
30
20
20
30
25
25
10
30
10
Share
ownership
requirements
– CEO 300% of salary
– Other executive directors
200% of salary
– 100% of the requirement
to be retained for two years
after leaving
Actual shareholdings for each
of the executive directors as at
31/12/20:
– CEO 1,122%
– CFO 636%
Malus and
clawback
The Committee may apply malus and/or clawback to variable pay
in certain specified circumstances, including:
– Misconduct.
– Material misstatement of financial results affecting the assessment
of a performance condition, or where there has been an error
or inaccuracy relating to the determination of variable pay.
In addition, the Committee can apply malus if a director:
– fails to meet the required standards of fitness and propriety;
– participates in or was responsible or accountable for a material
failure of risk management;
– has caused or contributed to a material extent to censure
by any regulatory authority; or
– has caused or contributed to a significant detrimental impact
on the Company’s reputation.
The full detail of the executive directors’
Remuneration Policy is included on pages 111 to 117.
1 The directors’ maximum pension contribution is aligned to the maximum available to all UK
employees, currently 14% of salary.
Man Group plc Annual Report 2020
95
Governance
Directors’ Remuneration report continued
2. Remuneration at a glance continued
2.2 Remuneration outcomes for 2020
The chart below shows the actual and ‘illustrative’ total remuneration of the executive directors in each of the last two years. As set out in detail
in the 2018 DRR, the impact of switching from the former Deferred Executive Incentive Plan (DEIP) to the LTIP is that no long-term variable pay
will be included in the single figure table until the first award vests at the end of 2021. Consequently, in the interests of clarity and transparency,
the 2019 and 2020 ‘illustrative’ data in the table below shows the potential single figure outcome using an expected value of 50% for the LTIP.
Achievement at this level would require target performance to be delivered on all five metrics. The actual outcomes for the March 2019, 2020
and March 2021 awards will be reported in the DRRs for 2021, 2022 and 2023 respectively.
Single total figure of remuneration
Luke Ellis
CEO
Actual
2019
Illustrative
2019
Actual
2020
Illustrative
2020
1,255
1,255
1,241
1,241
1,549
$2,804m
1,549
1,925
$4,729m
1,909
$3,150m
1,909
1,925
$5,075m
Mark Jones
CFO
Actual
2019
Illustrative
2019
Actual
2020
Illustrative
2020
Fixed pay
Annual bonus
Long-term incentive
705
705
708
708
878
$1,583m
878
1,094
$2,677m
1,069
$1,777m
1,069
1,094
$2,871m
Bonus
As set out in the Chair’s statement, strong relative net inflows delivered a solid performance in Core Management Fee PBT and despite lower
performance fees than the 2019 high, Core Total PBT exceeded the threshold for this metric. This resulted in achievement of 44.4% out of a
maximum of 70% on the financial component of the bonus, with the non-financial objectives in a range from 24% to 25% out of a maximum
of 30%.
Short-term annual cash bonus (%)
Luke Ellis
Actual
Opportunity
Mark Jones
Actual
Opportunity
0%
50%
100%
0%
50%
100%
Net inflows
Core Management Fee PBT
Core Total PBT
Strategic and personal
The approach to target setting has been described in detail in the
2018 and 2019 DRRs and the Remuneration Committee again
established the bonus targets by reference to internal and external
forecasts, including consensus estimates available at the time and
long-run historical performance of both Man Group and our peers.
The charts below show actual 2020 performance compared against
the targets set for 2020 and historical performance.
Net inflows, relative growth (%)
16%
10%
2%
4.6%
-1.2%
6% Maximum
3.5% Target
1% Threshold
2016
2017
2018
2019
20201
1 For 2016 to 2019, the metric was growth in Net Inflows; from 2020 the metric is growth in
Relative Net Inflows. The chart shows absolute growth for 2016 to 2019 and relative growth
for 2020.
96
Man Group plc Annual Report 2020
Core Management Fee PBT ($m)
Core Total PBT ($m)
203
178
170
180
188 Maximum
175 Target
162 Threshold
132
384
359
384
284
237
388 Maximum
295 Target
237 Threshold
159
0
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Core Management Fee PBT
Core Performance Fees
2.3 Executive director pay in the context of Man Group’s shareholders
The chart below shows the TSR generated since Luke Ellis’s appointment as CEO in September 2016, compared to both the FTSE 250
and the FTSE 350 Financial Services Index.
Total Shareholder Return (TSR) (Sep 2016 – Dec 2020)
250
200
150
100
50
0
Sep
2016
Dec
2016
Apr
2017
Aug
2017
Dec
2017
Apr
2018
Aug
2018
Dec
2018
Apr
2019
Aug
2019
Dec
2019
Apr
2020
Aug
2020
Dec
2020
Man Group TSR
FTSE 250 TSR
FTSE 350 Financial Services TSR
Source: Datastream
The chart below shows the executive directors’ shareholdings compared to their shareholding requirements. Under the Remuneration Policy
shares owned outright and those deferred shares that no longer have performance conditions attached count towards the shareholding
requirement. In the future, LTIP shares retained during the two-year post-vesting holding period will also count towards the requirements.
Shares which are not owned outright are shown net of tax (i.e. excluding that proportion of those shares expected to be sold on vesting to
settle the associated tax liability). Both executive directors comfortably exceed their shareholding requirement with shares owned outright.
Executive directors’ shareholdings (number of shares)
Luke Ellis (requirement = 300% of salary)
6,541,131 shares
Mark Jones (requirement = 200% of salary)
2,108,756 shares
0
200
400
600
800
1,000
1,200
% of salary
Shareholding requirement
Shares owned outright
Shares no longer subject to performance conditions (net)
Man Group plc Annual Report 2020
97
Governance Directors’ Remuneration report continued
2. Remuneration at a glance continued
2.4 Executive director pay in the context of Man Group’s employees
In determining the appropriate remuneration for the executive directors, the Committee carefully considered conditions for employees across
the Group. A high calibre, motivated workforce, appropriately rewarded for their contributions, is a critical component of our success and the
table below illustrates remuneration paid to the executive directors in the context of the wider workforce.
CEO – single total remuneration figure (SFT) ($’000)
Ratio of SFT to median UK employees1
Compensation – all employees ($m)2
Compensation ratio3
Number of bonus-eligible employees
Mean annual bonus award per bonus-eligible employee ($’000)
Median annual bonus award per bonus-eligible employee ($’000)
CEO SFT as % of total compensation of all employees
Aggregate total SFT of all executive directors as % of total compensation of all employees
Year ended
31 December
2020
3,150
19:1
446
48%
1,367
177
34
0.7%
1.1%
Year ended
31 December
2020
illustrative4
5,075
30:1
446
48%
1,367
177
34
1.1%
1.8%
Year ended
31 December
2019
2,804
17:1
460
43%
1,312
203
35
0.6%
1.0%
Year ended
31 December
2019
illustrative4
4,729
29:1
460
43%
1,312
203
35
1.0%
1.6%
1 See table R6 on page 102 for the full disclosure of the CEO ratio.
2 Compensation for all employees represents total fixed pay (salary, pension and benefits) and variable pay in respect of 2020.
3 Compensation ratio represents total compensation costs for all employees (fixed base salaries, benefits, variable bonus compensation and associated social security costs) as a proportion of net
revenue (gross management and other fees, performance fees, income or gains on investments and other financial instruments, and share of post-tax profits of associates, less distribution costs).
4 The columns headed ‘Year ended 31 December 2019 – illustrative’ and ‘Year ended 31 December 2020 – illustrative’ are included to aid understanding of the impact of the switch to the LTIP award,
which means that no long-term variable pay is included in the directors’ single figure disclosure (table R1, page 99). For illustrative purposes, an expected value of 50% of the face value of the LTIP
award made in March 2020 and the award to be made in March 2021 has been assumed.
98
Man Group plc Annual Report 2020
3. Remuneration outcomes in 2020
3.1 Single total figure of remuneration for executive directors
The table below sets out a single figure for the total remuneration received by each executive director for the year ended 31 December 2020
and the prior year.
Single total figure of remuneration for executive directors (audited) – Table R1
All figures in USD
Salary
Taxable benefits1
Pension benefits2
Other3
Total fixed remuneration
Short-term variable4
Value of vested award
Amount due to share appreciation
Total long-term variable5
Total variable remuneration
Total
Executive directors
Luke Ellis
Mark Jones
2020
1,100,000
2,519
135,206
3,312
1,241,037
1,909,371
–
–
–
1,909,371
3,150,408
2019
1,100,000
3,223
134,929
16,893
1,255,045
1,548,615
–
–
–
1,548,615
2,803,660
2020
625,000
3,149
77,711
2,240
708,100
1,069,245
–
–
–
1,069,245
1,777,345
2019
612,500
3,191
76,727
12,934
705,352
877,609
–
–
–
877,609
1,582,961
1 Taxable benefits includes private medical insurance.
2 Pension benefits are paid into the Man Group Self-Invested Personal Pension with any contributions exceeding the annual or lifetime allowance paid as cash on a cost neutral basis to the Company.
3
4 See table R2 for details of the short-term variable compensation award.
5 The first award under the new Man Group plc LTIP was made in March 2019 for the three-year performance period ending on 31 December 2021. To the extent the performance conditions have been
‘Other’ includes non-taxable benefits (e.g. life insurance, Group income protection and fund fee rebate).
achieved, any vested shares will be reported in this table in the report for 2021. Vested shares are subject to a further two-year holding period.
3.2 Annual bonus in respect of 2020 performance
The annual bonus is based on the Committee’s assessment of executive directors’ performance against objectives agreed by the Board at the
beginning of the year, split 70% based on quantitative metrics and 30% on qualitative performance. The threshold, target and maximum ranges
are considered by the Remuneration Committee to represent appropriately stretching levels of performance and are set by reference to internal
budgets and strategic plans, industry backdrop and external expectations. The targets for Core Management Fee PBT and Core Total PBT
(including Adjusted Performance Fee PBT) have been adjusted to exclude ‘non-core management fees’ relating to discontinued business,
in order to ensure the executive directors are incentivised only using stretching targets for metrics over which they have direct control.
Table R2 shows the results of the Committee’s assessment of the performance delivered in 2020.
Annual bonus in respect of 2020 (audited) – Table R2
Weighting
30%
20%
20%
70%
30%
Financial metric
Increase in Relative Net Inflows
Core Management Fee PBT
Core Total PBT
Total financial metrics
Non-financial metrics
Percentage of maximum annual
bonus awarded
Quantum of award – total2
Quantum of award – paid in cash
Quantum of award – deferred
2019
actual
-1.2%1
$170m
$384m
Threshold
(25% of max)
1.0%
$162m
$237m
Target
(50% of max)
3.5%
$175m
$295m
Maximum
(100% of max)
6.0%
$188m
$388m
2020
outcome
4.6%
$180m
$284m
Bonus outcome,
after weighting
(% of maximum)
21.4%
14.0%
9.0%
44.4%
CFO
24.0%
% achieved
71%
70%
45%
CEO
25.0%
69.4%
68.4%
$1,909,371 $1,069,245
$534,623
$534,622
$954,686
$954,685
In 2019, the metric was increase in Net Inflows.
1
2 50% of the bonus is paid in cash with the remaining 50% deferred into Man Group plc shares; when a director achieves their shareholding requirement, up to half the deferral may be into Man Group
plc funds and the balance into shares. No further performance conditions apply to the deferral, which vests in three equal tranches on the first, second and third anniversary of grant subject, in normal
circumstances, to continued employment.
Man Group plc Annual Report 2020
99
Governance
Directors’ Remuneration report continued
3. Remuneration outcomes in 2020 continued
Assessment of performance against qualitative objectives
Key
Criteria fully met or exceeded
Criteria partially met
Criteria not met
Executive
directors Objective
CEO Develop Man Group’s strategic plan, key
business objectives and assessment
of required resources to be agreed by
the Board.
Continue leading approach to compliance
and risk management including initial
operation of Senior Managers Certification
Regime (SMCR).
Develop new investment content and focus
on research and technology to support
long-term profitable growth. Growth of client
relationships, with a focus on North America.
Continue to improve people development,
succession planning and engagement.
Promotion of appropriate culture in the
business. Promote Man Group as a leading
organisation in the industry for diversity.
Continue to improve Man Group’s
perception with key stakeholders through
engagement and actions, with a specific
focus on actions to improve gender balance
in our management group.
CFO Maintain and improve timeliness, relevance
and quality of information to support
informed and effective decision making
across the business.
Continue to improve people development,
succession planning and engagement.
Promotion of appropriate culture in the
business. Promote Man Group as a leading
organisation in the industry for diversity.
Management of firm’s capital base to
support growth, maintain appropriate
capital strength and improve shareholder
returns over time. Monitor potential
acquisition opportunities.
Continue leading approach to compliance
and risk management.
Continue to improve Man Group’s
perception and favourability with
shareholders, financing counterparties and
wider stakeholders, with a particular focus
on improving Man Group’s positive impact
on our local and wider communities and the
environment.
Outcome
Delivered new peak assets under management and positive net inflows despite the
backdrop of a global pandemic. Exceptional growth from TargetRisk which is now
in excess of $10 billion, exemplifying the success of innovation and organic growth.
Cost discipline led to 6% growth in Core Management Fee EPS despite challenging
markets.
The smooth transition to remote working across the whole Company at short notice
reflected previous investments and planning for more extreme operational stresses.
No events occurred outside the Company’s risk appetite, despite extreme market
turbulence during the year. The SMCR was effectively implemented with no issues.
Net inflows of $1.8 billion and net inflows in three out of four quarters were delivered
in the year with continued growth seen from North America despite not being able
to meet clients in person for much of that time. Continued progress was made on
both new content and new markets, including quantitative approaches to credit
strategies and Chinese markets and onboarding of an experienced discretionary
Asian equities team.
There was a huge management focus on welfare and the engagement of our staff
throughout the year, with an enormous breadth of initiatives as well as direct
personal engagement and communication. Extremely strong feedback from staff on
the support from the Company, reflected in the staff survey seeing engagement
increasing to 8.3/10. Work is also continuing on delivering the pipeline of future
diverse talent with Man Group starting to work with a wide range of partners to
widen access to the asset management industry. This year we published our first
Global Inclusion Statement to better communicate our values.
Exceeded our Women in Finance Charter commitment to achieve 25% of women in
management positions by the end of 2020. The Group Board also achieved gender
parity in 2020. There was a positive contribution to Man Group and to our broader
industry reputation with the CEO’s role as Deputy Chair for the Standards Board for
Alternative Investments.
Automation of daily delivered data for a range of revenue and performance metrics
which allowed for a faster and more informed management response to the rapid
market moves in 2020. Improved statistical analytics on client behaviour and
compensation patterns across the firm were delivered.
As well as the CFO’s contribution to overall staff engagement levels, specifically in
Finance, the staff survey achieved 88% participation and an overall engagement
score of 8.6/10. Finance talent and succession planning was developed further with
a spotlight on diversity. There was continued growth in programmes such as
returners and apprentices that broaden the talent pool that Man Group recruits from.
Risk management of the balance sheet seed book remained strong with seeding
gains of more than $20 million for the full year, including gains for the first half of the
year, despite the extreme stress test of 2020. Interest expense was reduced by a
further $4 million as better financing sources for the seed book were accessed.
Investments into risk management processes and systems proved effective with no
material operational events despite everyone working from home throughout most of
the year. All strategies across the firm continued to operate within risk and liquidity
limits despite the extreme market environment at various points during the year.
Strong shareholder engagement was delivered despite the impact of the pandemic,
for example operating a virtual AGM which was positively noted by both
shareholders and the FRC. Top quartile rankings in our sector were achieved on
ESG metrics and there were continued improvements during the year across all
major third-party providers.
100
Man Group plc Annual Report 2020
3.3 Relative importance of spend on pay
The table below shows the year-on-year change in total employee expenditure compared to the change in shareholder distributions.
Relative importance of spend on pay – Table R3
Total employee expenditure1
Shareholder distributions2
2020
$m
451
254
2019
$m
477
244
%
change
-5
4
1 Remuneration paid to or receivable by all employees (i.e. accounting cost). Refer to Note 4 to the financial statements for further details. Total employee expenditure excludes restructuring costs.
2 Distributions to shareholders (dividends paid of $152 million and repurchase of shares of $92 million in 2019, dividends paid of $147 million and repurchase of shares of $107 million in 2020).
3.4 Review of past performance
The performance graph below compares the Company’s Total Shareholder Return performance against the FTSE 250 Index and the FTSE 350
Financial Services Index. The FTSE 250 has been chosen as the primary comparator to align with the peer group used in the LTIP in which 25%
of the outcome is determined by the Company’s relative TSR performance compared to the FTSE 250 Index. In previous years, Man Group had
chosen the FTSE 350 Financial Services Index as the comparator group so it has also been shown below, for reference.
Total Shareholder Return (TSR) (Jan 2011 – Dec 2020)
300
250
200
150
100
50
0
Jan
2011
Dec
2011
Dec
2012
Dec
2013
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Dec
2020
Man Group TSR
FTSE 250 TSR
FTSE 350 Financial Services TSR
Source: Datastream
Historical CEO remuneration – Table R4
Accounting period ended
CEO single figure ($’000)
Short-term variable award
(as a percentage of maximum
opportunity)3
Long-term variable award
(as a percentage of maximum
opportunity)3
L Ellis2
E Roman2
P Clarke2
L Ellis2
E Roman2
P Clarke2
L Ellis2
E Roman2
P Clarke2
31 Dec
20111
n/a
n/a
6,437
n/a
n/a
n/a
n/a
n/a
n/a
31 Dec
2012
n/a
n/a
1,048
n/a
n/a
n/a
n/a
n/a
n/a
31 Dec
2013
n/a
3,397
978
n/a
31 Dec
31 Dec
2015
2014
n/a
n/a
5,367
5,068
n/a
n/a
n/a
n/a
70% 100% 83.3%
n/a
n/a
n/a
n/a
40% 40.7%
n/a
0%
n/a
17%
0%
n/a
31 Dec
2016
1,347
910
n/a
31 Dec
2017
6,215
n/a
n/a
31 Dec
2018
2,856
n/a
n/a
31 Dec
2019
2,804
n/a
n/a
31 Dec
2020
3,150
n/a
n/a
40.2% 78.8% 58.3% 56.3% 69.4%
n/a
n/a
n/a4
n/a
n/a
n/a
n/a
28.6% 46.2%
n/a
n/a
n/a
n/a
n/a4
n/a
n/a
n/a
n/a
n/a4
n/a
n/a
n/a
n/a
n/a
n/a
1 Salary and benefits are for nine months and bonus for 12 months.
2 Peter Clarke stepped down as CEO with effect from 28 February 2013 and was on garden leave until his retirement on 10 December 2013. Emmanuel Roman became CEO on 28 February 2013
and stepped down on 31 August 2016. Luke Ellis was appointed CEO on 1 September 2016. Remuneration for 2016, therefore, reflects four months’ service only.
3 For the accounting periods ended up to and including 31 December 2012, as there was no cap on the overall maximum bonus awards, the percentage of maximum opportunity is not shown.
4 Awards under the LTIP were made in March 2019 and March 2020 and will be made in March 2021, vesting in March 2022, March 2023 and March 2024 respectively, with a subsequent two-year
holding period.
Man Group plc Annual Report 2020
101
Governance Directors’ Remuneration report continued
3. Remuneration outcomes in 2020 continued
3.5 Percentage change in directors’ remuneration
The table below sets out the percentage change in remuneration for the directors compared to all staff. This is a new requirement and will
progressively build up to cover a five-year period. There are no employees of the Parent Company, other than the executive directors, so
the comparison has been made, on a voluntary basis, to all staff.
Percentage change in directors’ remuneration – Table R5
Executive directors
Luke Ellis
Mark Jones
Non-executive directors
John Cryan2
Dame Katharine Barker
Lucinda Bell3
Richard Berliand
Zoe Cruz
Ceci Kurzman4
Dev Sanyal
Anne Wade5
All staff6
2020
Salary/Fees
Benefits1
Bonus
0%
2%
-9%
-11%
400%
10%
–
8%
10%
–
6%
–
4%7
-4%
1,153%
–
341%
-78%
–
10%
–
22%7
23%
22%
–
–
–
–
–
–
–
–
-15%8
1 Taxable benefits include private medical insurance for executive directors; and includes travel and staff entertainment expenses and the tax paid in relation to such benefits for non-executive directors.
The percentage change in benefits for the non-executive directors should be read in conjunction with the data showing actual taxable benefits in table R7 (page 103) which shows that the large
percentage movements recorded above are explained by movements in small absolute numbers.
2 John Cryan served as a non-executive director during 2019 and became Company Chair in January 2020 which explains the increase in his fees disclosed in the table.
3 Lucinda Bell was appointed to the Board on 28 February 2020.
4 Ceci Kurzman was appointed to the Board on 28 February 2020.
5 Anne Wade was appointed to the Board on 30 April 2020.
6 Figures are calculated on a per capita basis.
7 Represents the average increase in salary and taxable benefits in underlying currency in which each member of staff is paid.
8 For staff, bonus includes both variable cash compensation and deferred awards relating to the current year.
3.6 CEO pay ratio
The table below compares the 2020 single total figure of remuneration for the CEO with that of the Group’s UK employees who are paid at the
25th percentile (lower quartile), 50th percentile (median) and 75th percentile (upper quartile).
Table R6
Year
2020
2019
Method
25th percentile
pay ratio
50th percentile
pay ratio
75th percentile
pay ratio
A
A
29:1
26:1
19:1
17:1
11:1
10:1
The ratio of CEO pay to the median UK employee is slightly higher in 2020 compared to 2019. The Committee considered this and determined
that it was mainly driven by the differential outcome for the CEO in 2019, when record profit was delivered, driven by performance fees. The
structure of the executive directors’ remuneration meant that 2019’s performance fee outcome was not fully recognised in their 2019 bonuses
as Core Total PBT accounted for only 20% of their overall bonus outcome whereas it was the main driver of higher bonuses for the wider
employee base.
The ratio has been calculated using Option A methodology, which uses actual employee data. The Committee considered this to be the most
accurate approach. Total full-time equivalent remuneration for people employed for the full 12-month period ending on 31 December 2020 has
been calculated in line with the methodology for the ‘single figure of remuneration’ for the CEO (table R1, page 99). This data was then ranked
to identify the individuals at the 25th, 50th and 75th percentiles and the salary and total pay and benefits for the three identified quartile point
employees is shown in the table below.
All figures in USD
Salary
Total pay and benefits
25th percentile
77,545
107,041
50th percentile
116,317
167,056
75th percentile
142,166
280,695
102
Man Group plc Annual Report 2020
3.7 Retirement benefits
Luke Ellis and Mark Jones are not eligible for any defined benefits under the Man Group plc Pension Plan.
3.8 Single total figure of remuneration for non-executive directors
The table below sets out a single figure for the total remuneration received by each non-executive director for the year ended 31 December 2020
and the prior year.
Single total figure of remuneration for non-executive directors (audited) – Table R7
All figures in GBP
John Cryan (Chair)1
Dame Katharine Barker
Lucinda Bell2
Richard Berliand
Zoe Cruz
Andrew Horton3
Ceci Kurzman4
Matthew Lester5
Dev Sanyal
Anne Wade6
Fees
Taxable benefits7
Total
2020
350,000
92,500
75,346
135,000
92,500
37,090
62,788
14,167
90,000
60,346
2019
70,000
84,167
–
125,000
84,167
100,000
–
85,000
85,000
–
2020
11,508
1,353
87
1,353
2,495
637
–
2,550
1,452
–
2019
12,025
108
–
307
11,328
108
–
108
1,319
–
2020
361,508
93,853
75,433
136,353
94,995
37,727
62,788
16,717
91,452
60,346
2019
82,025
84,275
–
125,307
95,495
100,108
–
85,108
86,319
–
1 John Cryan’s contractual arrangements with his former employer, Deutsche Bank AG, mean that he is effectively unpaid for his role as Chair of Man Group plc, as he is required to sacrifice
his post-tax receipts arising from his Man Group role to Deutsche Bank AG.
2 Lucinda Bell was appointed to the Board on 28 February 2020 and took over from Andrew Horton as the Chair of the Audit and Risk Committee on 1 May 2020. Her remuneration for 2020
has been pro-rated accordingly. Due to an administrative error, Lucinda was underpaid by £13,333 during 2020. The relevant adjustments have been made in 2021 to correct the position.
3 Andrew Horton stepped down from the Board on 1 May 2020 and as Chair of the Audit and Risk Committee on 1 May 2020. His remuneration for 2020 has been pro-rated accordingly.
4 Ceci Kurzman was appointed to the Board on 28 February 2020. Her remuneration for 2020 has been pro-rated accordingly.
5 Matthew Lester stepped down from the Board on 26 February 2020. His remuneration for 2020 has been pro-rated accordingly.
6 Anne Wade was appointed to the Board on 30 April 2020. Her remuneration for 2020 has been pro-rated accordingly. Due to an administrative error, Anne was overpaid by £3,333 during 2020.
The relevant adjustments have been made in 2021 to correct the position.
7 Taxable benefits comprise travel and staff entertainment expenses and the tax paid in relation to such benefits.
3.9 Payments for loss of office and payments to past directors (audited)
There were no payments for loss of office made to executive directors during the year.
3.10 Directors’ interests
Directors’ interests in shares of Man Group plc (audited) – Table R8
Executive directors
Luke Ellis
Mark Jones
Non-executive directors
John Cryan
Dame Katharine Barker
Lucinda Bell3
Richard Berliand
Zoe Cruz
Andrew Horton4
Ceci Kurzman5
Matthew Lester6
Dev Sanyal
Anne Wade7
Number of
ordinary
shares1,2
31 December
2020
Number of
ordinary
shares1
31 December
2019
5,548,466
1,434,438
3,637,643
351,977
–
47,813
–
50,000
–
–
–
–
86,825
–
–
45,057
–
50,000
–
100,000
–
22,692
81,821
–
1 All of the above interests are beneficial.
2 There has been no change in the directors’ interests in the ordinary shares of Man Group plc from 31 December 2020 up to 1 March 2021, being the latest practicable date prior to the publication
of this report.
3 Lucinda Bell was appointed to the Board on 28 February 2020.
4 Andrew Horton stepped down from the Board on 1 May 2020. His shareholding at that date was 100,000 ordinary shares.
5 Ceci Kurzman was appointed to the Board on 28 February 2020.
6 Matthew Lester stepped down from the Board on 26 February 2020. His shareholding at that date was 22,692 ordinary shares.
7 Anne Wade was appointed to the Board on 30 April 2020.
Man Group plc Annual Report 2020
103
Governance Directors’ Remuneration report continued
3. Remuneration outcomes in 2020 continued
Executive directors’ shareholdings measured against their respective shareholding requirement as at 31 December 2020
(audited) – Table R9
Executive directors
Luke Ellis
Mark Jones
Shares owned
outright
5,548,466
1,434,438
Shares no
longer subject to
performance
conditions1
992,665
674,318
Total
shareholding2
6,541,131
2,108,756
Value of
shareholding3
(USD)
12,339,582
3,978,084
Annual salary
(USD)
1,100,000
625,000
Shareholding
requirement as
a % of salary
300%
200%
Current
shareholding as
a % of salary
1,122%
636%
Requirement
met?
Yes
Yes
1
In future, LTIP shares retained during the two-year post-vesting retention period will also count towards achievement of the requirement. Unvested shares no longer subject to performance conditions
are shown on a net of tax basis. Details of unvested awards can be found in tables R11, R12 and R14.
2 Shares that count towards achievement of the policy are limited to: shares owned outright and deferred shares, granted under the Deferred Executive Incentive Plan (DEIP), Deferred Share Plan (DSP)
and Partner Deferred Share Plan (PDSP), which are no longer subject to performance conditions.
3 Shareholdings valued at 31 December 2020 share price of £1.38 and a GBP/USD exchange rate of £1 = $1.3670.
3.11 Directors’ interests in shares and options under Man Group long-term incentive plans
Scheme interests to be awarded under the Man Group plc Long-Term Incentive Plan (LTIP)1 – Table R10
Executive director
Luke Ellis
Mark Jones
Award value2
Award (% of
salary)
(USD)
350% 3,850,000
2,187,500
350%
Vesting
date
Mar-24
Mar-24
End of retention
period date
Mar-26
Mar-26
1 Awards under the LTIP will be made in March 2021 for the three-year performance period commencing on 1 January 2021 and ending on 31 December 2023; the proportion of the award which vests
will be determined based on the measures, weightings and target ranges set out in table R19 (page 107).
2 The monetary value of these awards will be converted into a number of shares using the USD/GBP exchange rate and the market value on the immediately preceding dealing day to grant. The awards
will be granted as conditional awards of shares and will vest, to the extent the performance conditions have been achieved, three years later and will then be subject to a further two-year retention
period, under the LTIP rules. These awards attract dividend accruals from grant date to the end of the two-year retention period for vested shares.
Conditional share awards under the Long-Term Incentive Plan (LTIP) – subject to performance conditions and retention period
(audited) – Table R11
Executive director
Luke Ellis
Mark Jones
Date of
grant
Face value of
Mar-19 $3,850,000
Mar-20 $3,850,000
$2,143,750
Mar-19
$2,187,500
Mar-20
award1 1 January 2020
2,293,338
–
1,276,972
–
Granted during
the year2,3
–
3,008,979
–
1,709,647
Dividends
accruing4
142,918
187,516
79,578
106,542
31 December
2020
2,436,256
3,196,495
1,356,550
1,816,189
Vesting date5
Mar-22
Mar-23
Mar-22
Mar-23
End of retention
period6
Mar-24
Mar-25
Mar-24
Mar-25
1 The face value of the awards represent 350% of salary.
2 The performance measures for these awards are: Relative Investment Performance (25%), Relative TSR versus FTSE 250 (25%), 3-year Cumulative Core Management Fee EPS (20%), 3-year
Cumulative Core Total EPS (20%) and Cumulative Net Inflows (10%). The targets were disclosed in detail in the 2019 DRR.
3 The awards under the LTIP were granted in March 2020 for the three-year performance period commencing on 1 January 2020 and ending on 31 December 2022. The monetary value of these
awards was converted into a number of shares using the GBP/USD exchange rates of £1 = $1.2538 and a share price of £1.0205, being the market value on the immediately preceding dealing day to
grant. The awards have been granted as conditional awards of shares and will vest, to the extent the performance conditions have been achieved, three years later and will then be subject to a further
two-year retention period, under the LTIP rules. These awards attract dividend accruals from grant date to the end of the two-year retention period for vested shares.
4 On 15 May 2020, dividend accruals of 165,483 and 93,210 shares were added to Luke Ellis and Mark Jones’s awards respectively based on a sterling dividend of 4.10 pence. On 2 September 2020,
dividend accruals of 164,951 and 92,910 shares were added to Luke Ellis and Mark Jones’s awards respectively based on a sterling dividend of 3.70 pence.
5 0% of the award will vest at threshold with straight-line vesting between threshold and target and target and maximum performance. 100% of the award will vest for maximum performance.
6 Shares subject to a vested award are delivered to participants at the end of the two-year retention period.
Conditional share awards under the Deferred Executive Incentive Plan (DEIP) – subject only to service conditions (audited) –
Table R12
Executive director
Luke Ellis
Mark Jones
Date of
1 January
grant1
2020
Mar-173
313,332
Mar-184 1,092,455
Mar-184
524,699
Dividends
accruing2
13,016
68,079
32,695
Vested during
the period
104,444
–
–
Lapsed during
the period
–
–
–
31 December
2020
221,904
1,160,534
557,394
Date
vested
Mar-20
–
–
1 No further awards are to be granted under the DEIP following the adoption of the LTIP.
2 On 15 May 2020, dividend accruals of 40,613 and 16,374 shares were added to Luke Ellis and Mark Jones’s awards respectively based on a sterling dividend of 4.10 pence. On 2 September 2020,
dividend accruals of 40,482 and 16,321 shares were added to Luke Ellis and Mark Jones’s awards respectively based on a sterling dividend of 3.70 pence.
3 Remaining award vests in two equal instalments in March 2021 and March 2022.
4 Award vests in three equal instalments in March 2021, March 2022 and March 2023.
104
Man Group plc Annual Report 2020
Options granted under the Man Group Deferred Share Plans – not subject to service conditions (audited) – Table R13
Executive director
Luke Ellis1
Mark Jones2
Date of grant
Deferred Share Plan (KEOP)
Nov-10
Mar-11
Partner Deferred Share Plan (POP)
Mar-11
1 January
2020
Lapsed during
period
31 December
2020
Option exercise
price
Lapsed
date
Latest exercise
date
744,327
407,463
744,327
–
–
407,463
319.88p
267.08p
Nov-20
–
–
Mar-21
356,110
–
356,110
308.55p
–
Mar-21
1 Luke Ellis was granted KEOP options under the Deferred Share Plan prior to his appointment as a director. All options are vested.
2 Mark Jones was granted a POP option under the Partner Deferred Share Plan prior to his appointment as a director. All options are vested.
Options granted under the Man Group Deferred Share Plans – subject only to service conditions (audited) – Table R14
Executive
director
Luke Ellis
Date of grant
Deferred Share Plan (DSP)
Mar-151
Mar-171
Mar-192
Mar-203
Mark Jones Partner Deferred Share Plan
(PDSP)
Mar-154
Deferred Share Plan (DSP)
Mar-17 4,5
Mar-17 4
Mar-192
Mar-203
1 January
2020
Granted during
the year
Dividends
accruing6
Exercised/
vested during
the period
Lapsed during
the year
31 December
2020
Exercised/
vested date
441,839
215,215
238,748
–
–
–
–
302,581
–
–
9,916
18,852
441,839
215,215
79,582
–
441,839
–
–
441,839
320,416
50,081
271,623
–
–
–
–
171,474
19,967
–
11,282
10,683
–
50,081
90,541
–
–
–
–
–
–
–
–
–
–
–
–
169,082
321,433
Mar-20
Mar-20
–
–
–
Mar-20
340,383
–
192,364
182,157
–
Mar-20
Mar-20
–
1 Luke Ellis was granted nil-cost options under the Deferred Share Plan prior to his appointment as a director.
2 Remaining award vests in two equal instalments in March 2021 and March 2022. All are exercisable until March 2029.
3 Award vests in three equal instalments in March 2021, March 2022 and March 2023. All are exercisable until March 2030.
4 Mark Jones was granted nil-cost options under the Deferred Share Plan as well as conditional awards under the Partner Deferred Share Plan prior to his appointment as a director.
5 Award vests in a single instalment in March 2022 and will be exercisable until March 2027.
6 On 15 May 2020, dividend accruals of 14,407 and 20,999 shares were added to Luke Ellis and Mark Jones’s awards respectively based on a sterling dividend of 4.10 pence. On 2 September 2020,
dividend accruals of 14,361 and 20,933 shares were added to Luke Ellis and Mark Jones’s awards respectively based on a sterling dividend of 3.70 pence.
Options granted under the Man Group Sharesave Scheme (audited) – Table R15
Executive director
Luke Ellis
Mark Jones
Date of
grant
Sep-17
Sep-19
Sep-17
Sep-20
1 January
2020
11,363
11,811
13,636
16,822
Granted during
year
–
–
–
16,822
Exercised during
period
–
–
–
–
Lapsed during
year
–
–
–
–
31 December
2020
11,363
11,811
13,636
16,822
Option price
132.0p
127.0p
132.0p
107.0p
Earliest exercise
date
Oct-22
Oct-24
Oct-20
Oct-23
Latest exercise
date
Mar-23
Mar-25
Mar-21
Mar- 24
Number of options
Man Group plc Annual Report 2020
105
Governance Directors’ Remuneration report continued
3. Remuneration outcomes in 2020 continued
3.12 Shareholder voting and engagement
At the AGMs held on 1 May 2020 and 11 May 2018, votes cast by proxy and at the meeting in respect of directors’ remuneration were as follows:
Table R16
Resolution
Votes for
Approve the annual report on remuneration (May 2020) 1,031,978,008
Approve the Directors’ Remuneration Policy (May 2018) 1,132,967,350
% for
92.4
97.2
Votes against
85,142,424
32,266,653
% against
Total votes cast
1,117,120,432
7.6
2.8 1,165,234,003
Votes withheld
(abstentions)
110,327
565,403
106
Man Group plc Annual Report 2020
4. Implementation of Directors’ Remuneration Policy for 2021
4.1 Base salary
Salaries are reviewed annually taking into account market benchmarks for executives of comparable status, responsibility and skill.
Base salary of executive directors – Table R17
Base salary at
1 January 2020
1 January 2021
Luke Ellis
$1,100,000
$1,100,000
Mark Jones
$625,000
$625,000
4.2 Annual bonus for 2021
The following table shows the performance metrics and weightings for the annual bonus in 2021. The Remuneration Committee considers that
the disclosure of detailed performance targets in advance for 2021 would be commercially sensitive and they are not, therefore, disclosed here.
It is the intention of the Committee to disclose them in the DRR for the year ended 31 December 2021.
Table R18
Metrics
Relative Net Inflows
Core Management Fee EPS
Core Total EPS
Strategic and Personal
Total
Weighting %
30%
20%
20%
30%
100%
4.3 Long-Term Incentive Plan for 2021
The threshold to maximum ranges for the Man Group plc LTIP are set out in the table below. Awards vest at 0% at threshold, 50% at target
and 100% at maximum, with straight-line vesting between these points. Vested awards are subject to a two-year holding period.
Table R19
Metrics
Relative Investment Performance
Relative TSR vs FTSE 250
3-year Cumulative Core Management Fee EPS, cents
3-year Cumulative Core Total EPS, cents
Cumulative Relative Net Inflows
Total
Threshold
0%
Median
30¢
42¢
0%
Target
3%
Mid-point between
Median and Upper
Quartile
33¢
56¢
9%
Maximum
6%
Upper
Quartile
36¢
75¢
18%
Weighting %
25%
25%
10%
30%
10%
100%
4.4 Non-executive directors’ Remuneration Policy for 2021
There have been no changes to the fees for the Chair or non-executive directors since last year.
Non-executive directors’ fees for 2021 – Table R20
Position (all figures in GBP)
Chair of the Board
Board fee1
Senior Independent Director
Audit and Risk Committee Chair
Other Audit and Risk Committee members
Employee Engagement NEDs
Remuneration Committee Chair
Other Remuneration Committee members
1
Includes Nomination Committee membership where appropriate.
2021
350,000
75,000
15,000
35,000
15,000
7,500
30,000
10,000
2020
350,000
75,000
15,000
35,000
15,000
7,500
30,000
10,000
% change
–
–
–
–
–
–
–
–
Man Group plc Annual Report 2020
107
Governance
Directors’ Remuneration report continued
5. Remuneration Committee
5.1 Membership and attendance
The Committee met seven times during 2020 with attendance by members as indicated below. All members held office throughout the year,
except for Anne Wade who joined the Man Group plc Board on 30 April 2020 and attended all meetings after that date. In addition, certain urgent
proposals relating to the retention of awards by good leavers were circulated and agreed by email in between meetings.
Table R21
Committee member
Richard Berliand (Chair)
Dame Katharine Barker
Zoe Cruz
John Cryan
Anne Wade1
Meetings
attended
7/7
7/7
7/7
7/7
4/4
1 Anne Wade was appointed to the Committee on 30 April 2020 and attended all meetings after that date.
Committee meetings are regularly attended by the CEO and, where appropriate, by the CFO at the invitation of the Chair. The Committee is
supported by the Senior Reward Executive, who routinely attends, as does the Global Head of HR. Other members of the Legal, Compliance
and Executive Incentive Plans teams attend meetings when required to provide information and advice on remuneration, regulatory and executive
incentive plan matters. The Company Secretary acts as Secretary to the Committee.
At the end of each meeting there is an opportunity for private discussion between Committee members without the presence of executive
directors and management.
Roles and responsibilities
The Committee’s principal responsibilities are to:
• Determine the Company’s remuneration philosophy and the principles and structure of its remuneration policy, ensuring that these are aligned
with the Company’s purpose, business strategy, objectives, risk appetite and values, comply with all regulatory requirements and promote
long-term shareholder and other stakeholder interests.
• Recommend to the Board the specific remuneration policy for the executive directors, for approval by shareholders, and make remuneration
decisions within that approved policy.
• Approve the total annual compensation for individual executive directors based on their achievement against objectives set by the Committee
and Board at the start of the year for the short-term annual bonus and at the start of the relevant performance period for the LTIP.
• Recommend to the Board the remuneration of the Board Chair.
• Approve the total annual compensation for Executive Committee members, the Company Secretary and Remuneration Code staff.
• Review and consider shareholder feedback and agree the approach to ongoing shareholder engagement.
The Committee’s decision-making process takes account of legislation, regulation, corporate governance standards, guidance issued by
regulators, shareholders and shareholder representative bodies. As covered in section 5.2, the Committee has independent external advisers
and reviews their objectivity and independence annually. To avoid conflicts of interest, no Committee member or attendee is present when
matters relating to his or her own remuneration are discussed. Full terms of reference for the Committee, which are reviewed on an annual basis
and submitted to the Board for approval, are available on the Company’s website: www.man.com/corporate-governance.
5.2 Independent advisers
Following a formal tender process in July 2017, the Committee appointed PricewaterhouseCoopers (PwC) to provide it with advice on a range
of remuneration matters including the benchmarking of directors’ compensation in the asset management sector, trends in market practice
and regulatory disclosures. PwC also provide professional services in the ordinary course of business including tax and related advisory work
to parts of the Group. There are processes in place to ensure the advice received by the Committee is independent of any support provided
to management. The Committee is satisfied on this basis that PwC are able to serve as an objective and independent remuneration adviser.
The total fees paid to PwC in 2020 were £97,500 (ex. VAT) on the basis of agreed fixed fees. The Committee also received legal advice from
Herbert Smith Freehills LLP on compliance with legislation and regulations relating to remuneration matters.
108
Man Group plc Annual Report 2020
5.3 Committee activities during 2020 and the early part of 2021
The summary below sets out the main issues considered and decisions made by the Committee in the period following the publication of the
2019 Directors’ Remuneration report up to the current date.
Chair’s fee
• Reviewed the fee level of the Chair in the context of benchmarking of similar roles in broadly equivalent-sized companies in the Financial
Services sector and of the demands of the role and recommended to the Board that this should remain unchanged.
Executive director compensation
• Reviewed the Directors’ Remuneration Policy, ahead of its standard three-year renewal at the AGM in May 2021, and determined to roll the
current policy forward for a further year, as set out in detail in the Chair’s statement (pages 91 to 94).
• Established the threshold, target and maximum ranges to be achieved for the financial metrics and recommended to the Board for approval
the objectives to be delivered under the non-financial component of the annual bonus.
• Assessed the 2020 performance of the CEO and CFO against the financial and non-financial metrics of the annual bonus and considered
whether any discretionary intervention was required to adjust the formulaic outcome, and approved the total cash sum payable and the
amount to be deferred.
• Reviewed the level of achievement of each executive director in respect of their shareholding requirement and consequently determined
that the option to defer up to 50% of the bonus deferral amount into funds could be offered.
• To provide the business context for all the above reward decisions, reviewed the available benchmarking for the CEO and CFO roles within
UK and US listed asset managers (please see section 5.5 for information on peer groups).
Shareholder engagement and reporting
• Reviewed shareholder voting and feedback on the 2020 AGM resolution for the DRR, noting the substantial level of support.
• Consulted with the top 20 shareholders, representing almost 60% of the shareholder base, and the main proxy advisory groups as part
of the consideration of the appropriate approach to the renewal of the Directors’ Remuneration Policy.
• Reviewed the 2020 DRR taking account of best practice recommendations and institutional shareholder guidelines.
Compensation below Board level
• Reviewed, challenged and approved the 2020 bonus pool proposed by management in relation to the Company’s performance for the year.
• Approved bonus deferral policies for different groups of staff.
• Approved total compensation proposals for Executive Committee members, taking account of the CEO’s appraisal of their individual
performance for 2020 and their adherence to the Company’s business values.
• Approved the total compensation for BIPRU, AIFMD and UCITS V Remuneration Code staff.
• Approved the total compensation for the Company Secretary.
• Retained oversight of the total compensation for staff earning over $1 million, taking account of the CEO’s appraisal of their performance
for 2020 and reports from the Risk and Compliance functions on any related risk issues arising during the year.
• Reviewed the approach to wider workforce compensation, including by reference to gender and ethnicity metrics.
• Reviewed the ratio of CEO pay to the lower quartile, median and upper quartile remuneration paid to UK employees (see page 102).
Financial regulation and governance
• Reviewed ongoing regulatory developments on remuneration and their implications for the Company’s business.
• Reviewed the Company’s FCA Remuneration Policy Statement and the Company’s BIPRU, AIFMD, UCITS V and MiFID II Remuneration Policy.
• Approved the list of BIPRU, AIFMD and UCITS V Remuneration Code staff for 2020.
5.4 2020 Committee evaluation
Following a mid-year review, by the Chair, of the 2020 priority actions identified in the Committee’s 2019 evaluation, the Chair undertook at the
year-end a full-year evaluation of the operation and effectiveness of the Committee during 2020. The topics covered included progress on the
priorities for 2020 and the conduct and outcomes of specific areas of Committee activity and focus during the year, including the support and
advice available to the Committee.
In the evaluation feedback, the Committee again acknowledged the quality of the advice provided by its advisers and the thorough and
professional papers delivered to the Committee to support its decision making. The following specific areas of focus were agreed for 2021:
• Deliver the 2020 DRR.
• Ensure a smooth transition to the new Committee Chair.
• Continue the Committee’s engagement with shareholders as appropriate and, in particular, again undertake a thorough consultation
in advance of proposing a new Directors’ Remuneration Policy for approval at the 2022 AGM, incorporating any changes as required
by the IFPR.
• Further deepen the Committee’s understanding of compensation below the Board and build on the current year analysis of workforce
remuneration by reference to gender and other diversity metrics; ensure this is considered in discussions about the level and appropriateness
of executive director compensation.
• Review the effectiveness of the process originally adopted in 2019 for explaining to the workforce how executive remuneration aligns with wider
Company pay policy and consider whether any changes are required; this is carried forward from the 2019 priorities as no changes were made
this year due to the pandemic.
• Review the peer group used for comparisons of executive director remuneration.
• Keep the remuneration advice and industry knowledge available to the Committee under review as a matter of ongoing good governance.
Man Group plc Annual Report 2020
109
Governance Directors’ Remuneration report continued
5. Remuneration Committee continued
5.5 Benchmarking and peer groups
Benchmarking is one of a number of factors considered by the Committee in its deliberations on remuneration as it is important that the
Committee understands the level of remuneration paid by Man Group’s competitors for similar positions and which they may be offering
in the marketplace.
Man Group variously uses three separate peer groups as detailed in the tables below. These are:
1. a group of asset managers and related businesses listed on the London Stock Exchange;
2. a group of similar businesses listed on the New York Stock Exchange or Nasdaq; and
3. businesses within the privately owned hedge fund industry.
All three of these sources are relevant.
UK LISTED PEER GROUP
• 3i
• Ashmore
• Close Brothers
• Intermediate Capital Group
• Jupiter
• M & G
• Ninety-One
• Schroders
• Standard Life Aberdeen
• TP ICAP
US LISTED PEER GROUP
• Affiliated Managers
• Apollo Global Management
• Ares
• Artisan Partners
• BlackRock
• Blackstone
• Carlyle
• Eaton Vance
• Federated Investors
• Janus Henderson
• KKR
• Waddell & Reed
PRIVATE MANAGER PEER GROUP
• AKO
• AQR
• Arrowgrass
• Brevan Howard
• Bridgewater
• Capula
• Citadel
• Lansdowne Partners
• Marshall Wace
• Millennium
• Two Sigma
• Winton
Many of Man Group’s senior staff are geographically mobile, particularly between London and New York, and an explicit consideration of
remuneration levels in both of these geographies is relevant. Man Group is one of the few listed companies anywhere in the world that
operates in the hedge fund industry. The majority of businesses in this industry are privately owned and systematic remuneration data is
not publicly available. Nevertheless, Man Group competes for talent against these businesses and staff move between Man Group and
these private companies.
Man Group operates globally – witnessed in the geographic footprint of its operations, the spread of its client base and in the breadth of assets it
manages. It also creates and distributes a wide range of products: hedge funds, long-only funds and quantitative funds. None of the companies
referred to above have these same characteristics and, although some of them are larger than Man Group, the Committee believes that, while
they are broadly comparable, Man Group tends to be more diverse geographically and have a wider range of fund strategies. However, these
groups share some of Man Group’s characteristics and, in some cases, information regarding the remuneration of directors is publicly available.
The privately owned hedge fund market is made up of a large number of participants, some of them small and single product and others very
large. As noted earlier, little information is available publicly on the compensation quantum and structures in these businesses. The senior
management of those few hedge fund companies which are publicly listed are generally the founders of the original private company who
retained very significant shareholdings at the time of listing. Man Group endeavours to make up this gap in publicly available data by reviewing
available information on privately owned peers, some of whom are listed in the table above. Man Group has also obtained direct information
about remuneration in those privately held companies that Man Group has acquired.
Interpreting peer group data and benchmarking involves a number of complexities and the Committee looks at this data to provide important
market context for its decisions. The Committee intends to undertake a review of the peer group during 2021 with a view to considering whether
there are any other competitors with similar characteristics to Man Group plc, especially in Europe.
Unless otherwise stated, all information in the Directors’ Remuneration report is unaudited.
For and on behalf of the Board
Richard Berliand
Chair of the Remuneration Committee
2 March 2021
110
Man Group plc Annual Report 2020
6. Directors’ Remuneration Policy
6.1 Executive directors’ Remuneration Policy
This section of the report sets out the Remuneration Policy for executive and non-executive directors which will be put to shareholders for
approval and, if approved, be effective from the conclusion of the 2021 AGM on 7 May 2021. It is proposed that approval for a revised
Remuneration Policy will be sought from shareholders at the 2022 AGM.
Aligning the interests of the executive directors with those of shareholders and with Man Group’s strategic goals is central to Man Group’s
remuneration policy. During 2020, the Directors’ Remuneration Policy has been reviewed in consultation with some of the Company’s largest
shareholders and their main representative bodies. The current policy has operated broadly as intended and, as set out in the Chair’s statement,
the Committee has decided to roll forward the existing policy for a further 12 months to ensure that any changes required to make the policy
compliant with any new requirements arising from the Investment Firms Prudential Regime (IFPR) can be incorporated. Consequently, no
changes are proposed to the policy originally approved in May 2018, except as set out below:
• Post-departure shareholdings: directors will be required to retain their shareholdings, at the lower of their required or actual holding on leaving,
in full for two years after departure.
In line with shareholders’ interests being managed within a robust governance framework, the Company continues to aim to retain and
incentivise high calibre executive directors; it will do this by paying a competitive base salary and benefits, together with a short-term annual
bonus, with significant deferral, and a long-term incentive plan collectively linked to a range of financial and non-financial metrics to deliver the
Company’s strategy and ensure alignment with shareholder interests.
In compliance with the UK Corporate Governance Code (2018) (the Code), we have set out below how the Remuneration Committee addresses
the following factors:
Risk
Inappropriate risk-taking is avoided and good alignment with shareholders is achieved through a number of mechanisms including significant
bonus deferral into shares and funds, a three-year performance period for the Long-Term Incentive Plan (the LTIP) with a subsequent two-year
post-vesting holding period and shareholding requirements, including for two years after cessation of employment. Before any decisions about
incentive outcomes are made, the Audit and Risk Committee reports to the Remuneration Committee on any specific matters indicating
excessive risk-taking or lack of regard for controls and procedures. Malus and clawback provisions apply to the incentives in a range of specified
circumstances, as set out in the table on page 113.
Predictability
The charts on page 114 illustrate the potential remuneration outcomes under a range of scenarios (including in the event of a 50% increase in the
share price). In addition, the Remuneration Committee has included illustrative numbers for the ‘single figure’ outcome as if a fair value for the LTIP
had been included, on page 96.
Proportionality
The link between strategic priorities and incentive metrics is set out in detail in the chart on page 93. The Remuneration Committee considers
wider employee remuneration, holistic business performance and shareholder experience in determining the appropriate level of executive
director remuneration.
Alignment to culture
The key principles that underpin our approach to remuneration (and which apply at all levels of the organisation) are:
• remuneration is structured to support corporate strategy and sound risk management;
• employees’ interests are aligned with shareholders and the bonus pool is drawn from profit;
• incentives are designed to encourage behaviour focused on longer-term strategic and sustainable performance; and
• our total remuneration is competitive in the talent markets from which we hire.
Simplicity
Incentive schemes are straightforward in their structure and operation with explicit links between strategic priorities, key performance indicators
and incentive metrics.
Clarity
The Remuneration Policy is clearly laid out in tabular form in the DRR (summary on page 95 and full policy on pages 112 to 113). Details of the
operation of the Remuneration Policy have been explained to the wider workforce, as set out in the Chair’s statement.
Man Group plc Annual Report 2020
111
Governance Directors’ Remuneration report continued
6. Directors’ Remuneration Policy continued
EXECUTIVE DIRECTORS’ REMUNERATION POLICY – Table R22
Function
Operation
Opportunity
Performance metrics
Base salary
Based on experience and
individual contribution to
leadership and Company
strategy.
Salaries are reviewed annually taking into
account market ranges for executives of
comparable status, responsibility and
skill in companies of similar size and
complexity to Man Group with
consideration also given to sector
relevance.
Pension
To provide an opportunity
for executives to build up
income on retirement.
Group Personal Pension (GPP), or
a similar contribution to an alternative
arrangement is provided. For those
exceeding HM Revenue & Customs
pension allowances, cash allowances
are provided at no additional cost to
Man Group.
Benefits
To provide non-cash
benefits which are
competitive in the market
in which the executive
is employed.
Benefits include family private medical
insurance, life assurance, permanent
health insurance and gym membership
subsidy.
Flexible benefits can be purchased from
base salary.
None.
None.
The maximum salary for an
executive director is $1.1 million for
the duration of this Remuneration
Policy. In reviewing salaries the
Remuneration Committee takes into
account individual and Company
performance, salary increases
below Board level, time since the
last increase, market practice and
total compensation opportunity.
The maximum employer
contribution for executive directors is
aligned with the maximum available
under the wider employee policy,
currently 14% of pensionable base
salary. To qualify for the maximum
employer contribution level, directors
must meet certain service criteria in
line with the policy for all employees.
It is not anticipated that the total
benefits for any executive director
will normally exceed 10% of salary.
None.
Sharesave
To encourage UK-based
employees to own Man
Group shares.
Annual bonus
To incentivise and reward
strong performance against
annual financial and
non-financial targets.
Deferral of a significant
proportion of the bonus into
shares is designed to align
executives’ interests with
those of shareholders over
the long term.
Other ad hoc benefits such as relocation
can be offered, depending on personal
circumstances.
The Man Group Sharesave Scheme is an
all-employee plan. The executive
directors who participate in the
Sharesave Scheme are granted options
over Man Group shares and make
monthly savings from their post-tax
salary. Options are granted at a 20%
discount to market price on the date
of grant.
Performance measures and stretching
targets are set at the start of the year. At
the end of the year, the Remuneration
Committee considers the extent to which
these have been achieved and sets the
award level, taking into account the
overall performance context and
experience of shareholders.
50% of any bonus is delivered upfront in
cash and 50% is delivered in shares (or
fund awards where the executive director
has met the minimum shareholding
requirement) deferred for up to three
years, released on the first, second
and third anniversary of grant in three
equal tranches.
The Committee may award dividend
equivalents on deferred shares in
respect of dividends declared during
the deferral period.
Malus and clawback provisions apply in
certain specified circumstances, further
details of which are provided below.
112
Man Group plc Annual Report 2020
Savings capped at HM Revenue &
Customs limits.
None.
The maximum award is 250% of
salary.
Threshold performance is 25% of
the maximum.
The bonus is based on the
Remuneration Committee’s
assessment of executive directors’
performance over a financial year
against objectives, which are based at
least 70% on financial measures which
may include, but are not limited to,
measures of funds under management,
revenue, profit and cash, and up to
30% based on individual contribution
and medium-term strategic goals.
Details of the measures and weightings
applicable for the year ending
31 December 2021 are on page 107.
Details of the targets will be disclosed
retrospectively in next year’s annual
report on remuneration, when they are
no longer deemed commercially
sensitive by the Board.
The Committee retains the discretion to
adjust the bonus if it considers that the
formulaic outcome does not reflect
underlying business performance.
Function
Operation
Opportunity
Performance metrics
The vesting of awards is linked to a
range of measures which may include,
but is not limited to:
– a measure of investment
performance;
– a profitability measure;
– a growth measure (e.g.
management fee EPS and/or
increase in net flows); and
– a relative performance measure
(e.g. TSR).
Weightings may vary year-on-year with
no individual metric accounting for less
than 10% or more than 50% of the
overall outcome. Details of the
measures for the awards to be made in
March 2021 are set out on page 107.
The Committee has discretion to
amend the performance conditions,
in exceptional circumstances, if it
considers it appropriate to do so, e.g. in
the event of accounting changes, M&A
activities and disposals. Any such
amendments would be fully explained
and disclosed in the next year’s annual
report on remuneration. The Committee
retains discretion to adjust the extent to
which an award shall vest if appropriate
to reflect the broader financial
performance of the Group.
Executive directors are required to build
up this shareholding progressively.
Incumbents will build up to the
prescribed shareholdings with vested
shares where not already at or above
this level. The full requirement, or the
actual holding on departure if lower,
must be retained for two years after
departure from Man Group.
Long-Term Incentive
Plan
To engage and motivate
executive directors to
deliver on KPIs which
support implementation of
the Company’s strategy in
order to deliver superior
long-term returns to
shareholders.
An annual award of Man Group plc
shares, subject to performance conditions
over a period of at least three years. An
additional holding period of at least two
years will apply following vesting.
The maximum annual grant is 350%
of salary.
Threshold performance results in
0% vesting, rising to 100% vesting
for maximum performance.
Notional dividends accrue on
performance share awards to the extent
that the performance conditions are met,
delivered as shares or cash at the
discretion of the Remuneration
Committee at the same time as the
delivery of vested shares.
Malus and clawback provisions apply in
certain specified circumstances, further
details of which are provided below.
Shareholding
requirements
In order to align the interests of executive
directors and shareholders, Man Group
requires its executive directors to
maintain a percentage of salary in
Man Group shares.
The Chief Executive Officer is
required to maintain a shareholding
of 300% of base salary. Other
executive directors are required to
maintain a shareholding of 200% of
base salary.
Malus and clawback
The Committee may apply malus and/or
clawback to variable pay in certain
specified circumstances including:
misconduct, material misstatement of
financial results affecting the assessment
of a performance condition, or where
there has been an error or inaccuracy
relating to the determination of
variable pay.
In addition, it can apply malus if the
director fails to meet the required
standards of fitness and propriety, the
director participates in or was responsible
or accountable for a material failure of risk
management, or the director has caused
or contributed to a material extent to
censure by any regulatory authority or a
significant detrimental impact on the
Company’s reputation.
Notes to the policy table:
In implementing the above Remuneration Policy, the Remuneration Committee shall have regard to all relevant legal and regulatory requirements, including the principles and provisions of the UK
Corporate Governance Code (2018), the UKLA Listing Rules, the Financial Conduct Authority Remuneration Codes and to leading investor representative body guidelines.
Any commitments made prior to, but due to be fulfilled after, the approval and implementation of the revised remuneration policy approved by shareholders (including under any previously approved
policy) will be honoured. In particular, awards which vest under the DEIP will be satisfied in accordance with the DEIP rules. In addition to the elements of remuneration detailed in the policy table, the
Remuneration Committee may consider it appropriate to grant an award under a different structure in order to facilitate the recruitment of an individual (see details in the paragraph ‘Approach to
recruitment remuneration’).
Where employees hold units in funds managed by the Group, the fund may rebate fees to the employee.
Man Group plc Annual Report 2020
113
Governance Directors’ Remuneration report continued
6. Directors’ Remuneration Policy continued
6.2 Illustrative pay for performance scenarios
The chart below provides an illustration of some of the potential reward opportunities for executive directors in respect of the operation of the
Directors’ Remuneration Policy in 2021 showing the potential split between the different elements of remuneration under different performance
scenarios: ‘minimum’, ‘mid-point’, ‘maximum’ and ‘maximum with 50% share price appreciation’.
Assumptions used:
• The ‘minimum’ scenario reflects base salary, pension and benefits as disclosed in the single figure of total remuneration (i.e. fixed remuneration)
which are the only elements of the executive directors’ remuneration packages not linked to performance during the year under review.
• The ‘mid-point’ scenario reflects fixed remuneration as above, plus a target pay-out of 50% of the maximum annual bonus and 50% vesting
for the LTIP.
• The ‘maximum’ scenario reflects fixed remuneration as above, plus full pay-out of both the annual bonus and LTIP.
• The ‘minimum’, ‘mid-point’ and ‘maximum’ illustrations are based on initial award value and do not, therefore, reflect potential share price
appreciation or any dividend equivalent received over the vesting/deferral periods.
• The ‘maximum with 50% share price appreciation’ shows the impact of a 50% increase in the value of the LTIP share award from grant;
it does not reflect any potential dividends received over the vesting period.
• Annual bonus includes both the cash bonus and the amount of the bonus deferred.
CEO
Maximum with 50%
share price appreciation
Maximum
Mid-point
Minimum
CFO
Maximum with 50%
share price appreciation
Maximum
Mid-point
Minimum
28%
35%
39%
20%
$9,785
49%
$7,860
30%
42%
$4,560
13%
16%
28%
100%
$1,260
13%
16%
28%
35%
39%
20%
$5,562
49%
$4,468
28%
30%
42%
$2,593
100%
$718
Salary and benefits
Annual EIP
LTIP
LTIP – illustrative share price growth (assuming 50%)
6.3 Performance measures selection and approach to target-setting
Annual objectives are set according to immediate priorities identified by the Board and management and will be reviewed and adjusted annually
to reflect changing priorities. The long-term performance metrics are in line with the long-term strategic focus of the Company and will be
reviewed as required in line with any changes in strategic direction. Targets will be set by reference to internal budgets and strategic plans,
industry backdrop and external expectations to ensure they represent appropriately stretching levels of performance.
6.4 Differences between executive directors’ and employees’ remuneration
Executive Committee members participate in an annual bonus scheme with significant levels of deferral, to align their remuneration with the
long-term interests of share and fund holders. However, in line with market practice in alternative investment funds, their incentive pay-outs
are uncapped.
Employee remuneration includes base salary, pension (capped at 14% of salary) and benefits (which include private health, subsidised gym
membership, the opportunity to participate in charitable activities during working hours and a range of flexible benefits which can be purchased
from salary), an annual performance bonus and, for senior contributors, long-term share and fund-based deferrals. The level of deferral increases
as total compensation increases. This provides alignment with shareholders and the future performance of the Company and with the interests of
investors in funds managed by the Company.
Sales staff have a specific bonus scheme to incentivise appropriate asset raising and retention, whilst aligning interests on costs.
114
Man Group plc Annual Report 2020
6.5 Approach to recruitment remuneration
External appointment
APPROACH TO RECRUITMENT REMUNERATION – Table R23
Component
Base salary
Pension
Benefits
Sharesave
Annual bonus
Long-Term
Incentive Plan
Approach
Base salary will be determined to provide competitive total compensation in relation to
relevant market practice, experience and skills of the individual, internal relativities and their
current compensation.
Maximum grant value
$1.1 million
Pension contributions or an equivalent cash supplement will be set in line with existing
policy, including any service criteria, in line with other employees.
14% of salary1
Benefits may include (but are not limited to) private medical insurance, life assurance,
permanent health insurance, Group income protection and any necessary relocation
expenses.
New appointees will be eligible to participate in any all-employee share schemes the
Company offers.
n/a
n/a
The remuneration structure described in the policy table will apply to new appointees with
the relevant maximum being pro-rated to reflect the proportion of employment over the
year.
250% of salary
New appointees may be granted awards under the long-term incentive plan, on the same
terms as other executive directors, as described in the policy table, including in respect of
the first part-year of service.
350% of salary
1 The directors’ maximum pension contribution is aligned to the maximum available to all employees, currently 14% of salary.
In determining the appropriate remuneration, the Remuneration Committee will take into consideration all relevant factors (including quantum,
nature of remuneration and the jurisdiction from which the candidate was recruited) to ensure that arrangements are in the best interests of both
Man Group and its shareholders.
With respect to a new appointment, the Remuneration Committee may ‘buy out’ incentive arrangements, including bonuses, forgone on leaving
a previous employer, and awards made under such ‘buy out’ arrangements may be in addition to the remuneration outlined in the table above.
In doing so, the Remuneration Committee will consider relevant factors including any performance conditions attached to those incentive
arrangements and the likelihood of those conditions being met. In defining the size of this ‘buy out’ award, the Remuneration Committee would
ensure that its fair value is no higher than the fair value of the incentive arrangements forgone. The Remuneration Committee may also consider
it appropriate to structure any such ‘buy out’ award differently to the structure described in the policy table including whether appropriate
performance conditions should apply, exercising the discretion available under the UKLA Listing Rules.
The Remuneration Committee does not intend that such ‘buy out’ awards will be made as a matter of routine; on the contrary, although the
Remuneration Committee cannot anticipate every circumstance which it might face in the future, it is expected that any such awards will only be
contemplated in exceptional circumstances, will be reviewed and approved by the full Board and described fully in the subsequent year’s DRR.
Internal appointment
For the appointment of a new executive director by way of internal promotion, the Remuneration Committee’s approach will be consistent with
the policy for external appointees detailed above. Where an individual has contractual commitments made prior to their promotion to the Board,
the Company will continue to honour these commitments.
Man Group plc Annual Report 2020
115
Governance Directors’ Remuneration report continued
6. Directors’ Remuneration Policy continued
6.6 Service contracts and exit payment policy
SERVICE CONTRACTS – Table R24
Element
Condition
Contract dates
Luke Ellis: 1 September 2016
Mark Jones: 1 January 2017
Current appointment
No fixed term
Notice period (by either
Company or director)
Luke Ellis: 12 months
Mark Jones: 6 months
The Company’s policy is that notice periods will not exceed 12 months
Provisions for contract
termination
Under all contracts the Company can opt to terminate immediately by making a payment in lieu of the notice period or part
of it. Luke Ellis’ contract requires payment of base salary only in lieu. Mark Jones’s contract requires payment of base salary
plus a cash sum in lieu of pension contributions and other insured benefits.
Payments in lieu are to be made in monthly instalments unless the Company and the executive director agree otherwise.
Unless the Company decides otherwise the executive directors have a duty to mitigate their losses arising from termination
of their employment in which case any replacement earnings earned in what would otherwise have been the notice period
would reduce the obligation on the Company to make payments in lieu.
Annual bonus
The service contracts do not oblige the Company to pay any bonus to executive directors and bonuses are awarded at
the Remuneration Committee’s discretion. Payment of any bonus is conditional upon the executive director being in
employment and not under notice at the payment date, except in certain ‘good leaver’ circumstances.
Long-Term Incentive Plan
Where the director is deemed to be a ‘good leaver’, deferred bonus awards are retained by participants and release would
follow the normal vesting schedule (except in the case of death where the Remuneration Committee may allow early
vesting). The treatment will be decided by the Committee taking into account the circumstances of the departure including
the performance of the executive director. Good leaver reasons include death, retirement on terms agreed with the
Company, ill-health, injury or disability and sale of the company or business in which the individual was employed. The
Remuneration Committee may also decide, in its discretion, to grant good leaver status in other exceptional circumstances.
The treatment of long-term awards is governed by the relevant Plan rules, as approved by shareholders. Where an
individual’s employment terminates, the LTIP rules provide for unvested long-term incentive awards to lapse except as set
out below:
– Under the LTIP rules, where an individual is deemed to be a ‘good leaver’, unvested long-term incentive awards will
vest at the normal vesting date subject to performance against applicable performance conditions and, unless the
Committee determines otherwise, pro-rating for time. Any Committee determination will take into account a number of
considerations, in particular performance and other circumstances relating to their termination of employment.
– Good leaver reasons include death, retirement, ill-health, injury or disability, redundancy, sale of the company or
business in which the individual was employed and cessation of employment on terms agreed with the Company. The
Remuneration Committee may also decide, in its discretion, to grant good leaver status in other circumstances and will
take into account the reason for leaving and the executive director’s performance up to the date employment ceases.
Where the post-departure shareholding requirements have not been met at the date of departure, after exit post-vesting
holding periods will continue to apply.
The treatment in relation to DEIP awards is as set out in the policy approved in 2015. Good leaver reasons in the DEIP are:
death, retirement, ill health, injury or disability, redundancy, their office or employment being with either a company which
ceases to be a Group Member or relating to a business or part of a business which is transferred to a person who is not
a Group Member, cessation with the agreement of their employer provided that such Participant has organised and
performed an orderly handover procedure to the satisfaction of the Committee, or for any other exceptional reason, if the
Committee so decides.
To protect Man Group’s business interests the executive directors’ service contracts contain covenants which restrict the executives’ ability to
solicit or deal with clients and their ability to solicit senior employees. Luke Ellis has also entered into a broader non-compete covenant for an
agreed period post termination.
Further, the Board has the right, at its discretion, to require Mark Jones to comply with a broader non-compete covenant for up to six months
post termination to provide additional protection for the Company. If the Board exercises this right, the Company will pay an additional amount up
to six months’ base salary and the value of pension contributions (or alternative cash allowance) and certain other insured benefits so that he is
not left without income during the time when the Board wishes the non-compete to operate. This amount is paid in two equal instalments and is
reduced by any payments made in lieu of notice. The Company may make a contribution to reasonable legal fees and provide outplacement
services in connection with termination of a director’s contract.
Executive directors’ service contracts are available to view at the Company’s registered office.
116
Man Group plc Annual Report 2020
6.7 External appointments
With the approval of the Board in each case, and subject to the overriding requirements of the Company, executive directors may accept a limited
number of external appointments as non-executive directors of other companies and retain any fees received. Details of external directorships
held by executive directors, including associated fees, are provided in the Directors’ Remuneration report for the relevant year.
6.8 Non-executive directors’ Remuneration Policy
Non-executive directors have formal letters of appointment. The Chair has a contract with the Company which provides that his appointment is
terminable on six months’ notice. The letters of appointment of the non-executive directors, except for Richard Berliand and Dev Sanyal, contain
a three-month notice period. The letters of appointment of Richard Berliand and Dev Sanyal do not contain any notice provisions or provision
for compensation in the event of early termination. It is intended that the letters of appointment of all future non-executive directors will contain
a three-month notice period. The Board’s policy is to appoint non-executive directors for an initial three-year term, subject to retirement and
reappointment by shareholders annually at the AGM, which may be followed by a further three years by mutual agreement. Any further extension
will be subject to rigorous review. The initial dates of appointment of the non-executive directors to the Board are shown on pages 64 to 65 of
this 2020 Annual Report, and their current fee levels are provided in the DRR on page 107. Non-executive directors are encouraged to build a
shareholding in the Company.
Letters of appointment for the non-executive directors are available to view at the Company’s registered office.
Details of the policy on fees paid to our non-executive directors are set out in the table below.
NON-EXECUTIVE DIRECTORS’ REMUNERATION POLICY – Table R25
Function
Operation
Opportunity
Fees
To attract and retain non-
executive directors of the highest
calibre and experience relevant to
Man Group.
Fees are reviewed annually by the Board at the
year-end taking into account market benchmarks for
non-executives of companies of similar size and
complexity to Man Group with consideration of
sector relevance.
Fee levels will take account of any significant change
in the scope of the role or time commitment required
and are set by reference to an appropriate
comparator group.
The Chair’s remuneration is recommended by the
Remuneration Committee and approved by the
Board. Neither the Chair nor the non-executive
directors take part in discussions or vote on their
own remuneration.
Non-executive directors are reimbursed for
expenses, such as travel and subsistence costs,
incurred in connection with the carrying out of their
duties. Any tax costs associated with these benefits
are paid by the Company.
Non-executive directors receive a base fee for Board
service, including Nomination Committee
membership where appropriate. Additional fees are
payable for acting as Senior Independent Director, as
a member or Chair of the Audit and Risk or
Remuneration Committees or for other
responsibilities, including those relating to employee
engagement. They do not participate in any share
option or share incentive plans.
6.9 Recruitment of non-executive directors
When recruiting a new non-executive director, the Board will utilise the policy as set out in table R25 above. A base fee in line with the prevailing
fee schedule would be payable for Board membership, with additional fees payable for acting as Senior Independent Director, as a member or
Chair of a Board Committee or for other responsibilities, including those relating to employee engagement.
6.10 Consideration of conditions elsewhere in the Company
In assessing executive director remuneration, internal relativities within the Company are reviewed by the Remuneration Committee. These
internal reviews cover the individual elements of base salaries, benefits and total compensation. The Committee has shared with all employees
a simple document explaining how the remuneration of the executive directors is determined and how that links to the way in which employees
are remunerated. A dedicated email address has been established to provide employees with a quick and easy way to raise any questions with
the Remuneration Committee. The Committee has not, however, formally consulted with employees during its review of the Directors’
Remuneration Policy.
6.11 Consideration of shareholder views
The Remuneration Committee values engagement with shareholders and their representative bodies and consulted extensively before deciding
to roll forward the existing policy for a further 12 months, as explained previously. It will again undertake extensive consultation before proposing
a new three-year policy at the AGM in May 2022.
For and on behalf of the Board
Richard Berliand
Chair of the Remuneration Committee
2 March 2021
Man Group plc Annual Report 2020
117
Governance Directors’ report
The Directors present their report,
together with the audited consolidated
financial statements, for the year ended
31 December 2020.
Man Group plc is incorporated as a public limited company
and is registered in Jersey with the registered number 127570.
The Company’s registered office is 22 Grenville Street, St Helier,
Jersey, JE4 8PX.
Although the Company is subject to Jersey law, the following report
also includes disclosures which would be required for a UK
incorporated company under the UK Companies Act 2006 in order to
ensure that UK legislative disclosures with which our stakeholders
have become familiar are also included for continuity.
Directors
Details of the current directors, together with their biographies, can be
found on pages 64 and 65. The following director changes occurred
during 2020:
Matthew Lester
Lucinda Bell
Ceci Kurzman
Andrew Horton
Anne Wade
Stepped down 26 February 2020
Appointed 28 February 2020
Appointed 28 February 2020
Stepped down 1 May 2020
Appointed 30 April 2020
Details of the directors’ interests in the Company’s shares are given on
page 103 of the Annual Report.
Powers of directors
The Board is responsible for the management of the business of the
Company and may exercise all the powers of the Company subject
to the provisions of relevant statutes and the Company’s Articles of
Association (the Articles). A copy of the Articles is available on the
Company’s website and by request from the registered office of the
Company. The Articles may be amended by a special resolution of
the shareholders.
Appointment, retirement and replacement
of directors
The appointment, retirement and replacement of directors are
governed by the Articles, the 2018 UK Corporate Governance Code
and the Companies (Jersey) Law 1991. Under the Articles, the Board
has the power to appoint further directors during the year, but any
director so appointed must stand for reappointment at the next Annual
General Meeting (AGM). In accordance with the Articles, one-third of
the Board must retire by rotation at each AGM and may stand for
reappointment. In practice, and in accordance with the UK Corporate
Governance Code, all Board members retire and offer themselves for
reappointment at each AGM.
The Articles give each director the power to appoint any person
to be his/her alternate, such appointment being subject to Board
approval where the proposed alternate is not an existing director
of the Company.
118
Man Group plc Annual Report 2020
Directors’ indemnities and insurance cover
The Company has maintained third-party indemnity provisions for the
benefit of Man Group plc and its subsidiary directors, and these
remain in force at the date of this report. New indemnities are granted
by the relevant company to new directors on their appointment and
covers, to the extent permitted by law, any third-party liabilities which
they may incur as a result of their service on a Board within the Group.
The Company arranges directors’ and officers’ liability insurance to
cover certain liabilities and defence costs which an indemnity does not
meet. Neither the indemnity nor the insurance provides any protection
in the event of a director being found to have acted fraudulently or
dishonestly in respect of the Company or its subsidiaries.
Shares
Share capital
Details of movements in issued share capital, together with the rights
and obligations attaching to the Company’s shares, are set out in Note
20 to the financial statements. This Note also provides information on
the Company’s unexpired authority to purchase its own shares and
details of the shares purchased by the Company during the year.
Substantial interests
As at 31 December 2020, the Company had been notified of the
following voting interests in the ordinary share capital of the Company in
accordance with DTR 5 of the FCA’s Disclosure Guidance and
Transparency Rules. Percentages are shown as notified, calculated with
reference to the Company’s latest total voting rights announcement prior
to the date of the movement triggering the notification.
It should be noted that these holdings are likely to have changed since
the Company was notified. However, notification of any change is not
required until the next notifiable threshold is crossed.
Shareholder
Silchester International
Investors LLP
Tameside MBC re Greater
Manchester Pension Fund
BlackRock, Inc.
Number of
shares notified
to the Company
131,297,253
Percentage of
issued share
capital
8.52%
90,519,215
6.12%
76,581,342
5.18%
Date of
notification
29 May
2019
25 September
2020
23 October
2020
No changes to the above were disclosed to the Company in
accordance with DTR 5 during the period 1 January to 1 March 2021
inclusive, being the latest practicable date prior to the publication of
this report.
Restriction on voting rights
Employee Trust and share awards
Man Group operates share incentive arrangements for qualifying staff.
Where vesting conditions are met, awards granted under these
arrangements are settled in Company shares. In order to hedge the
Company’s exposure to such grants, the Company has established
the Employee Trust, which assumes the obligation to deliver shares
(and satisfy other fund-based forms of remuneration) to employees.
To enable the Employee Trust to meet these obligations, Man Group
provides funds by contributions or loans. Although independent of the
Group, the assets and liabilities of the Employee Trust are consolidated
into the accounts of Man Group and the shares it holds are treated for
accounting purposes as though they were treasury shares. These
shares remain, however, in issue as trust assets and, under the
Employee Trust deed, the trustees have discretion to vote, or abstain
from voting, on resolutions put to shareholders. Further details
regarding deferred compensation arrangements can be found in Note
19 to the financial statements.
Treasury shares
Ordinary shares held by the Company in treasury do not carry voting
rights. Further details on treasury shares can be found in Notes 8 and
20 to the financial statements.
Subsequent events
Details of any subsequent events are disclosed in Note 28 to the
financial statements.
Further disclosures
The Directors’ report comprises pages 118 to 119 and the other
sections and pages of the Annual Report and Accounts cross
referenced below which are incorporated by reference. In line with
common practice, certain disclosures normally included in the
Directors’ report have instead been integrated into the Strategic report
(pages 1 to 61) and Corporate governance report (pages 62 to 79).
Pages
10-11,
42-43
62-117
120
7, 25, 29,
141, 170
152
41-46,
56-60, 74
144, 160
12-19
52-54
30-37,
83-84
14-19
135
Business relationships, stakeholders and their effect on
decisions
Corporate governance statement
Directors’ responsibility statement including disclosure of
information to the auditor
Dividend
Dividend waiver
Employment policies, including disability and equal
opportunities and employee involvement
Financial risk management and financial instruments
Future developments in the business
Greenhouse gas emissions, energy consumption and
energy efficiency
Internal control and risk management statements
Research and development activities
Going concern disclosure
For and on behalf of the Board
Elizabeth Woods
Company Secretary
2 March 2021
Share transfer restrictions
• On 28 August 2018, 3,140,953 ordinary shares in the Company,
which were issued in part settlement of an earn-out payment made
in connection with the acquisition of Aalto, became subject to share
lock-up agreements. Subject to a number of limited exceptions, the
shares could not be disposed of until 1 January 2020 (third
anniversary of the acquisition).
• In accordance with the current Directors’ Remuneration Policy, the
CEO is required to hold shares in Man Group plc representing at
least 300% of salary and other executive directors are required to
hold shares in Man Group plc representing at least 200% of salary.
On leaving the Man Group Board, directors are expected to retain a
shareholding for two years, with 100% of the requirement retained
for the first year and at least 50% for a further year. Jonathan Sorrell
(former President of Man Group) stepped down as an executive
director on 11 September 2019 and left the business on
31 December 2019. As a result, he is required to retain shares in
Man Group plc in accordance with the Directors’ Remuneration
Policy until 31 December 2021.
• The Board may decline to register a transfer of any share which is
not a fully paid share. In addition, registration of a transfer of an
uncertificated share may be refused in the circumstances set out in
The Companies (Uncertificated Securities) (Jersey) Order 1999 and
where the number of joint holders exceeds four.
Change of control
The Company’s employee share and fund product incentive schemes
contain provisions whereby, upon a change of control of the Company,
outstanding options and awards will vest and become exercisable,
subject to any prorating that may be applicable.
In the event that the change of control of the Company relates to an
internal reorganisation, the Board may determine, with the consent of
the new controlling company, that in the case of share awards the
outstanding options and awards will not vest and will be automatically
surrendered in consideration for the grant of new equivalent awards or
options in the new controlling company and that fund product awards
will not vest but will continue to subsist.
Subsidiaries, joint ventures and associated
undertakings
The Company’s subsidiaries are listed on pages 162 to 163 (Note 29)
of the financial statements.
Independent auditor
The Company’s auditor, Deloitte, has indicated its willingness to
continue in office and a resolution to reappoint Deloitte as auditor of
the Company will be proposed at the 2021 Annual General Meeting.
Political donations
The Group’s policy is not to make any donations or contributions to
political parties or organisations and no such payments were made
during the year.
Annual General Meeting (AGM)
The AGM of Man Group plc will be held at Riverbank House, 2 Swan
Lane, London, EC4R 3AD on Friday 7 May 2021 at 10am. The
Company intends to hold the 2021 AGM in a similar format to the 2020
AGM, with shareholders encouraged to join the meeting virtually rather
than in person.
Man Group plc Annual Report 2020
119
Governance
Directors’ responsibility statement
The directors are responsible for preparing
the Annual Report and the financial
statements in accordance with applicable
law and regulations.
The directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in Jersey, Channel Islands governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
The Companies (Jersey) Law 1991 requires the directors to prepare
financial statements for each financial year. Under that law the directors
have elected to prepare the financial statements in accordance with
applicable law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union. The financial statements are
required by law to give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for that period.
Each of the directors, whose names and functions are on pages 64 to
65, confirm that, to the best of each person’s knowledge and belief:
• the financial statements, prepared in accordance with the relevant
financial reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole;
• the Strategic report includes a fair review of the development and
performance of the business and the position of the Company and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties
that they face;
• the Annual Report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company’s and Group’s
position, performance, business model and strategy; and
• there is no relevant audit information of which the Group’s auditor
is unaware, and that they have taken all steps that they ought to
have taken as a director in order to make themselves aware of any
relevant audit information and to establish that Man Group’s auditor
is aware of that information.
In preparing the Group financial statements, International Accounting
Standard 1 requires that directors:
• properly select and apply accounting policies;
• present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
• provide additional disclosures when compliance with the specific
requirements in IFRSs are insufficient to enable users to understand
the impact of particular transactions, other events and conditions on
the entity’s financial position and financial performance; and
• make an assessment of the company’s ability to continue as a
going concern.
The directors are responsible for keeping proper accounting records
that disclose with reasonable accuracy at any time the financial
position of the company and enable them to ensure that the financial
statements comply with the Companies (Jersey) Law 1991. They are
also responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
120
Man Group plc Annual Report 2020
Financial statements contents
Audited information
Note
Independent auditor’s report
Group income statement
Group statement of comprehensive income
Group balance sheet
Group cash flow statement
Group statement of changes in equity
Notes to the Group financial statements
Basis of preparation
Significant accounting policies schedule
Revenue
Distribution costs and asset servicing
Compensation
Other costs
Finance expense and finance income
Tax
Earnings per ordinary share
Dividends
Goodwill and acquired intangibles
Other intangibles
Cash, liquidity and borrowings
Investments in fund products and other investments
Fee and other receivables
Trade and other payables
Provisions
Leasehold improvements and equipment
Leases
Deferred compensation arrangements
Capital management
Pension
Segmental analysis
Geographical disclosure
Foreign currencies
Fair value of financial assets/liabilities
Related party transactions
Other matters
Subsequent events
Group investments
Unaudited information
Five-year record
Alternative performance measures
122
130
130
131
132
133
135
135
136
136
136
137
138
138
139
140
141
141
143
144
145
148
148
149
149
149
152
154
155
159
159
159
160
161
161
161
162
165
166
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
Man Group plc Annual Report 2020
121
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Independent auditor’s report to the members of Man Group plc
Report on the audit of the financial statements
1. Opinion
3. Summary of our audit approach
In our opinion the financial statements of Man Group plc (the
‘Company’) and its subsidiaries (the ‘Group’):
• give a true and fair view of the state of the Group’s affairs as at
31 December 2020 and of the Group’s profit for the year then ended;
• have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union; and
• have been properly prepared in accordance with Companies (Jersey)
Law, 1991.
Key audit
matters
The key audit matters that we identified in the current
year were:
• valuation of GPM goodwill and intangible assets;
• accuracy of performance fees; and
• valuation of investment property: right-of-use lease
asset.
Within this report, key audit matters are identified
as follows:
We have audited the financial statements which comprise:
• the Group income statement;
• the Group statement of comprehensive income;
• the Group balance sheet;
• the Group cash flow statement;
• the Group statement of changes in equity; and
• the related notes 1 to 29.
The financial reporting framework that has been applied in their
preparation is applicable law and IFRSs as adopted by the
European Union.
2. Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the auditor’s responsibilities
for the audit of the financial statements section of our report.
We are independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the financial statements in
the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical
Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements. We confirm that the non-audit services prohibited by the
FRC’s Ethical Standard were not provided to the Group.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
Scoping
Significant
changes in our
approach
The materiality that we used for the Group financial
statements was $15.24 million which was determined
on the basis of 2% of gross management and
other fees.
We performed a full scope audit of 29 (2019: 22)
subsidiaries and audits of specified account balances
within a further eight (2019: 10) subsidiaries across
eight (2019: eight) geographic locations.
Together, this accounts for 98% (2019: 99%) of the
Group’s revenue, 98% (2019: 97%) of the Group’s
profit before tax and 98% (2019: 99%) of the Group’s
total assets.
The valuation of investment property: right-of-use
lease asset is considered a new key audit matter in
the current year due to the degree of judgement and
complexity in the estimation of key assumptions, as a
result of the uncertainty in the central London
property market due to COVID-19, and the amount of
senior and specialised audit time spent on this matter
in the current year. We have also refined the key audit
matter in relation to valuation of GPM goodwill and
intangible assets and contingent consideration to
focus only on valuation of goodwill and intangible
assets. Refer below in the ‘Key audit matters’ section
for the rationale.
There are no other significant changes in our
approach apart from these key audit matters.
122
Man Group plc Annual Report 2020
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s ability to
continue to adopt the going concern basis of accounting included:
• assessing the financing facilities including nature of facilities,
repayment terms and covenants;
• challenging the linkage between the business model and medium-
term risks;
• testing of clerical accuracy and assessing the sophistication of the
model used to prepare the forecasts;
• assessing the reasonableness of the assumptions used in
the forecasts;
• assessing the historical accuracy of forecasts prepared by
management;
• analysing the amount of headroom in the forecasts considering cash
and covenants;
• assessing management’s stress testing and scenario planning; and
• performing a sensitivity analysis of the key inputs.
Valuation of GPM goodwill and intangible assets
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group's ability to
continue as a going concern for a period of at least 12 months from
when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK
Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors’ statement in the financial
statements about whether the directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect
to going concern are described in the relevant sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement,
were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Key audit matter
description
Following the acquisition of Aalto in 2017, the Group recognised goodwill of $55m and $16m of intangible assets
upon acquisition of the Cash Generating Unit (CGU) of Global Private Markets (GPM). In the current year, the goodwill
attributable to the CGU is nil (2019: $55m) and the intangible assets balance is $12m (2019: $15m). There is an
impairment expense recognised of $55m (2019: nil) for the write down of the goodwill in the period.
How the scope of our
audit responded to the
key audit matter
The estimation uncertainty in forecasting growth requires judgemental interpretations such as the projection of Funds
Under Management (FUM) flows and perpetual growth multiples, discount rates or margin estimates used to calculate
the carrying value of the CGU. The valuation of goodwill is very sensitive to changes in this estimate.
There is a fraud risk given the risk of management bias in estimating key assumptions. Given the level of judgement
involved in deriving necessary assumptions and the sensitivities of these assumptions, the valuation of GPM goodwill
and intangible assets is deemed to be a key audit matter.
The challenges facing the GPM business in 2020 discussed in Note 10 affected the cash flows of the CGU and its
forecasts resulting in an impairment of the full goodwill balance with the remaining balance at year end being attributable
to intangible assets.
The accounting policy for the valuation of goodwill and intangible assets, including management’s sensitivity analyses,
is detailed in Note 10 to the financial statements.
Our procedures included:
Assessing related controls: We obtained an understanding of the relevant controls over the goodwill and intangible
assets valuation and tested the relevant controls over the valuation model integrity, methodology applied, data input
and assumptions used.
Working with specialists: We involved our internal valuation specialists in challenging management’s assumptions
used to calculate the fair value. Our specialists assisted with challenging the forecast FUM flows and performance
against recent industry flows and performance, challenging the discount rate and perpetual growth multiple applied
through discussions with management based on the results of our reviews.
Substantive testing: We compared the modelled Group value-in-use and the Group’s market capitalisation, assessing
management’s reconciliation between the two valuations. We examined the goodwill and intangible assets of the GPM
CGU and assessed:
• management’s deal pipeline;
• corroborated forecasts to evidence support for deal progress where available; and
• used market data to challenge management’s estimates. This included understanding and challenging the effect
of COVID-19 on the pipeline and forecasted growth.
We performed an independent sensitivity analysis to determine the impact of reasonably foreseeable changes to
assumptions used in the value in use calculations for the GPM CGU to determine whether such changes would trigger
material impairments.
Key observations
We consider the valuation of GPM’s goodwill and intangible assets to be appropriate. Based on market comparisons
and other available evidence, we consider the Group’s exit multiple to be within an acceptable range although at the
optimistic end of that range.
Man Group plc Annual Report 2020
123
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Independent auditor’s report to the members of Man Group plc continued
Accuracy of performance fees
Key audit matter
description
Performance fees are manually calculated as they are performed less frequently and are more complicated than
management fee calculations, increasing the relative risk of misstatement.
How the scope of our
audit responded to the
key audit matter
The performance fees require the accurate implementation of methodologies as set out in the investment
management agreements which are bespoke for each client or fund. The value of performance fees recorded in the
year is $177m (2019: $325m).
The performance fee calculation requires the use of estimated valuations which can change after the period end.
There is a fraud risk associated with the accuracy of revenue due to this balance’s importance to stakeholders and
link to long-term incentives. Given the complexity of the calculations and level of judgement involved in determining
if the revenue has crystallised, accuracy of performance fees is deemed to be a key audit matter.
The accounting policy for performance fees is detailed in Note 2.
Our procedures included:
Assessing related controls: We obtained an understanding of the relevant controls over performance fees and
tested the relevant controls over the accuracy of performance fees. We place reliance on these controls as a part
of a combined audit approach.
Tests of detail: We independently agreed a sample of calculations to governing documents and source
documentation, verifying the calculation methodology and the accuracy of the inputs used in the calculation (for
example, fee rates, crystallisation dates, fund product profit and relevant benchmarks), challenging any judgements
when interpreting governing documents. For estimates subsequently finalised and invoiced after the year end, we
assessed the amounts invoiced against the accrued estimate at the year end in mid-February.
Key observations
Based on our work, performance fees are appropriately recorded.
Valuation of investment property: right-of-use lease asset
Key audit matter
description
Investment property: right-of-use lease asset is measured at cost less impairment and is recorded at $78m (2019:
$141m). In the current period, there were circumstances which indicated that the carrying amount may not be
recoverable and the balance was assessed for impairment. There is an impairment recognised of $25m (2019: nil) for
the write down of the value of the investment property: right-of-use lease asset in the period. The value in use is
equivalent to the fair value of the investment property and is determined by forecasting cash flow projections to the
end of the relevant lease contract based on estimates for future rentals. Given the adverse effect of COVID-19 on the
central London property market during 2020 and beyond, the estimation of key assumptions is challenging. These
assumptions include the timeline for new tenants signing a sub-lease contract, the discount rate, the sub-lease length
and the expected rental amount. This has required specialised knowledge of the property market and therefore
elevated the level of audit effort required.
We note that in the current period, there has been an impairment given the assumptions mentioned above have been
negatively impacted as a result of COVID-19.
The accounting policy for valuation of investment property: right-of-use lease asset is detailed in Note 18.
How the scope of our
audit responded to the
key audit matter
Assessing related controls: We obtained an understanding of the relevant controls over the valuation of investment
property: right-of-use lease asset and tested the relevant controls over the valuation model integrity, methodology
applied, data input and assumptions used.
Working with specialists: We involved our real estate valuation specialists in challenging management’s assumptions
used to calculate the fair value. Our specialists assisted with challenging the timeline for signing a sub-lease contract
with new tenants, the discount rate applied, the sub-lease length and the expected rental amount. We also involved
accounting specialists to assist us in challenging the appropriateness of the accounting treatment for the cash flows
included in the model.
Substantive testing: We examined the valuation of investment property: right-of-use lease asset and:
• assessed management’s projected cash flows for appropriateness including challenging how they have attributed
cash flows specific to investment property floors;
• corroborated forecasts to known costs from previous periods; and
• used market data to challenge management’s estimates. This included understanding and challenging the effect
of COVID-19 on the uncertainty of acquiring future tenants.
We performed an independent sensitivity analysis to determine the impact of reasonably foreseeable changes to
assumptions used in the calculations for fair value of investment property: right-of-use lease asset to determine
whether such changes would trigger material impairments in future and have noted that this is unlikely given the
quantum of the sub-lease exposure and since the expected adverse effect of COVID-19 is captured in the
impairment assessment.
Key observations
Based on our work, investment property: right-of-use lease asset is appropriately recorded and the estimates
discussed above are the midpoint of an acceptable range.
124
Man Group plc Annual Report 2020
6. Our application of materiality
6.1 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality
Basis for determining materiality
Rationale for the benchmark applied
Group financial statements
$15.24 million (2019: $15.95 million)
2% of gross management and other fees (2019: 5% of the two-year
average adjusted profit before tax)
We have changed the benchmark in the current period from the two-year
average adjusted profit before tax to gross management and other fees.
We have determined this to be an appropriate measure as it is statutory
in nature and removes the variability of performance fees from the
calculation. We note that performance fees can fluctuate significantly
year on year. For the year ended 31 December 2019, performance fees
were $325 million in comparison to $177 million in 2020. As a result, we
have removed this variability by using gross management and other fees
as the benchmark.
Materiality ($m)
Group materiality $15.24m
i
F
n
a
n
c
a
i
l
Gross management
and other fees $762m
Component materiality range $0.1m to $9.16m
s
t
a
t
e
m
e
n
t
s
Gross management and other fees
Group materiality
Audit & Risk Committee reporting threshold $0.76m
Man Group plc Annual Report 2020
125
Independent auditor’s report to the members of Man Group plc continued
7.2 Our consideration of the control environment
Where relevant, we followed a combined approach of performing
substantive and controls testing. We took a controls reliance approach
over management and performance fees and the related balance sheet
receivables and accruals in all areas of the business except GPM given
these controls are not as embedded in the normal course of business.
We also tested relevant controls over distribution costs, fixed
compensation, asset servicing and investment in fund product plans.
Where we place reliance on service organisations reports specifically at
administrators and transfer agents, we have obtained an understanding
of the controls provided within the service organisation reports and
tested any complementary controls performed by the Group.
We have performed general IT controls testing over the Group’s
financial reporting processes and the key IT systems for management
fees, performance fees, distribution costs and compensation. In
addition, we performed tests over manual relevant controls which
complement these where needed.
7.3 Working with other auditors
All work was performed by the Group audit team with the exception of
specified audit procedures being performed by the US and Swiss teams
largely over local payroll and cash balances. Components were
supervised by the Group audit team. Regular calls were held with
components during the audit to discuss progress and provide updates
relevant to the Group audit.
6.2 Performance materiality
We set performance materiality at a level lower than materiality to
reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as
a whole. Group performance materiality was set at 70% of Group
materiality for the 2020 audit (2019: 70%).
When considering performance materiality we have taken into account
our strong understanding of the entity and its environment. We have
considered the reliability of the entity's internal controls over financial
reporting and were able to rely upon controls for a number of
business processes.
We also considered our past experience of the audit, which has
indicated a low number of corrected and uncorrected misstatements
identified in prior periods.
6.3 Error reporting threshold
We agreed with the Audit and Risk Committee that we would report to
the Committee all audit differences in excess of $762k (2019: $798k),
as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds. We also report to the Audit and Risk
Committee on disclosure matters that we identified when assessing
the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1 Identification and scoping of components
We perform our global scoping assessment on an individual entity by
entity basis to determine the ‘significant components’ or specified
balances which should be subject to testing. In doing so, we perform
both a quantitative and qualitative assessment of all entities within the
consolidated Group. Our quantitative assessment is primarily based
on each entity’s profit before tax and revenue, however a further
assessment is performed to determine whether sufficient coverage
has been obtained. Our qualitative assessment is based on our
understanding of the entities obtained from prior years’ and current
year’s events and any significant risks or management interest
associated with each entity. Specific to our considerations is
management’s strategy for the Group and we continue to re-assess
where we focus our efforts as the business continues to evolve.
Based on that assessment, which is broadly consistent with the prior
year, we focused our Group audit scope primarily on the audit work at
eight geographical locations. This included the full audit of 29 (2019: 22)
subsidiaries across the UK, the US, Switzerland, Jersey, Japan, Ireland,
the Cayman Islands and Channel Islands. A further eight (2019: 10)
subsidiaries across the UK, the US, Hong Kong, Jersey and Australia
were subject to an audit of specified account balances where the extent
of our testing was based on our assessment of the risks of material
misstatement and of the materiality of the Group’s operations at
those locations. All other subsidiaries were subject to analytical
review procedures.
These eight (2019: eight) geographical locations represent the principal
business units and account for 98% (2019: 99%) of the Group’s total
assets, 98% (2019: 99%) of the Group’s revenue and 98% (2019: 97%)
of the Group’s profit before tax on an absolute basis. They were also
selected to provide an appropriate basis for undertaking audit work to
address the risks of material misstatement identified above. Our audit
work at the 37 (2019: 32) subsidiaries was executed at levels of
materiality applicable to each individual entity which were lower than
Group materiality and ranged from $0.1 million to $9.16 million (2019:
$0.1 million to $10.4 million).
Ordinarily the Group audit team implements a programme of planned
visits so that the Senior Statutory Auditor or a senior member of the
Group audit team visits each of the locations where the Group audit
scope is focused on a rotational basis. During the current year no visits
were made to individual locations. This was replaced with video
conference calls that included screen sharing to allow for similar
interactions and assurance. Regular communications were maintained
with all geographical locations. Books and records for subsidiaries
located within Ireland, the Cayman Islands, Australia and the Channel
Islands are maintained within the UK and are audited by the Group
audit team.
126
Man Group plc Annual Report 2020
Revenue
96%
Full audit scope
Specified audit procedures 2%
2%
Review at group level
Profit before tax
95%
Full audit scope
Specified audit procedures 3%
2%
Review at group level
Total assets
90%
Full audit scope
Specified audit procedures 8%
2%
Review at group level
8. Other information
The other information comprises the information included in the Annual
Report, other than the financial statements and our auditor’s report
thereon. The directors are responsible for the other information
contained within the Annual Report.
Our opinion on the financial statements does not cover the other
information and we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the
directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view, and for such
internal controls as the directors determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Group’s ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
10. Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the
financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Man Group plc Annual Report 2020
127
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Independent auditor’s report to the members of Man Group plc continued
11.2 Audit response to risks identified
As a result of performing the above, we identified valuation of GPM
goodwill and intangible assets and accuracy of performance fees as key
audit matters related to the potential risk of fraud. The key audit matters
section of our report explains the matters in more detail and also
describes the specific procedures we performed in response to those
key audit matters. In addition to the above, our procedures to respond
to risks identified included the following:
• reviewing the financial statement disclosures and testing to
supporting documentation to assess compliance with provisions
of relevant laws and regulations described as having a direct effect
on the financial statements;
• enquiring of management, the Audit and Risk Committee and in-
house and external legal counsel concerning actual and potential
litigation and claims;
• performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud;
• reading minutes of meetings of those charged with governance,
reviewing internal audit reports and reviewing correspondence with
HMRC, FCA and other regulators globally; and
• in addressing the risk of fraud through management override of
controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making
accounting estimates are indicative of a potential bias; and evaluating
the business rationale of any significant transactions that are unusual
or outside the normal course of business.
We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members including internal
specialists and significant component audit teams and remained alert
to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by our
engagement letter
In our opinion, the part of the directors’ remuneration report to be
audited has been properly prepared in accordance with the provisions
of UK Companies Act 2006 as if that Act had applied to the Company.
11. Extent to which the audit was considered
capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud, is detailed below.
11.1 Identifying and assessing potential risks related to
irregularities
In identifying and assessing risks of material misstatement in respect
of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
• the nature of the industry and sector, control environment and
business performance including the design of the Group’s
remuneration policies, key drivers for directors’ remuneration,
bonus levels and performance targets;
• results of our enquiries of management, internal audit and the Audit
and Risk Committee about their own identification and assessment
of the risks of irregularities;
• any matters we identified having obtained and reviewed the Group’s
documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and
whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they
have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-
compliance with laws and regulations;
• the matters discussed among the audit engagement team including
component audit teams and relevant internal specialists, including
tax, valuations, pensions, IT and industry specialists regarding how
and where fraud might occur in the financial statements and any
potential indicators of fraud.
As a result of these procedures, we considered the opportunities and
incentives that may exist within the organisation for fraud and identified
the greatest potential for fraud in the following areas: valuation of GPM
goodwill and intangible assets, accuracy of performance fees and the
possible recognition of contingent liabilities. In common with all audits
under ISAs (UK), we are also required to perform specific procedures
to respond to the risk of management override of controls.
We also obtained an understanding of the legal and regulatory
framework that the Group operates in, focusing on provisions of those
laws and regulations that had a direct effect on the determination of
material amounts and disclosures in the financial statements. The key
laws and regulations we considered in this context included Companies
(Jersey) Law 1991, Listing Rules and the Disclosure Guidance and
Transparency Rules, pensions legislation, tax legislation and matters
regulated by the Financial Conduct Authority (the Group’s lead
regulator). Compliance with regulatory capital requirements is
fundamental to the Group’s ability to continue as a going concern.
In addition, we considered provisions of other laws and regulations
that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the Group’s ability
to operate or to avoid a material penalty. These included the Group’s
solvency requirements.
128
Man Group plc Annual Report 2020
15.2 Consistency of the audit report with the additional report
to the Audit and Risk Committee
Our audit opinion is consistent with the additional report to the
Audit and Risk Committee we are required to provide in accordance
with ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body,
in accordance with Article 113A of the Companies (Jersey) Law 1991.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for
our audit work, for this report, or for the opinions we have formed.
Stuart McLaren (CA)
For and on behalf of Deloitte LLP
Recognised Auditor
London
2 March 2021
13. Corporate Governance Statement
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements and our
knowledge obtained during the audit:
• the directors’ statement with regard to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified, set out on page 135;
• the directors’ explanation as to their assessment of the Group’s
prospects, the period this assessment covers and why the period
is appropriate, set out on page 31;
• the directors' statement on fair, balanced and understandable,
set out on page 120;
• the Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks, set out on page 33;
• the section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems,
set out on pages 32 and 33; and
• the section describing the work of the Audit and Risk Committee,
set out on pages 80 to 85.
14. Matters on which we are required to report
by exception
14.1 Adequacy of explanations received and accounting records
Under Companies (Jersey) Law 1991 we are required to report to you if,
in our opinion:
• we have not received all the information and explanations we require
for our audit; or
• proper accounting records have not been kept by the Company, or
proper returns adequate for our audit have not been received from
branches not visited by us; or
• the financial statements are not in agreement with the accounting
records and returns.
We have nothing to report in respect of these matters.
15. Other matters
15.1 Auditor tenure
Following the recommendation of the Audit and Risk Committee, we were
appointed by the Audit and Risk Committee on 19 March 2014 to audit
the financial statements for the year ending 31 December 2014 and
subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of the
firm is seven years, covering the years ending 31 December 2014
to 31 December 2020.
Man Group plc Annual Report 2020
129
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Group income statement
$m
Revenue:
Gross management and other fees
Performance fees
Income or gains on investments and other financial instruments
Third-party share of gains relating to interests in consolidated funds
Sub-lease rental and lease surrender income
Distribution costs
Asset servicing costs
Compensation
Other costs
Revaluation of contingent consideration
Amortisation of acquired intangible assets
Impairment of GPM goodwill
Impairment of right-of-use lease assets – investment property
Impairment of acquired intangible assets
Recycling of FX revaluation to the Group income statement on liquidation of subsidiaries1
Gain on sale of investment in Nephila
Finance expense
Finance income
Profit before tax
Tax expense
Statutory profit attributable to owners of the Parent Company
Statutory earnings per share:
Basic (cents)
Diluted (cents)
Group statement of comprehensive income
$m
Statutory profit attributable to owners of the Parent Company
Other comprehensive (expense)/income:
Remeasurements of post-employment benefit obligations
Current tax credited on pension scheme
Deferred tax debited on pension scheme
Items that will not be reclassified to profit or loss
Cash flow hedges:
Valuation gains taken to equity
Transfer to Group income statement
Deferred tax credited/(debited) on cash flow hedge movements
Net investment hedge
Recycling of FX revaluation to the Group income statement on liquidation of subsidiaries1
Foreign currency translation
Items that may be reclassified to profit or loss
Other comprehensive (expense)/income (net of tax)
Total comprehensive income attributable to owners of the Parent Company
Year ended
31 December
2020
Year ended
31 December
2019
Note
2
2
13.1
13.2
18.2
3
3
4
5
25
10
10
18
10
6
6
7
8
762
177
939
40
(17)
25
(34)
(55)
(451)
(150)
22
(63)
(55)
(25)
–
17
–
(16)
2
179
(41)
138
9.5
9.3
788
325
1,113
35
(18)
14
(38)
(55)
(476)
(189)
37
(78)
–
–
(5)
–
1
(42)
8
307
(22)
285
18.9
18.4
Year ended
31 December
2020
Year ended
31 December
2019
Note
138
285
21
(15)
4
–
(11)
6
(3)
1
(4)
(17)
10
(7)
(18)
120
(10)
3
(2)
(9)
–
12
(2)
–
–
1
11
2
287
Note:
1 Relates to the liquidation of non-USD functional currency subsidiaries, whereby the related movements in the cumulative translation adjustment reserve are realised upon disposal.
130
Man Group plc Annual Report 2020
Group balance sheet
$m
Assets
Cash and cash equivalents
Fee and other receivables
Investments in fund products and other investments
Pension asset
Leasehold property – right-of-use lease assets1
Investment property – right-of-use lease assets1
Leasehold improvements and equipment1
Goodwill and acquired intangibles
Other intangibles
Deferred tax assets
Total assets
Liabilities
Trade and other payables
Provisions
Current tax liabilities
Third-party interest in consolidated funds
Lease liability
Deferred tax liabilities
Total liabilities
Net assets
Equity
Capital and reserves attributable to owners of the Parent Company
Note
12
14
13
21
18.1
18.1
17
10
11
7
15
16
7
13.2
18.1
7
At
31 December
2020
At
31 December
20191
351
386
787
2
74
78
30
742
39
119
2,608
574
9
12
219
272
25
1,111
1,497
281
426
776
16
79
141
29
854
31
120
2,753
559
8
14
213
307
28
1,129
1,624
1,497
1,624
Note:
1 As a result of reassessing our application of IFRS 16 ‘Leases’ with regard to the classification of the Group’s right-of-use lease assets and the associated leasehold improvements, we determined
that our leased business premises, which are in turn sub-let under operating leases, are classified as investment property under IAS 40 ‘Investment Property’. Accordingly, we have restated this
retrospectively from 1 January 2019, which results in the reclassification of $130 million of right-of-use lease assets within leasehold property and $11 million of leasehold improvements to
investment property at 31 December 2019. This restatement has no impact on the Group’s income statement, earnings per share, net assets, or total capital and reserves attributable to owners
of the Parent Company. As the Group applied IFRS 16 for the first time from 1 January 2019, the Group has not presented a restatement balance sheet at 31 December 2018 as there is no
change to that previously reported. See Note 18 for further details on the Group’s lease arrangements.
The financial statements were approved by the Board of Directors and authorised for issue on 2 March 2021 and signed on its behalf by:
Luke Ellis
Chief Executive Officer
Mark Jones
Chief Financial Officer
Man Group plc Annual Report 2020
131
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Group cash flow statement
$m
Cash flows from operating activities
Statutory profit
Adjustments for non-cash items:
Income tax expense
Net finance expense
Revaluation of contingent consideration
Depreciation of leasehold improvements and equipment1
Depreciation of right-of-use lease assets1
Impairment of right-of-use lease assets – investment property
Amortisation of acquired intangible assets
Impairment of goodwill and acquired intangible assets
Amortisation of other intangibles
Share-based payment charge
Fund product-based payment charge
Recycling of FX revaluation to the Group income statement on liquidation of subsidiaries
Foreign exchange movements
Gain on sale of investment in Nephila
Other non-cash movements
Changes in working capital:
Decrease/(increase) in receivables
Decrease in other financial assets2
(Decrease)/increase in payables
Cash generated from operations
Interest paid
Unwind of lease liability discount
Unwind of discount in relation to acquisitions3
Income tax paid
Cash flows from operating activities
Cash flows from investing activities
Purchase of leasehold improvements and equipment
Purchase of other intangible assets
Payment of contingent consideration in relation to acquisitions3
Interest received
Proceeds from sale of investment in Nephila
Cash flows used in investing activities
Cash flows from financing activities
Purchase of own shares by the Employee Trust and Partnerships
Proceeds from sale of Treasury and Employee Trust shares in respect of Sharesave
Repayments of principal lease liability
Payment of contingent consideration in excess of projected fair value recognised at acquisition3
Share repurchase programmes (including costs)
Dividends paid to Company shareholders
Repayment of Tier 2 notes
Payment of capitalised upfront costs on revolving credit facility
Cash flows used in financing activities
Net increase/(decrease) in cash
Cash at the beginning of the year
Effect of foreign exchange movements
Cash at year end4
Year ended
31 December
2020
Year ended
31 December
2019
Note
138
41
14
(22)
12
22
25
63
55
14
20
54
(17)
(16)
–
(11)
392
50
31
(30)
443
(2)
(12)
–
(37)
392
(12)
(18)
(2)
2
–
(30)
(21)
–
(22)
–
(107)
(147)
–
–
(297)
65
281
5
351
285
22
34
(37)
13
22
–
78
5
12
28
50
–
13
(1)
9
533
(122)
170
5
586
(11)
(14)
(80)
(43)
438
(9)
(14)
(78)
8
1
(92)
(11)
2
(20)
(11)
(92)
(152)
(150)
(1)
(435)
(89)
370
–
281
7
6
25
17
18.1
18
10
10
11
4
4
6,18.1
18.1
20
9
12
12
Notes:
1 As a result of reassessment of our application of IFRS 16 ‘Leases’ together with IAS 40 ‘Investment Property’ with regard to the classification of the Group’s right-of-use lease assets from
1 January 2019, we have reclassified $2 million of depreciation of leasehold improvements and equipment as depreciation of right-of-use lease assets in 2019. See Note 17 for further details.
Includes $1 million of restricted net cash inflows (2019: $35 million) relating to consolidated fund entities (Note 13.2).
2
3 As required by IAS 7, whereby the total consideration paid is greater than the projected fair value of contingent consideration recognised on acquisition, the unwind of discount over the life of the
earn-out should be recognised within operating activities and any residual payment in excess of this recognised within financing activities. This is applicable to the final Numeric contingent
consideration payment in September 2019 (Note 25).
Includes $62 million (2019: $61 million) of restricted cash relating to consolidated fund entities (Note 13.2).
4
132
Man Group plc Annual Report 2020
Group statement of changes in equity
$m
Share capital and capital reserves
Revaluation reserves and retained earnings
Capital and reserves attributable to owners of the Parent Company
Share capital and capital reserves
Year ended
31 December
2020
Year ended
31 December
2019
(1,635)
3,132
1,497
(1,635)
3,259
1,624
$m
At 1 January 2020
At 31 December 2020
Revaluation reserves and retained earnings
$m
At 1 January 2020
Statutory profit
Other comprehensive income/(expense):
Revaluation of defined benefit pension scheme
Current tax credited on pension scheme
Fair value gains on cash flow hedges1
Transfer cash flow hedge to Group income statement1
Deferred tax credited on cash flow hedge movements
Net foreign currency losses
Share-based payment charge
Purchase of own shares by the Employee Trust
Disposal of own shares by the Employee Trust
Share repurchases
Transfer to Treasury shares
Transfer from Treasury shares
Dividends
At 31 December 2020
Share
capital
53
53
Profit
and loss
account
3,322
138
(15)
4
–
–
–
–
20
–
(26)
(100)
107
(11)
(147)
3,292
Share
premium
account
Capital
redemption
reserve
–
–
–
–
Merger
reserve
Reorganisation
reserve
–
–
(1,688)
(1,688)
Total
(1,635)
(1,635)
Own shares
held by
Employee
Trust
Treasury
shares
Cumulative
translation
adjustment
Cash flow
hedge
reserve1
(66)
–
–
–
–
–
–
–
–
(21)
27
–
–
–
–
(60)
(52)
–
–
–
–
–
–
–
–
–
–
–
(107)
11
–
(148)
55
–
–
–
–
–
–
(11)
–
–
–
–
–
–
–
44
–
–
–
–
6
(3)
1
–
–
–
–
–
–
–
–
4
Total
3,259
138
(15)
4
6
(3)
1
(11)
20
(21)
1
(100)
–
–
(147)
3,132
Note:
1 Details of the Group’s 2020 cash flow hedging arrangements are provided in Note 19.
The proposed 2020 final dividend would reduce shareholders’ equity by $81 million (2019: $76 million) subsequent to the balance sheet date
(Note 9). Further details of the Group’s share capital and reserves are included in Note 20.
Man Group plc Annual Report 2020
133
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Group statement of changes in equity continued
Share capital and capital reserves
$m
At 1 January 2019
Purchase and cancellation of own shares
Scheme of arrangement (Note 1):
Cancellation of shares in former holding company
Issue of shares in new holding company
Capital reduction (Note 1)
At 31 December 2019
Revaluation reserves and retained earnings
$m
At 1 January 2019
Adjustment for adoption of IFRS 16
At 1 January 2019
Statutory profit
Other comprehensive income/(expense):
Revaluation of defined benefit pension scheme
Current tax credited on pension scheme
Deferred tax debited on pension scheme
Transfer cash flow hedge to Group income statement1
Deferred tax debited on cash flow hedge movements
Net foreign currency gains
Share-based payment charge
Scheme of arrangement – capital reduction (Note 1)
Deferred tax credited on share-based payments
Purchase of own shares by the Employee Trust
Disposal of own shares by the Employee Trust
Share repurchases
Transfer to Treasury shares
Transfer from Treasury shares
Cancellation of Treasury shares
Disposal of Treasury shares in respect of Sharesave
Dividends
At 31 December 2019
Note:
1 Details of the Group’s 2019 cash flow hedging arrangements are provided in Note 12.
Share
capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Reorganisation
reserve
55
(2)
(53)
53
–
53
32
–
(32)
2,861
(2,861)
–
Profit
and loss
account
Own shares
held by
Employee
Trust
499
(24)
475
285
(10)
3
(2)
–
–
–
28
2,861
1
–
(15)
(100)
92
(4)
(140)
–
(152)
3,322
(62)
–
(62)
–
–
–
–
–
–
–
–
–
–
(11)
15
–
–
(8)
–
–
–
(66)
8
2
(10)
–
–
–
Treasury
shares
(114)
–
(114)
–
–
–
–
–
–
–
–
–
–
–
–
–
(92)
12
140
2
–
(52)
499
–
(499)
–
–
–
632
–
(632)
(1,688)
–
(1,688)
Cumulative
translation
adjustment
Cash flow
hedge
reserve
54
–
54
–
–
–
–
–
–
1
–
–
–
–
–
–
–
–
–
–
–
55
(10)
–
(10)
–
–
–
–
12
(2)
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
1,226
–
(1,226)
1,226
(2,861)
(1,635)
Total
367
(24)
343
285
(10)
3
(2)
12
(2)
1
28
2,861
1
(11)
–
(100)
–
–
–
2
(152)
3,259
134
Man Group plc Annual Report 2020
Notes to the Group financial statements
1. Basis of preparation
Accounting policies
The audited consolidated financial information has been prepared in accordance with International Financial Reporting Standards (IFRSs) and
interpretations (IFRICs) as adopted by the EU. Man Group’s principal accounting policies have been consistently applied across the Group in the
preparation of the financial statements. Accounting policies are included in the relevant sections, and significant policies are outlined on page 136.
The impact, if any, of new accounting standards and amendments applicable for the year ended 31 December 2020 and accounting standards that
are not yet effective are detailed on page 136.
Consolidated group and presentation currency
The consolidated group is Man Group plc (the Company) and its subsidiaries (together the Group or Man Group). The Company has taken
advantage of the exemption provided in Article 105 (11) of the Companies (Jersey) Law 1991 and therefore does not present its individual financial
statements and related notes. The Group’s presentation currency is United States dollars (USD).
The consolidated financial information contained within these financial statements incorporates the results, cash flows and financial position of the
Company and its subsidiaries (Note 29) for the year to 31 December 2020. Subsidiaries are entities controlled by the Group (including structured
entities, as defined by IFRS 12 ‘Disclosure of Interests in Other Entities’, as detailed in Note 13.3), and are consolidated from the date on which
control is transferred to the Group until the date that control ceases. Control exists when the Group has the power to direct the relevant activities,
exposure to significant variable returns and the ability to utilise power to affect those returns. All intercompany transactions and balances between
Group entities are eliminated on consolidation.
Business combinations (acquisitions) are accounted for using the acquisition method. The acquisition date is the date on which Man Group
effectively obtains control of the acquiree. The cost of an acquisition is measured as the fair value at the acquisition date of assets transferred,
liabilities incurred and equity instruments issued by the Group. The fair value of an acquisition is calculated at the acquisition date by recognising
the acquiree’s identifiable assets and liabilities at their fair values at that date, and costs relating to acquisitions are recognised in the Group income
statement as incurred. Any contingent consideration is recognised at fair value at the acquisition date, with any subsequent changes to the fair value
recognised in the Group income statement.
Man Group’s relationship with independent fund entities
Man Group acts as the investment manager/advisor to fund entities. The Group assesses such relationships on an ongoing basis to determine
whether each fund entity is controlled by the Group and therefore consolidated into the Group’s results. Having considered all significant aspects
of the Group’s relationships with fund entities, the directors are of the opinion that, although Man Group manages the assets of certain fund entities,
where the Group neither holds an investment in the fund entity nor receives the returns on the fund entity via a total return swap or sale and
repurchase arrangement, the characteristics of control are not met. For most fund entities: the existence of independent boards of directors at the
fund entities; rights which allow for the removal of the investment manager/advisor; the influence of investors; limited exposure to variable returns;
and the arm’s length nature of Man Group’s contracts with the fund entities, indicate that the Group does not control the fund entities and their
associated assets, liabilities and results should not be consolidated into the Group financial statements. Assessment of the control characteristics
for all relationships with fund entities led to the consolidation of 19 funds for the year ended 31 December 2020 (2019: 15), as detailed in Note 13.
An understanding of the aggregate funds under management (FUM) and the fees earned from fund entities is relevant to an understanding of
Man Group’s results and earnings sustainability, and this information is provided in the Chief Financial Officer’s review on pages 24 to 29.
Judgemental areas and accounting estimates
The most significant area of judgement is whether the Group controls certain funds through its exposure to fund products via either direct
investments, total return swaps or sale and repurchase arrangements, and is required to consolidate them (Note 13.2). Our key judgements on
this are outlined above within ‘Man Group’s relationship with independent fund entities’. The key assumptions concerning the future and other key
sources of estimation uncertainty at the reporting date that may have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year relate to the valuation of goodwill and acquired intangibles for CGUs with lower levels of headroom.
The key assumptions and range of possible outcomes are discussed in Note 10.
These judgements and estimates have been an area of focus for the Group Board, and in particular the Audit and Risk Committee, during the year.
The report of the Chair of the Audit and Risk Committee discusses the involvement of the Committee in this evaluation on page 82.
Going concern
Man Group’s business activity is discussed on pages 1 to 61, together with the significant risk factors (pages 34 to 37).
During the 12 months ended 31 December 2020 and the subsequent period up to the date of approval of the financial statements, the COVID-19
pandemic has caused extensive disruption to businesses and economic activities globally. Although COVID-19 has not had a significant or ongoing
adverse impact on the Group to date, its impact on the Group’s operating arrangements, including access to capital and liquidity, is subject to
ongoing review by the directors and senior management. This includes assessment of the Group’s medium-term financial plan and capital and
liquidity plan, which are built by aggregating the expected business performance across the Group and include rigorous downside scenario testing.
We continue to have a strong cash (Note 12) and capital (Note 20) position, and our business typically has a good conversion of profits into cash
flows, which helps protect the business in stressed scenarios. Further discussion in relation to COVID-19 is included in the Chief Executive Officer’s
review and the Risk management and Our sustainable business model sections of the Strategic report on pages 16, 30 and 55 respectively.
The directors consider that the Group is well placed to manage business and financial risks in the current economic environment and have
concluded that there is a reasonable expectation that Man Group has adequate resources to continue in operational existence for the foreseeable
future. Accordingly, the Group financial statements have been prepared on a going concern basis using the historical cost convention, except for the
measurement at fair value of certain financial instruments that are held at fair value through profit or loss. The directors have also made a longer-term
viability statement, as set out on page 31.
Corporate reorganisation
In May 2019 the Group adjusted its corporate structure. Man Group plc was incorporated in Jersey on 26 October 2018 and became the new listed
holding company of the Group on 28 May 2019 via a court-approved scheme of arrangement under Part 26 of the UK Companies Act 2006, with
the former holding company being renamed Man Group Limited. Under the scheme of arrangement, shares in the former holding company of the
Group were cancelled and the same number of new ordinary shares were issued to the new holding company in consideration for the allotment to
shareholders of one ordinary share of 3 3/7 US cents in the new holding company for each ordinary share of 3 3/7 US cents they held in the former
holding company. On 28 May 2019, Man Group plc effected a reduction of its share capital by cancelling its share premium and recognising an
equivalent increase in the profit and loss account in reserves.
Man Group plc Annual Report 2020
135
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Notes to the Group financial statements continued
1. Basis of preparation continued
Financial reporting controls
Details of the Group’s systems of internal control are included on page 32.
Significant accounting policies schedule
Policy
Revenue
Distribution costs and asset servicing
Tax
Goodwill and acquired intangibles
Investments in fund products and other investments
Leases
Deferred compensation arrangements
Pension
Note
Page
2
3
7
10
13
18
19
21
136
136
139-140
141-143
145-147
149-151
152-153
155-158
Impact of new accounting standards
A number of new or amendments to existing accounting standards and interpretations have been issued by the International Accounting Standards
Board (IASB).
The following accounting standards relevant to the Group’s operations were effective for the first time in the year to 31 December 2020. Their
adoption has not had a significant impact on these financial statements:
• Amendments to IFRS 3 ‘Business Combinations’: definition of a business;
• Amendments to IAS 1 ‘Presentation of Financial Statements’ and IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’:
definition of material;
• Amendments to References to the Conceptual Framework in IFRS Standards; and
• Interest Rate Benchmark Reform – Phase 1 (Amendments to IFRS 9, IAS 39 and IFRS 7).
The following standards are relevant to the Group’s operations and have been issued by the IASB but are not yet mandatory and have not been
early adopted by the Group:
• Amendments to IAS 1 ‘Presentation of Financial Statements’: classification of liabilities as current or non-current;
• Amendments to IFRS 3 ‘Business Combinations’: Reference to the Conceptual Framework;
• Amendments to IAS 16 ‘Property, Plant and Equipment’: property, plant and equipment – proceeds before intended use;
• Amendments to IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’: onerous contracts – cost of fulfilling a contract;
• Interest Rate Benchmark Reform – Phase 2 (amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16); and
• Annual Improvements to IFRS Standards 2018-2020 Cycle: amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting
Standards’, IFRS 9 ‘Financial Instruments’, IFRS 16 ‘Leases’ and IAS 41 ‘Agriculture’.
No other standards or interpretations issued and not yet effective are expected to have an impact on the Group’s financial statements.
2. Revenue
Fee income is Man Group’s primary source of revenue, which is derived from the investment management agreements that are in place with the
fund entities.
Management fees net of rebates, which include all non-performance related fees, are recognised in the year in which contractual investment
management services are provided and do not include any other performance obligations. Fees are generally based on an agreed percentage
of NAV or FUM and are typically charged in arrears and receivable within one month.
Performance fees net of rebates relate to the performance of the funds managed during the year and are recognised when the performance
obligation has been met, whereby the fee has crystallised and can be reliably estimated. This is generally at the end of the performance period
or upon early redemption by a fund investor. Until the performance period ends, market movements could significantly move the NAV of the fund
products. For alternative strategies, Man Group will typically only earn performance fees on any positive investment returns in excess of the high-
water mark, meaning the Group will not be able to earn performance fees with respect to positive investment performance in any year following
negative performance until that loss is recouped, at which point a fund investor’s investment surpasses the high-water mark. For long-only
strategies, performance fees are earned only when performance is in excess of a predetermined strategy benchmark (positive alpha). Once
crystallised, performance fees typically cannot be clawed back. There are no other performance obligations or services provided which suggest
these have been earned either before or after the crystallisation date.
Rebates relate to repayments of management and performance fees charged, typically to institutional investors, and are presented net within gross
management and other fees and performance fees in the Group income statement.
Analysis of FUM, margins and performance is provided in the Chief Financial Officer’s review on pages 24 to 27.
3. Distribution costs and asset servicing
Distribution costs are paid to external intermediaries for marketing and investor servicing, largely in relation to retail investors. Distribution costs are
variable with FUM and the associated management fee revenue. Distribution costs are expensed over the period in which the service is provided.
Distribution costs have decreased from $38 million in 2019 to $34 million in 2020, despite broadly stable average FUM, largely as a result of the
continued mix shift towards institutional assets.
Asset servicing includes custodial, valuation, fund accounting, registrar, research and administration functions performed by third parties under
contract to the Group, on behalf of the funds, and is recognised in the period in which the service is provided. The costs of these services vary
based on transaction volumes, the number of funds, and fund NAVs.
136
Man Group plc Annual Report 2020
4. Compensation
$m
Salaries
Variable cash compensation
Share-based payment charge
Fund product-based payment charge
Social security costs
Pension costs
Restructuring credit (adjusting item per page 167)
Total compensation costs
Year ended
31 December
2020
Year ended
31 December
2019
163
167
20
54
34
13
–
451
163
187
28
50
36
13
(1)
476
Compensation is the Group’s largest cost and an important component of Man Group’s ability to retain and attract talent. In the short term, the
variable component of compensation adjusts with revenues and profitability.
Total compensation costs have decreased by 5% compared to 2019 due to the lower levels of management and performance fee revenues year on
year, which decrease associated variable cash compensation. The compensation ratio, as outlined on page 169, has increased from 43% in 2019
to 48% as a result of the lower level of performance fee revenues.
Salaries and pension costs remained flat due to the increase in average headcount of 3%, driven by lower levels of attrition during the pandemic,
being offset by the more favourable sterling (GBP) to USD achieved exchange rates. As the Group no longer hedged fixed costs from 1 January
2020, this is represented by the average exchange rate of 1.29 for 2020 versus a hedged rate of 1.36 for 2019, which reduced 2020 comparative
fixed compensation costs by around $6 million.
Salaries, variable cash compensation and social security costs are charged to the Group income statement in the period in which the service is
provided and include partner drawings. The accounting for share-based and fund product-based compensation arrangements is detailed in
Note 19.
Pension costs relate to Man Group’s defined contribution and defined benefit plans (Note 21).
Average headcount
The table below provides average headcount by function, including directors, employees, partners and contractors:
Year ended
31 December
2020
Year ended
31 December
2019
i
F
n
a
n
c
a
i
l
Investment management
Sales and marketing
Technology and support functions1
Average headcount
Note:
1
Includes all staff performing technology-based roles, including those supporting the investment management side of the Group’s business.
379
196
881
1,456
375
195
843
1,413
s
t
a
t
e
m
e
n
t
s
Man Group plc Annual Report 2020
137
Notes to the Group financial statements continued
5. Other costs
$m
Occupancy
Technology and communications
Temporary staff, recruitment, consultancy and managed services
Audit, tax, legal and other professional fees
Benefits
Travel and entertainment
Insurance
Marketing and sponsorship
Other cash costs, including irrecoverable VAT
Restructuring – corporate reorganisation (adjusting item per page 167)
Total other costs before depreciation and amortisation
Depreciation of leasehold property and equipment, and amortisation of other intangibles1
Depreciation of ROU lease assets1 (Note 18)
Total other costs
Year ended
31 December
2020
Year ended
31 December
2019
14
25
9
20
14
2
5
2
11
–
102
26
22
150
13
26
21
26
15
13
3
5
13
7
142
25
22
189
Note:
1 As a result of reassessment of our application of IFRS 16 ‘Leases’ together with IAS 40 ‘Investment Property’ with regard to the classification of the Group’s right-of-use lease assets from
1 January 2019, we have reclassified $2 million of depreciation of leasehold improvements and equipment as depreciation of right-of-use lease assets in 2019. See Note 17 for further details.
Other costs, before depreciation and amortisation, have decreased from $142 million to $102 million in 2020. Global travel restrictions and working
from home as a result of COVID-19 have provided some cost savings on travel and entertainment, whilst management action to lower the levels of
hiring during the period saw a reduction in recruitment and temporary staff costs. Costs were further supported by the more favourable GBP to USD
achieved exchange rates (as outlined in Note 4), which reduced 2020 comparative other costs by around $3 million.
Restructuring costs of $7 million in 2019 relate to professional fees incurred in relation to the Group’s corporate reorganisation detailed in Note 1.
Auditor’s remuneration, including advisory and professional services, is disclosed in the Audit and Risk Committee report on page 84.
6. Finance expense and finance income
$m
Finance expense:
Revolving credit facility costs and other (Note 12)
Interest payable on borrowings (Note 12)
Unwind of lease liability discount
Unwind of contingent consideration discount (adjusting item per page 167)
Total finance expense
Finance income:
Interest on cash deposits
Total finance income
Year ended
31 December
2020
Year ended
31 December
2019
(2)
–
(12)
(2)
(16)
2
2
(4)
(6)
(14)
(18)
(42)
8
8
The Group repaid its Tier 2 notes in full in September 2019, and therefore there is no interest payable on borrowings in 2020. The $16 million
decrease in unwind of contingent consideration discount is due to settlement of the final Numeric earn-out payment in September 2019 (see
Note 25 for contingent consideration creditor balances). Interest on cash deposits has decreased by $6 million as a result of lower interest rates
on cash deposits.
138
Man Group plc Annual Report 2020
7. Tax
$m
Analysis of tax expense:
Current tax:
UK corporation tax on profits
Foreign tax
Adjustments to tax charge in respect of previous years
Total current tax
Deferred tax:
Origination and reversal of temporary differences
Derecognition/(recognition) of US deferred tax assets (adjusting item per page 168)
Total deferred tax
Total tax expense
Year ended
31 December
2020
Year ended
31 December
2019
39
2
1
42
(9)
8
(1)
41
46
4
2
52
(3)
(27)
(30)
22
Man Group is a global business and therefore operates across many different tax jurisdictions. Income and expenses are allocated to these different
jurisdictions based on transfer pricing methodologies set in accordance with the laws of the jurisdictions in which Man Group operates and
international guidelines as laid out by the Organisation for Economic Co-operation and Development (OECD). The effective tax rate results from the
combination of taxes paid on earnings attributable to the tax jurisdictions in which they arise. The majority of the Group’s profits in the period were
earned in the UK, Switzerland and the US.
The current effective tax rate of 23% (2019: 7%) differs from the applicable underlying statutory tax rates principally as a result of: the net
derecognition of $8 million of the US deferred tax assets (as set out below) and the recognition of $3 million of other non-UK deferred tax assets, as
well as the $55 million impairment of GPM goodwill, partially offset by the $22 million revaluation of the Aalto contingent creditor (Notes 10 and 25)
and the recycling of FX revaluation gains of $17 million on liquidation of the Group’s subsidiaries, none of which are subject to tax in the relevant
jurisdiction, together with the utilisation of $20 million of off balance sheet non-trading tax losses against a portion of the $26 million sub-lease
surrender cash gain (Note 18). The effective tax rate is otherwise consistent with this earnings profile.
Accounting for tax involves a level of estimation uncertainty given the application of tax law requires a degree of judgement, which tax authorities
may dispute. Tax liabilities are recognised based on the best estimates of probable outcomes, with regard to external advice where appropriate.
The principal factors which may influence our future tax rate are changes in tax regulation in the territories in which the Group operates, the mix
of income and expenses earned and incurred by jurisdiction and the consumption of available deferred tax assets.
The current tax liabilities of $12 million (2019: $14 million) on the Group balance sheet comprise gross current tax liabilities of $14 million (2019:
$16 million) net of current tax assets of $2 million (2019: $2 million).
Man Group’s tax expense is higher (2019: lower) than the amount that would arise using the theoretical tax rate applicable to the profits of the
Group as follows:
$m
Profit before tax
Theoretical tax expense at UK rate: 19% (2019: 19%)
Effect of:
Overseas tax rates compared to UK
Adjustments to tax charge in respect of previous periods
Derecognition/(recognition) of US deferred tax asset
Other
Tax expense
Movements in deferred tax are as follows:
$m
Deferred tax liability
At 1 January
Credit to the Group income statement
Deferred tax liability at 31 December
Deferred tax asset
At 1 January
Adjustment for adoption of IFRS 16
(Charge)/credit to the Group income statement
Credit/(charge) to other comprehensive income and equity
Deferred tax asset at 31 December
Year ended
31 December
2020
Year ended
31 December
2019
179
34
(1)
1
8
(1)
41
307
58
(10)
2
(27)
(1)
22
Year ended
31 December
2020
Year ended
31 December
2019
(28)
3
(25)
120
–
(2)
1
119
(33)
5
(28)
93
5
25
(3)
120
The deferred tax liability of $25 million (2019: $28 million) largely relates to deferred tax arising on acquired intangible assets.
Man Group plc Annual Report 2020
139
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Notes to the Group financial statements continued
7. Tax continued
The deferred tax asset income statement charge of $2 million (2019: $25 million credit) is net of an $8 million charge relating to the partial
derecognition of US deferred tax assets (made up of the $14 million derecognition outlined below, partially offset by a net increase of $6 million).
The credit to other comprehensive income and equity of $1 million (2019: $3 million charge) relates to movements in relation to pensions, unrealised
cash flow hedge balances and employee share scheme balances.
The gross amount of UK non-trading losses for which a deferred tax asset has not been recognised is $25 million (2019: $45 million). These losses
are not subject to an expiration period. The gross amount of other future deductions for which a deferred tax asset has not been recognised is
$95 million (2019: nil), which expire in 2024.
The deferred tax asset comprises:
$m
US tax assets
Defined benefit pension schemes
Employee share schemes
Tax allowances over depreciation
Other
Deferred tax asset
31 December
2020
31 December
2019
81
3
14
6
15
119
89
4
15
7
5
120
The Group has recognised accumulated deferred tax assets in the US of $81 million (2019: $89 million). These deferred tax assets comprise
accumulated operating losses from existing operations of $41 million (2019: $48 million), future amortisation of goodwill and intangible assets
generated from acquisitions of $26 million (2019: $31 million) and other timing differences of $14 million (2019: $10 million), that will be available
to offset future taxable profits in the US. As a result of a projected decrease in forecast future taxable profits in the US, we have not recognised
$14 million of the available US deferred tax assets in relation to state and city tax losses (2019: nil) on the Group balance sheet at 31 December
2020 as we do not expect to realise sufficient future taxable profits to offset against these assets before they expire.
Man Group does not currently expect to pay federal tax on any profits it may earn in the US until 2027. Accordingly, any movements in the deferred
tax asset in the year are classified as an adjusting item (see page 168).
Included within ‘other’ is a deferred tax asset arising on the adoption of IFRS 16 ‘Leases’ on 1 January 2019 of $5 million (2019: $5 million) and the
recognition of $3 million of other non-UK deferred tax assets.
8. Earnings per ordinary share (EPS)
The calculation of basic EPS is based on post-tax profit of $138 million (2019: $285 million), and ordinary shares of 1,454,292,727 (2019:
1,509,534,942), being the weighted average number of ordinary shares in issue during the period after excluding the shares owned by the Employee
Trust and Treasury shares. For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive
potential ordinary shares, being ordinary shares of 1,478,342,304 (2019: 1,543,490,112).
The details of movements in the number of shares used in the basic and dilutive EPS calculation are provided below.
Number of shares at beginning of year
Repurchase and cancellation of own shares
Number of shares at period end
Shares held in Treasury reserve
Shares owned by Employee Trust
Basic number of shares
Share awards under incentive schemes
Employee share options
Diluted number of shares
The basic and diluted earnings per share figures are provided below.
Basic and diluted post-tax earnings ($m)
Basic earnings per share (cents)
Diluted earnings per share (cents)
Year ended 31 December 2020
Year ended 31 December 2019
Total
number
(million)
1,541.8
–
1,541.8
(86.2)
(31.5)
1,424.1
Weighted
average
(million)
1,541.8
–
1,541.8
(56.6)
(30.9)
1,454.3
23.8
0.2
1,478.3
Total
number
(million)
1,610.1
(68.3)
1,541.8
(25.7)
(28.6)
1,487.5
Weighted
average
(million)
1,610.1
(41.9)
1,568.2
(31.0)
(27.7)
1,509.5
33.2
0.8
1,543.5
Year ended
31 December
2020
Year ended
31 December
2019
138
9.5
9.3
285
18.9
18.4
140
Man Group plc Annual Report 2020
9. Dividends
$m
Ordinary shares
Final dividend paid for the year to 31 December 2019: 5.1 cents (2018: 5.1 cents)
Interim dividend paid for the six months to 30 June 2020: 4.9 cents (2019: 4.7 cents)
Dividends paid
Proposed final dividend for the year to 31 December 2020: 5.7 cents (2019: 5.1 cents)
Year ended
31 December
2020
Year ended
31 December
2019
75
72
147
81
80
72
152
76
Dividend distribution to the Company’s shareholders is recognised directly in equity in the Group’s financial statements in the period in which the
dividend is paid or, if required, approved by the Company’s shareholders. Details of the Group’s dividend policy are included in the Shareholder
information section on page 170. Details of dividends waived in the period are included in Note 19.1.
10. Goodwill and acquired intangibles
$m
Net book value at beginning
of the year
Amortisation
Impairment
Currency translation
Net book value at year end
Allocated to cash-generating
units as follows:
AHL
GLG
FRM
Numeric
GPM
Year ended 31 December 2020
Investment
management
agreements
Distribution
channels
Brand
names
Goodwill
Year ended 31 December 2019
Investment
management
agreements
Distribution
channels
Brand
names
Total
Goodwill
641
–
(55)
6
592
458
–
–
134
–
193
(57)
–
–
136
1
60
3
67
5
15
(4)
–
–
11
–
4
–
–
7
5
(2)
–
–
3
–
1
–
2
–
854
(63)
(55)
6
742
459
65
3
203
12
642
–
–
(1)
641
452
–
–
134
55
268
(70)
(5)
–
193
1
94
6
86
6
19
(4)
–
–
15
–
6
–
–
9
9
(4)
–
–
5
–
3
–
2
–
Total
938
(78)
(5)
(1)
854
453
103
6
222
70
i
F
n
a
n
c
a
i
l
Goodwill
Goodwill represents the excess of consideration transferred over the fair value of identifiable net assets of the acquired business at the date of
acquisition. Goodwill is carried on the Group balance sheet at cost less accumulated impairment, has an indefinite useful life, is not subject to
amortisation and is tested for impairment annually, or whenever events or circumstances indicate that the carrying amount may not be recoverable.
Investment management agreements (IMAs), distribution channels and brand names
IMAs, distribution channels and brand names are recognised at the present value of the expected future cash flows and are amortised on a straight-
line basis over their expected useful lives, which are between three and 13 years (IMAs and brands), and eight and 12 years (distribution channels).
s
t
a
t
e
m
e
n
t
s
Amortisation of acquired intangible assets of $63 million (2019: $78 million) primarily relates to the investment management agreements recognised
on the acquisitions of GLG and Numeric.
Allocation of goodwill to cash-generating units
For impairment review purposes, the Group has identified five cash-generating units (CGUs): AHL, GLG, FRM, Numeric and GPM.
Calculation of recoverable amounts for cash-generating units
An impairment expense is recognised for the amount by which the asset’s carrying value exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (CGUs). The recoverable amounts of the Group’s CGUs are assessed each year using a
value in use calculation. The value in use calculation gives a higher valuation compared to the fair value less cost to sell approach, as this would
exclude some of the revenue synergies available to Man Group through its ability to distribute products using its well established distribution
channels, which may not be fully available to other market participants.
The value in use calculations at 31 December 2020 use cash flow projections based on the Board-approved financial plan for the year to
31 December 2021 and a further two years of projections (2022 and 2023), plus a terminal value. The valuation analysis is based on best practice
guidance whereby a terminal value is calculated at the end of a short discrete budget period and assumes, after this three-year budget period, no
growth in asset flows above the long-term growth rate. In order to determine the value in use of each CGU, it is necessary to notionally allocate the
majority of the Group’s cost base relating to operations, product structuring, distribution and support functions, which are managed on a centralised
basis. Lease payments are treated as cash outflows and, whilst this represents a mismatch between the valuation model and the lease costs
recognised in the Group income statement under IFRS 16, the calculation of the value in use is not significantly different under the two approaches.
The value in use calculations for AHL, GLG, FRM, Numeric and GPM are presented on a post-tax basis, consistent with the prior year, given most
comparable market data is available on a post-tax basis. These are not significantly different to their pre-tax equivalent.
Man Group plc Annual Report 2020
141
Notes to the Group financial statements continued
10. Goodwill and acquired intangibles continued
The assumptions applied in the value in use calculation are derived from past experience and assessment of current market inputs. A bifurcated
discount rate has been applied to the modelled cash flows to reflect the different risk profile of management fee profits and performance fee profits.
The discount rates are based on the Group’s weighted average cost of capital using a risk-free interest rate, together with an equity market risk
premium and an appropriate market beta derived from consideration of Man Group’s beta, similar alternative asset managers, and the asset
management sector as a whole. The terminal value is calculated based on the projected closing FUM at 31 December 2023 and applying the mid-
point of a range of historical multiples to the forecast cash flows associated with management and performance fee profits.
For each CGU we have also considered the impact of COVID-19. AHL, GLG, FRM and Numeric absorbed its impact on financial markets and we do
not expect material changes to the medium-term outlook. For GPM, our reassessment of the forecast growth of the business led to a full impairment
of goodwill at 30 June 2020.
We have considered the impact of the exit of the United Kingdom from the European Union on 31 December 2020, including a range of Brexit
scenarios, and currently do not expect this to have a material impact on the value in use calculations at 31 December 2020. Further discussion
on Brexit is provided in the Market environment (page 12) and Risk management (page 31) sections of the Strategic report.
The recoverable amount of each CGU (the value in use) has been assessed at 31 December 2020. The key assumptions applied to the value in use
calculations for each of the CGUs are provided below.
Key assumptions:
Compound average annualised growth in FUM (over three years)
Discount rate
– Management fees1
– Performance fees2
Terminal value (mid-point of range of historical multiples)3
– Management fees
– Performance fees
AHL
10%
11%
17%
GLG
4%
11%
17%
13.0x
5.5x
13.0x
5.5x
FRM
(3%)
Numeric
2%
11%
17%
5.9x
3.9x
11%
17%
13.0x
5.5x
GPM
13%
15%
21%
16.8x
5.5x
Notes:
1 The pre-tax equivalent of the net management fees discount rate is 14%, 13%, 14%, 14% and 18% for each of the AHL, GLG, FRM, Numeric and GPM CGUs, respectively.
2 The pre-tax equivalent of the net performance fees discount rate is 21%, 21%, 22%, 22% and 26% for each of the AHL, GLG, FRM, Numeric and GPM CGUs, respectively.
3 The implied terminal growth rates are 4%, 3%, -10%, 4% and 9% for each of the AHL, GLG, FRM, Numeric and GPM CGUs, respectively. The terminal value is added to cash flow projections
based on the Board approved financial plan for the year to 31 December 2021 and a further two years of projections (2022 and 2023), and discounted.
The results of the valuations are further explained in the following sections, including sensitivity tables which show scenarios whereby the key
assumptions are changed to stressed assumptions, indicating the modelled headroom or impairment that would result. We have considered
reasonably foreseeable changes in the compound average annualised growth in FUM forecast assumption for each CGU, stressing this by 2% and
10% or to the point at which impairment would arise. Each assumption, or set of assumptions, is stressed in isolation. The results of these
sensitivities make no allowance for actions that management would take if such market conditions persisted.
AHL cash-generating unit
The AHL value in use calculation at 31 December 2020 indicates a value of $2.6 billion, with around $2.1 billion of headroom over the carrying value
of the AHL business. Therefore, no impairment charge is deemed necessary at 31 December 2020 (2019: nil). The valuation at 31 December 2020
is around $0.5 billion lower than the value in use calculation at 31 December 2019, largely driven by lower performance fees in the terminal value
compared to the prior year.
Sensitivity analysis:
Key assumption stressed to:
Modelled headroom/(impairment) ($m)
Compound average
annualised growth in FUM
Management fee/
performance fee
Discount rates (post-tax)
Multiples (post-tax)
Management fee/
performance fee
10%
2,080
8%
1,840
0%1
890
10%/16%
2,1412
12%/18%
2,0192
14.0x/6.5x
2,2803
12.0x/4.5x
1,8803
Notes:
1 Stressed by 10%, as opposed to the point of impairment, given an impairment scenario is not reasonably foreseeable.
2 An increase/decrease in the value in use calculation of $61 million.
3 An increase/decrease in the value in use calculation of $200 million.
GLG cash-generating unit
The GLG value in use calculation at 31 December 2020 indicates a value of $107 million, with $21 million of headroom over the carrying value of the
GLG business. Therefore, no impairment charge is deemed necessary at 31 December 2020 (2019: nil). The valuation at 31 December 2020 is
$83 million lower than the value in use calculation at 31 December 2019 largely due to lower than forecast net flows and performance. Amortisation
of acquired intangibles reduced the carrying value by $38 million during the year.
Sensitivity analysis:
Key assumption stressed to:
Modelled headroom/(impairment) ($m)
Compound average
annualised growth in FUM
Management fee/
performance fee
Management fee/
performance fee
Discount rates (post-tax)
Multiples (post-tax)
4%
21
2%1
–
10%/16% 12%/18% 14.0x/6.5x
303
192
232
12.0x/4.5x
123
Notes:
1 Stressed in a downside scenario to determine the point at which headroom would be reduced to nil, after which impairment would arise.
2 An increase/decrease in the value in use calculation of $2 million.
3 An increase/decrease in the value in use calculation of $9 million.
142
Man Group plc Annual Report 2020
10. Goodwill and acquired intangibles continued
FRM cash-generating unit
The FRM value in use calculation at 31 December 2020 indicates a value of $21 million, with $14 million of headroom over the carrying value of the
FRM business. Therefore, no impairment charge is deemed necessary at 31 December 2020 (2019: nil). The valuation at 31 December 2020 is
around $20 million lower than the value in use calculation at 31 December 2019 due to lower than previously forecast net flows during the year,
albeit these largely relate to low margin products and therefore have a lower impact on valuation than FUM. Amortisation of acquired intangibles
reduced the carrying value by $3 million during the year.
Sensitivity analysis:
Key assumption stressed to:
Modelled headroom/(impairment) ($m)
Discount rates (post-tax)
Multiples (post-tax)
Compound average
annualised growth in FUM
Management fee/
performance fee
Management fee/
performance fee
(3%)
14
(5%)
10
(13%)1 10%/16%
152
–
12%/18%
132
6.9x/4.9x
173
4.9x/2.9x
113
Notes:
1 Stressed to determine the point at which headroom would be reduced to nil, after which impairment would arise.
2 An increase/decrease in the value in use calculation of $1 million.
3 An increase/decrease in the value in use calculation of $3 million.
Numeric cash-generating unit
The Numeric value in use calculation at 31 December 2020 indicates a value of around $540 million, with around $332 million of headroom over the
carrying value of the Numeric business. Therefore, no impairment charge is deemed necessary at 31 December 2020 (2019: nil). The valuation at
31 December 2020 is around $130 million lower than the value in use calculation at 31 December 2019, primarily as a result of outflows during the
year and lower net management fee margins. Amortisation of acquired intangibles reduced the carrying value by $19 million during the year.
Sensitivity analysis:
Key assumption stressed to:
Modelled headroom/(impairment) ($m)
Discount rates (post-tax)
Multiples (post-tax)
Compound average
annualised growth in FUM
Management fee/
performance fee
Management fee/
performance fee
2%
332
0%
306
(8%)1 10%/16%
3462
204
12%/18% 14.0x/6.5x
3693
3182
12.0x/4.5x
2953
Notes:
1 Stressed by 10%, as opposed to the point of impairment, given an impairment scenario is not reasonably foreseeable.
2 An increase/decrease in the value in use calculation of $14 million.
3 An increase/decrease in the value in use calculation of $37 million.
GPM cash-generating unit
The GPM value in use calculation at 31 December 2020 indicates a value of $14 million, with $2 million of headroom over the carrying value of the
GPM business. Our value in use assessment at 30 June 2020 indicated an impairment of $55 million. As a result, the carrying value of GPM
goodwill was fully impaired at June 2020 (an adjusting item per page 167). The valuation at 31 December 2020 is $59 million lower than the value
in use calculation at 31 December 2019, primarily as a result of slower than forecast growth and a revised outlook for the business in the context
of increased uncertainty in the near term. The decrease in headroom is partially offset by $3 million of amortisation of acquired intangibles during
the year.
Sensitivity analysis:
Key assumption stressed to:
Modelled headroom/(impairment) ($m)
Notes:
1 Stressed by 10% to indicate a possible downside scenario.
2 An increase/decrease in the value in use calculation of $1 million.
3 An increase/decrease in the value in use calculation of $1 million.
11. Other intangibles
$m
Net book value at beginning of the year
Additions
Amortisation
Net book value at year end
Discount rates (post-tax)
Multiples (post-tax)
Compound average
annualised growth in FUM
Management fee/
performance fee
Management fee/
performance fee
13%
2
11%
(5)
3%1 14%/20%
32
(12)
16%/22% 17.8x/6.5x
33
12
15.8x/4.5x
13
Year ended
31 December
2020
Year ended
31 December
2019
31
22
(14)
39
26
17
(12)
31
Other intangibles relate to capitalised computer software. Capitalised computer software includes costs that are directly associated with the
procurement or development of identifiable and unique software products, which will generate economic benefits exceeding costs beyond one year
and are subject to regular impairment reviews. Capitalised computer software is amortised on a straight-line basis over its estimated useful life (three
years), with amortisation expense included within other costs in the Group income statement. Additions relate to the continued investment in Man
Group’s operating platforms.
Man Group plc Annual Report 2020
143
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Notes to the Group financial statements continued
12. Cash, liquidity and borrowings
$m
Cash and cash equivalents1
Undrawn committed revolving credit facility
Total liquidity
31 December 2020
31 December 2019
Total
289
500
789
Less than
1 year
Greater than
1 year
289
–
289
–
500
500
Total
220
500
720
Less than
1 year
Greater than
1 year
220
–
220
–
500
500
Note:
1 Excludes $62 million (2019: $61 million) of restricted cash held by consolidated fund entities (Note 13.2).
Liquidity resources support ongoing operations and potential liquidity requirements under stressed scenarios. The amount of potential liquidity
requirements is modelled based on scenarios that assume stressed market and economic conditions. The funding requirements for Man Group
relating to the investment management process are discretionary. The Group’s liquidity profile is monitored on a daily basis and the stressed
scenarios are updated regularly. The Board reviews the Group’s funding resources at each Board meeting and on an annual basis as part of the
strategic planning process. Man Group’s available liquidity is considered sufficient to cover current requirements and potential requirements under
stressed scenarios.
The Group’s previously issued Tier 2 notes were repaid in full in September 2019.
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less, net of outstanding bank
overdrafts, and at 31 December 2020 include cash at bank of $161 million (2019: $186 million) and short-term deposits of $128 million (2019:
$34 million). Cash and cash equivalents are measured at amortised cost, which is approximately equal to fair value. Cash ring-fenced for regulated
entities totalled $32 million at year end (2019: $34 million). Cash is invested in accordance with strict limits consistent with the Board’s risk appetite,
which consider both the security and availability of liquidity. Accordingly, cash is held in on-demand and short-term bank deposits, and at times
invested in short-term US Treasury bills. At 31 December 2020, the $289 million cash balance (which excludes cash held by consolidated fund
entities per Note 13.2) is held with 15 banks (2019: $220 million with 19 banks). The single largest counterparty bank exposure of $103 million is
held with an A rated bank (2019: $106 million with an A+ rated bank). At 31 December 2020, balances with banks in the AA ratings band aggregate
to $7 million (2019: $27 million) and balances with banks in the A ratings band aggregate to $282 million (2019: $192 million).
The $500 million committed revolving credit facility (RCF), which does not include financial covenants in order to maintain maximum flexibility, was
undrawn at 31 December 2020 (undrawn at 31 December 2019). The RCF was put in place in December 2019 as a five-year facility with the option
for Man Group to request the participant banks to extend the maturity date by one year on each of the first and second anniversaries, which they
have the option to accept or decline. In 2020 the Group exercised the first extension option and as a result the RCF is now scheduled to mature in
December 2025. From 2020, the RCF incorporates an ESG target-linked interest rate component, in alignment with the Group’s commitment to the
environment as detailed on pages 52 to 54.
Intra-day and overnight credit facilities
Man Group guarantees the obligations under $100 million intra-day (2019: $100 million) and $25 million overnight credit facilities (2019: $25 million),
used to settle the majority of the Group’s banking arrangements. As at 31 December 2020, the exposure under the intra-day facility is nil (2019: nil)
and the overnight facility exposure is nil (2019: nil). The fair value of these commitments has been determined to be nil (2019: nil).
Foreign exchange and interest rate risk
Man Group is subject to risk from changes in interest rates and foreign exchange rates on monetary assets and liabilities.
In respect of the Group’s monetary assets and liabilities which earn/incur interest indexed to floating rates, as at 31 December 2020 a 50 basis
points increase/decrease in these rates, with all other variables held constant, would have resulted in a $1 million increase/decrease (2019:
$1 million increase/decrease) in net interest income.
A 10% strengthening/weakening of the USD against all other currencies, with all other variables held constant, would have resulted in a foreign
exchange loss/gain of $23 million (2019: $26 million loss/gain), with a corresponding impact on equity. This exposure is based on USD balances
held by non-USD functional currency entities and non-USD balances held by USD functional currency entities within the Group.
In certain circumstances, the Group uses derivative financial instruments, specifically forward foreign exchange contracts, to hedge its risk
associated with foreign exchange movements. Where fixed foreign currency denominated costs are hedged, the associated derivatives may be
designated as cash flow hedges. Up to 31 December 2019, the Group’s risk management objective was to determine a foreign exchange rate at
which future foreign currency fixed costs were ultimately realised one year in advance, thereby providing increased certainty around the future USD
costs recognised in the Group income statement. Effective unrealised gains or losses on these instruments were recognised within the cash flow
hedge reserve in equity and, when realised, these were reclassified to the Group income statement in the same line as the hedged item, within
compensation and other costs (as outlined in Note 4 and Note 5). Fair value gains and losses on cash flow hedges, and gains and losses realised
on maturing cash flow hedges which have been reclassified from the cash flow hedge reserve into profit or loss, are separately shown in the Group
statement of comprehensive income. From 1 January 2020, Man Group changed its policy such that fixed foreign currency denominated costs are
no longer hedged.
Foreign currency derivative assets and liabilities are included within derivative financial instruments in fee and other receivables (Note 14) and trade
and other payables (Note 15) respectively.
144
Man Group plc Annual Report 2020
13. Investments in fund products and other investments
$m
Investments in fund products
Investments in consolidated funds
Other investments
$m
Investments in fund products
Other investments
Investments in consolidated funds
Loans to fund products
31 December
2020
Financial
assets at fair
value through
profit or loss
332
452
3
787
Total
349
3
420
4
776
31 December 2019
Financial
assets at fair
value through
profit or loss
Loans and
receivables
349
3
420
–
772
–
–
–
4
4
The Group’s seeding investments are included in various Group balance sheet line items. In summary, the total seeding investments portfolio is
made up as follows:
$m
Investments in fund products
Less fund investments for deferred compensation arrangements
Net investment in consolidated funds
Loans to fund products
Seeding investments portfolio
Note
13.1
13.1
13.2
31 December
2020
31 December
2019
332
(119)
272
–
485
349
(98)
259
4
514
13.1 Investments in fund products
Man Group uses capital to invest in fund products as part of its ongoing business, to build product breadth and to trial investment research
developments before marketing the products broadly to investors. Seed capital is invested via direct holdings in fund products or sale and
repurchase (repo) arrangements, which allow the Group to finance seed investments without consuming high levels of cash. Alternatively, Man
Group may obtain exposure to seed investments via total return swap (TRS) arrangements. Under a repo arrangement the Group is committed
to repurchase the underlying seed investments at maturity and pays an interest charge over the period, with the obligation to repurchase the assets
on maturity recorded as a liability within trade and other payables (Note 15). Under a TRS arrangement the Group is under no form of repayment
obligation and has no ownership interest (or voting rights) in the underlying investment. In exchange for the returns on the underlying seed
investments, the Group pays a floating rate of interest. At 31 December 2020, exposure to fund products via repo arrangements (included within
investments in fund products above, with an offsetting repayment obligation included within trade and other payables in Note 15) was $56 million
(2019: $36 million), and additional exposure via TRS was $50 million (2019: $62 million).
Regardless of whether the Group is exposed to a fund product’s returns by way of a direct investment, repo or TRS, the control considerations
are the same. Where the Group is deemed not to control the fund, the fund is classified within investments in fund products. Investments in fund
products are classified at fair value through profit or loss, with net gains due to movements in fair value of $47 million for the year ended
31 December 2020 (2019: $33 million) recognised through income or gains on investments and other financial instruments. Purchases and sales
of investments are recognised on trade date.
The fair values of investments in fund products are derived from the reported NAVs of each of the fund products, which in turn are based upon the
value of the underlying assets held within each of the fund products and the anticipated redemption horizon of the fund product. The valuation of
the underlying assets within each fund product is determined by external valuation service providers based on an agreed valuation policy and
methodology. Whilst these valuations are performed independently of Man Group, we have established oversight procedures and due diligence
processes to ensure that the NAVs reported by the external valuation service providers are reliable and appropriate. The Group makes adjustments
to these NAVs if the anticipated redemption horizon, events or circumstances indicate that the NAVs are not reflective of fair value. The fair value
hierarchy of financial assets is disclosed in Note 25.
Investments in fund products expose Man Group to market risk and therefore this process is subject to limits consistent with the Board’s risk
appetite. The largest single investment in fund products was $48 million (2019: $66 million). The market risk from seeding investments, including
those financed via repo and TRS arrangements, is modelled using a value at risk methodology using a 95% confidence interval and one-year time
horizon. The value at risk is estimated to be $24 million at 31 December 2020 (2019: $22 million).
Fund investments for deferred compensation arrangements
At 31 December 2020, investments in fund products included $119 million (2019: $98 million) of fund products related to deferred compensation
arrangements (as detailed in Note 19). The associated fund product investments are held to offset any change in deferred compensation over the
vesting period, and at vesting the value of the fund investment is delivered to the employee. The fund product investments are recorded at fair value
with any gains or losses during the vesting period recognised as income or gains on investments and other financial instruments in the Group
income statement, or alternatively these are accounted for as cash flow hedges as detailed in Note 19.
Man Group plc Annual Report 2020
145
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Notes to the Group financial statements continued
13. Investments in fund products and other investments continued
13.2 Consolidation of investments in funds
Seed capital invested into funds may be deemed to be controlled by the Group (Note 1). The control considerations under IFRS 10 also apply to the
fund products underlying the Group’s repo and TRS instruments and therefore the Group may similarly be required to consolidate them. The fund is
consolidated into the Group’s results from the date control commences until it ceases. In 2020, 19 (2019: 15) investments in funds have met the
control criteria and have therefore been consolidated on a line-by-line basis (Note 29).
The investments relating to consolidated funds are included within the Group balance sheet and income statement as follows:
$m
Balance sheet
Cash and cash equivalents
Transferable securities1
Fees and other receivables
Trade and other payables
Net assets of consolidated fund entities
Third-party interest in consolidated funds
Net investment held by Man Group
Income statement
Net gains on investments2
Management fee expenses3
Performance fee expenses3
Other costs
Net gains of consolidated fund entities
Third-party share of gains relating to interests in consolidated funds
Gains attributable to net investment held by Man Group
31 December
2020
31 December
2019
62
452
4
(27)
491
(219)
272
53
(2)
(2)
(5)
44
(17)
27
61
420
2
(11)
472
(213)
259
63
(3)
–
(3)
57
(18)
39
Notes:
1 Included within investments in fund products and other investments.
2
3 Relate to management and performance fees paid by the funds to Man Group during the year, which are eliminated within gross management and other fees and performance fees, respectively,
Included within income or gains on investments and other financial instruments.
in the Group income statement.
146
Man Group plc Annual Report 2020
13. Investments in fund products and other investments continued
13.3 Structured entities
Man Group has evaluated all exposures and concluded that where the Group holds an investment, fee receivable, accrued income, loan guarantee
or commitment with an investment fund or a collateralised loan obligation, this represents an interest in a structured entity as defined by IFRS 12
‘Disclosure of Interests in Other Entities’.
As with structured entities, investment funds are designed so that their activities are not governed by way of voting rights and contractual
arrangements are the dominant factor in affecting an investor’s returns. The activities of these entities are governed by investment management
agreements or, in the case of collateralised loan obligations, the indentures.
The key considerations in assessing whether the Group controls a structured entity, and therefore should be consolidated into the Group’s financial
statements, are outlined in Note 1. Consolidated structured entities are detailed in Note 13.2.
Man Group’s maximum exposure to loss from unconsolidated structured entities is the sum total of any investment held, fee receivables, accrued
income, and loans to the fund entities, and is $581 million for the year ended 31 December 2020 (2019: $639 million). The Group’s interest in and
exposure to unconsolidated structured entities is as follows:
31 December 2020
Alternative
Absolute return
Total return
Multi-manager solutions
Long-only
Systematic
Discretionary
Total
31 December 2019
Alternative
Absolute return
Total return
Multi-manager solutions
Long-only
Systematic
Discretionary
Guaranteed
Total
Less infrastructure
mandates and
consolidated
fund entities1
($bn)
Total
FUM
($bn)
Total FUM
unconsolidated
structured
entities
($bn)
Net
management
fee margin2
(%)
Fair value of
investment
held
($m)
Number
of funds
Fee
receivables
and accrued
income
($m)
Maximum
exposure
to loss
($m)
34.0
29.0
14.2
27.8
18.6
123.6
Total
FUM
($bn)
30.5
27.0
14.0
27.5
18.7
–
117.7
0.1
0.1
7.1
0.2
0.1
7.6
33.9
28.9
7.1
27.6
18.5
116.0
103
60
71
71
50
355
1.18
0.62
0.24
0.30
0.62
98
184
1
9
37
329
175
29
7
25
16
252
273
213
8
34
53
581
Less infrastructure
mandates and
consolidated
fund entities1
($bn)
Total FUM
unconsolidated
structured
entities
($bn)
Net
management
fee margin2
(%)
Fair value of
investment
held
($m)
Number
of funds
Fee
receivables
and accrued
income
($m)
Loans
to funds
($m)
Maximum
exposure
to loss
($m)
i
F
n
a
n
c
a
i
l
–
–
6.9
0.2
0.2
–
7.3
30.5
27.0
7.1
27.3
18.5
–
110.4
107
60
73
107
45
4
396
1.20
0.56
0.31
0.35
0.67
5.96
91
190
2
5
56
–
344
205
28
6
33
19
–
291
s
t
a
t
e
m
e
n
t
s
–
–
–
–
–
4
4
296
218
8
38
75
4
639
Notes:
1 For infrastructure mandates where we do not act as investment manager or advisor, Man Group’s role in directing investment activities is diminished and therefore these are not considered
structured entities.
2 Net management fee margins are the categorical weighted average. Performance fees can only be earned after a high-water mark is achieved. For performance fee eligible funds, performance
fees are within the range of 10% to 20%.
On occasion the Group agrees to purchase illiquid investments from the funds at market rates in order to facilitate investor withdrawals. The Group
has not provided any other non-contractual support to unconsolidated structured entities. Further information about risks relating to investment
funds can be found in the Risk management section of the Strategic report on pages 34 to 37.
Man Group plc Annual Report 2020
147
Notes to the Group financial statements continued
14. Fee and other receivables
$m
Fee receivables
Accrued income
Prepayments
Derivative financial instruments
Other receivables
31 December
2020
31 December
2019
16
238
15
4
113
386
27
266
15
4
114
426
Fee and other receivables are initially recorded at fair value and subsequently measured at amortised cost using the effective interest rate method,
except for derivatives which are measured at fair value through profit and loss (Note 25) and prepayments. Fee receivables and accrued income
represent management and performance fees from fund products and are received in cash when the funds’ net asset values are determined. The
majority of fees are deducted from the NAV of the respective funds by the independent administrators and therefore the credit risk of fee receivables
is minimal. No balances are overdue and, under the expected credit loss model of IFRS 9, no impairment has been recognised at 31 December
2020 (2019: nil). The decrease in accrued income in 2020 relates to the decrease in performance fee revenues year on year which crystallised at
31 December, with associated receivables at year end of $141 million compared to $169 million in 2019.
Details of derivatives used to hedge cash flow foreign exchange risk, which the Group applied up to 31 December 2019, are included in Note 12.
Other derivative financial instruments consist primarily of market risk hedges on some of our seeding positions and foreign exchange contracts.
As in 2019, all derivatives are held with external banks with ratings of A or higher and mature within one year. During the year, there were $23 million
net realised and unrealised losses arising from foreign exchange hedges (2019: $10 million gains), and the notional value of foreign exchange
derivative financial assets held at 31 December 2020 is $417 million (2019: $61 million). The notional value of market risk derivative financial assets
held at 31 December 2020 is $82 million (2019: $65 million).
Other receivables principally include balances relating to the Open Ended Investment Collective (OEIC) funds business of $33 million
(2019: $29 million), collateral posted with derivative counterparties of $27 million (2019: $24 million), amounts recharged to funds of $12 million
(2019: $11 million) and sub-lease rental income receivable of $5 million (2019: $15 million). For the OEIC funds businesses, Man Group acts as the
intermediary for the collection of subscriptions due from customers and payable to the funds, and for redemptions receivable from funds and
payable to customers. The unsettled fund payable is recorded in trade and other payables (Note 15). The amount of collateral posted with derivative
counterparties is a function of the unrealised gains or losses on the open derivatives at any point in time. At 31 December 2020 and 2019, no other
receivables are expected to be settled after 12 months.
15. Trade and other payables
$m
Accruals
Trade payables
Contingent consideration
Derivative financial instruments
Payables under repo arrangements
Share repurchase liability
Other payables
31 December
2020
31 December
2019
326
7
2
18
56
64
101
574
338
4
24
13
36
71
73
559
Trade and other payables are initially recorded at fair value and subsequently measured at amortised cost, except for derivatives and contingent
consideration payables which are measured at fair value (Note 25).
Accruals primarily relate to compensation accruals. Contingent consideration relates to the amounts payable in respect of acquisitions (Note 25).
Details of derivatives used to hedge cash flow foreign exchange risk are included in Note 12. The notional value of other foreign exchange derivative
financial liabilities at 31 December 2020 is $400 million (2019: $335 million). During the year, there were $10 million net realised and unrealised
losses arising from our market risk hedges (2019: $47 million), and the notional value of market risk derivative financial liabilities is $131 million (2019:
$245 million). All derivative contracts mature within one year.
Payables under repo arrangements relate to obligations to repurchase fund products as detailed in Note 13.1. The share repurchase liability is the
remaining liability relating to the share repurchase announced in September 2020 (2019: announced in October 2019), as detailed in Note 20.
Other payables include payables relating to the OEIC funds business of $33 million (2019: $28 million) and $27 million relating to consolidated funds
payables (2019: $11 million) as detailed in Note 13.2.
Included in trade and other payables at 31 December 2020 are balances of $3 million (2019: $23 million) which are expected to be settled after
more than 12 months, which largely relate to contingent consideration. Man Group’s policy is to meet its contractual commitments and pay
suppliers according to agreed terms.
148
Man Group plc Annual Report 2020
16. Provisions
$m
At 1 January 2020
Unused amounts reversed
Additional provisions
Charged to the income statement
At 31 December 2020
Dilapidations
Other
Total
3
(1)
1
–
3
5
–
–
1
6
8
(1)
1
1
9
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will
be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. All provisions are current given the Group
does not have the unconditional right to defer settlement.
17. Leasehold improvements and equipment
$m
Net book value at beginning of the year
Additions
Disposals
Transfer from investment property to leasehold improvements
Depreciation expense
Net book value at year end
Year ended 31 December 2020
Year ended 31 December 2019
Leasehold
improvements
Equipment
Total
Leasehold
improvements1
Equipment
Total
12
4
–
2
(4)
14
17
8
(1)
–
(8)
16
29
12
(1)
2
(12)
30
16
–
–
–
(4)
12
17
9
–
–
(9)
17
33
9
–
–
(13)
29
Note:
1 As a result of reassessing our application of IFRS 16 ‘Leases’ together with IAS 40 ‘Investment Property’ with regard to the classification of the Group’s right-of-use lease assets from 1 January
2019, we have reclassified $13 million of leasehold improvements associated with these right-of-use lease assets as ‘investment property’ at 1 January 2019 (Note 18), which resulted in a
reclassification of $11 million from that previously presented at 31 December 2019.
All leasehold improvements and equipment are recorded at cost less depreciation and impairment. Cost includes the original purchase price of the
asset and costs directly attributable to bringing the asset to its working condition for its intended use. Depreciation is calculated using the straight-
line method over the asset’s estimated useful life, which for leasehold improvements is over the shorter of the life of the lease and the improvement
(up to 24 years) and for equipment is between three and ten years.
18. Leases
18.1 The Group as lessee
Man Group’s lease arrangements relate to business premises property leases.
The Group assesses whether a contract is or contains a lease at inception of the contract. For arrangements where the Group is the lessee, a right-
of-use (ROU) lease asset and a related lease liability are recognised on the Group balance sheet at the date from which the Group has the right to
use the asset, usually the lease commencement date, except for short-term leases (defined as leases with a term of one year or less) and leases of
low-value assets. For these leases the Group recognises the lease payments on a straight-line basis over the lease term within other costs in the
Group income statement. The lease term is determined as the non-cancellable period of a lease, together with periods covered by an option to
extend the lease if the Group considers that exercise of the extension option is reasonably certain. Lease extension options and break clauses
inherent in the Group’s leases do not have a significant impact on the Group’s ROU lease assets and lease liabilities.
ROU lease assets relating to the portion of our leased business premises which we then sub-let under operating leases are classified as investment
property, with other ROU lease assets classified as leasehold property. Transfers from investment property to leasehold property occur when the
Group commences development of a previously sub-let portion of its leased business premises with a view to occupying that space. Similarly,
transfers from leasehold property to investment property occur when the Group ceases to occupy a portion of the leased business premises with
the intention of sub-letting that space. As a result of reassessing our application of IFRS 16 ‘Leases’ during the year, $139 million of ROU lease
assets at 1 January 2019 (31 December 2019: $130 million) have been reclassified from leasehold property to investment property in the prior
period presented, together with related leasehold improvements per Note 17, which primarily relates to our main London premises lease which ends
in 2035 (see Note 18.2).
All of the Group’s ROU lease assets, including those classified as investment property, are measured at cost less depreciation and impairment. Cost
includes the amount of the initial measurement of the associated lease liability, lease payments made at or before the lease commencement date,
lease incentives received, associated leasehold improvements and estimated costs to be incurred in restoring the property to the condition required
under the terms of the lease. Depreciation is calculated on a straight-line basis over the asset’s estimate useful life, which for leasehold
improvements classified as investment property is the shorter of the lease term and the life of the improvement and for all other assets is the lease
term, and included within other costs (Note 5). The ROU lease asset is assessed for impairment whenever events or circumstances indicate that the
carrying amount may not be recoverable and is also adjusted for any remeasurements of the lease liability.
All lease liabilities are measured at the present value of lease payments that are due over the lease term, discounted using the Group’s incremental
cost of borrowing at the lease commencement or modification date (being the rate the Group would have to pay to finance a similar asset). The
lease liability is adjusted for lease payments and unwind of lease liability discount as well as the impact of any subsequent lease modifications.
The unwind of lease liability discount is included within finance expense (Note 6).
In accordance with IFRS 16, cash payments of $34 million (2019: $34 million) in relation to leases, which reduce the lease liability recognised on the
Group balance sheet, are presented as unwind of lease liability discount of $12 million (2019: $14 million) (within operating activities) and repayments
of principal lease liability of $22 million (2019: $20 million) (within financing activities) in the Group cash flow statement. Payments in relation to short-
term leases and leases of low-value assets are included within operating activities.
Man Group plc Annual Report 2020
149
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Notes to the Group financial statements continued
18. Leases continued
18.1 The Group as lessee continued
Right-of-use lease assets
$m
Net book value at beginning of the year
Additions
Transfer from leasehold property to investment property
Transfer from investment property to leasehold property
Transfer from investment property to leasehold improvements
Early exercise of break clause2
Impairment
Depreciation expense (Note 5)
Net book value at year end
Year ended 31 December 2020
Year ended 31 December 2019
Leasehold
property
Investment
property
79
3
(7)
33
–
(22)
–
(12)
74
141
–
7
(33)
(2)
–
(25)
(10)
78
Total
220
3
–
–
(2)
(22)
(25)
(22)
152
Leasehold
property1
Investment
property1
89
1
–
–
–
–
–
(11)
79
152
–
–
–
–
–
–
(11)
141
Total
241
1
–
–
–
–
–
(22)
220
Notes:
1 As a result of reassessing our application of IFRS 16 ‘Leases’ together with IAS 40 ‘Investment Property’ with regard to the classification of the Group’s right-of-use lease assets from 1 January
2019, we have restated $139 million of right-of-use lease assets, in addition to $13 million of associated leasehold improvements (Note 17), from within ‘leasehold property’ to ‘investment
property’ at 1 January 2019 ($130 million and $11 million respectively at 31 December 2019).
2 Due to the lease surrender and exit of our principal sub-tenant from our main London leased premises during the year, we exercised a break clause on our secondary London premises in order to
bring all our London staff together in one location from 2021. This lease modification had the impact of reducing the right-of-use lease asset in line with the associated reduction in lease liability,
as outlined below.
Investment property with a carrying value of $78 million at 31 December 2020 (2019: $141 million) has a gross cost of $201 million (2019:
$255 million) net of accumulated depreciation and impairment of $123 million (2019: $114 million).
Lease liability
The maturity of the Group’s contractual undiscounted cash flows for the lease liability is as follows:
$m
Within one year
Between one and five years
Between five and ten years
Between ten and 15 years
After 15 years
Year ended
31 December
2020
Year ended
31 December
2019
Total
32
105
122
111
–
370
Total
35
120
134
115
15
419
Of the Group’s total lease liability of $272 million at 31 December 2020 (2019: $307 million), $253 million (2019: $257 million) relates to our main
premises in London (expiring in 2035). The revaluation of our GBP lease liabilities into US dollars (the lessee’s functional and the Group’s
presentation currency) may result in large unrealised gains or losses in the Group income statement, and therefore these non-cash movements
have been classified as an adjusting item (see page 167).
Movements in the Group’s lease liability are as follows:
$m
At beginning of the year
Additions
Unwind of lease liability discount (Note 6)
Cash payments
Early exercise of break clause
Foreign exchange movements (see page 167)
At year end
Year ended
31 December
2020
Year ended
31 December
2019
307
2
12
(34)
(22)
7
272
316
1
14
(34)
–
10
307
150
Man Group plc Annual Report 2020
18. Leases continued
18.2 The Group as lessor
Man Group acts as lessor in respect of certain sub-leased business premises arrangements, which are classified as operating leases under IFRS 16,
whereby sub-lease rental income is recognised on a straight-line basis over the lease term in the Group income statement. Sub-lease rental income
for 2020 was $7 million (2019: $14 million). In addition, during 2020 the principal sub-tenant of our main London office paid us cash of $26 million in
order to terminate their lease early, which was offset by an associated non-cash deferred rent write-off of $8 million and resulted in a net accounting
gain on lease surrender of $18 million. The surrender gain represents payment for the sub-lease rental risk and other costs taken on by the Group as
a result of this agreement, and therefore the amount relating to future periods ($7 million) has been recognised as an adjusting item (see page 167)
which we expect to release in future periods in line with future associated lost rental income and other costs. Following the lease surrender, the
Group exercised a break option on its other London premises in order to bring all London staff together in one location from 2021, resulting in a
$22 million decrease in the lease liability and associated ROU lease asset. This also triggered the transfer of $33 million from investment property
to leasehold property ROU lease assets, relating to the previously sub-let portion of the office which will be occupied by the Group.
At 31 December 2020, the contractual undiscounted operating lease payments receivable from sub-leases of the Group’s investment property ROU
lease assets are as follows:
$m
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
Between five and ten years
Year ended
31 December
2020
Year ended
31 December
2019
Total
Total
7
6
6
6
5
–
30
16
16
14
5
5
5
61
Fair value of investment property and impairment
Investment property ROU lease assets with a carrying value of $78 million at 31 December 2020 (2019: $141 million) have a fair value, which
is equivalent to their value in use, of $86 million (2019: $153 million). The carrying value and fair value decreases in our ROU sub-lease assets
compared to 2019 reflect a decrease in the sub-let space due to increased occupation by the Group. An impairment expense is recognised for
the amount by which the asset’s carrying value exceeds its recoverable amount, being its value in use. For the purposes of assessing impairment,
investment property ROU lease assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs), being the
individual sub-lease contract level. The value in use calculations at 31 December 2020 use cash flow projections out to the end of the relevant
property’s head lease, based on current sub-lease agreements and estimates for future rentals, reflecting the current commercial property market
and the adverse impact of COVID-19. The assumptions applied in the value in use calculations are derived from past experience and assessment
of current market inputs, with the market property yield discount rate then applied to the modelled cash flows. This assessment has resulted in
impairment of our investment property ROU lease asset (which includes related leasehold improvements) for sub-tenancies in our main London
office of $25 million at 31 December 2020, which was triggered by the sub-let vacancy created by the lease surrender of our principal sub-tenant
during the year coinciding with the London commercial property market uncertainty due to COVID-19. Reasonably foreseeable changes in the key
assumptions of this assessment would not be expected to result in a significant change to the impairment expense recognised.
Man Group plc Annual Report 2020
151
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Notes to the Group financial statements continued
19. Deferred compensation arrangements
Man Group operates equity-settled share-based payment schemes as well as fund product-based compensation arrangements.
For compensation plans whereby deferred compensation is invested in fund products managed by Man Group, the fair value of the employee
services received in exchange for the fund units is recognised as an expense over the vesting period, with a corresponding liability. The Group holds
these fund investments in order to offset any associated change in deferred compensation (Note 13.1), and at vesting the value of the fund
investment is delivered to the employee.
Effective for awards granted from 1 January 2020, the Group has elected to hedge account for deferred fund product charges, whereby the
offsetting gains or losses on these fund products are matched against the corresponding compensation charge in the Group income statement pro-
rata over the vesting period. Unmatched gains or losses are recognised through other comprehensive income and held within the cash flow hedge
reserve in equity until they are recycled over the vesting period into the Group income statement.
During the year, $74 million (2019: $78 million) relating to share-based payments and deferred fund product plans is included within compensation
costs (Note 4), consisting of share-based payments of $20 million (2019: $28 million) and deferred fund product plans of $54 million (2019:
$50 million). The unamortised deferred compensation at year end is $66 million (2019: $50 million) and has a weighted average remaining
vesting period of 1.8 years (2019: 1.6 years).
19.1 Employee Trust
The Employee Trust has the obligation to deliver share and fund product-based payments which have been granted to employees. In 2020
Man Group funded $36 million via contribution or loan (2019: $34 million) to enable the Employee Trust to meet its current period obligations.
The Employee Trust is fully consolidated into the Group and shares held are treated as Treasury shares for EPS purposes (Note 8). The Employee
Trust is controlled by independent trustees and their assets are held separately from those of Man Group. At 31 December 2020, the net assets
of the Employee Trust amounted to $105 million (2019: $106 million). These assets include 31,529,719 (2019: 28,627,805) ordinary shares in the
Company, nil notional value options over Man Group shares (2019: $10 million), and $43 million of fund units (2019: $39 million) to deliver against
future obligations. The shares are recorded at cost and shown as a deduction from shareholders’ funds. During the year, the trustees of the
Employee Trust waived all of the interim dividend for the year ended 31 December 2020 on each of the 31,567,105 ordinary shares registered
in its name at the relevant eligible date (2019 interim dividend: waived on all 28,206,246 shares) and all of the final dividend for the year ended
31 December 2019 on each of the 31,553,308 of ordinary shares (2018 final dividend: waived on all 27,561,827 shares).
19.2 Share-based payments
Share-based payments are remuneration payments to selected employees that take the form of an award of shares in Man Group plc. Awards
typically vest over three years, although conditions vary between different types of award. In respect of equity-settled share-based payment
schemes, the fair value of the employee services received in exchange for the share awards and options granted is recognised as an expense, with
the corresponding credit being recognised in equity. The total amount to be expensed over the vesting period is determined by reference to the fair
value of the share awards and options at grant date. The fair value of the share awards and options granted in exchange for employee services is
calculated using the Black-Scholes valuation model that takes into account the effect of both financial and demographic assumptions. Forfeiture
and early vesting assumptions are based on historical observable data. Changes to the original estimates, if any, are included in the Group income
statement, with a corresponding adjustment to equity.
Share options
The fair values of share options granted in the year under the Sharesave share option scheme, and the assumptions used in the calculations, are
as follows:
Grant date
Weighted average share price at grant date ($)1
Weighted average exercise price at grant date ($)2
Share options granted in the period
Vesting period (years)
Expected share price volatility (%)
Dividend yield (%)
Risk-free rate (%)
Expected option life (years)
Number of options assumed to vest
Average fair value per option granted ($)
Notes:
1 Sterling share price at grant date each year of £1.18 and £1.59, respectively.
2 Sterling exercise price each year of £1.07 and £1.27, respectively.
7/9/2020
1.6
1.4
4,313,479
3–5
30
6
(0.1)
3.4
3,289,641
0.2
10/9/2019
2.1
1.6
2,653,200
3–5
30
6
0.4
3.4
2,025,055
0.4
The expected share price volatility is based on historical volatility over the past five years. The expected option life is the average expected period
to exercise. The risk-free rate of return is the yield on zero-coupon UK government bonds of a term consistent with the assumed option life.
152
Man Group plc Annual Report 2020
19. Deferred compensation arrangements continued
19.2 Share-based payments continued
Movements in the number of share options outstanding are as follows:
Share options outstanding at beginning of the year
Granted
Forfeited
Expired
Exercised
Share options outstanding at year end
Share options exercisable at year end
Note:
1 Calculated at 31 December exchange rates each year.
Year ended 31 December 2020
Year ended 31 December 2019
Weighted
average
exercise price1
($ per share)
Weighted
average
exercise price1
($ per share)
Number
3.8 44,490,388
1.5
2,653,200
1.7
(1,170,912)
–
–
1.3
(2,218,500)
3.4 43,754,176
4.1 38,067,463
3.6
1.7
2.4
–
1.2
3.6
4.0
Number
43,754,176
4,313,479
(1,859,636)
(12,523,057)
(183,571)
33,501,391
26,857,475
The share options outstanding at year end have a weighted average exercise price and expected remaining life as follows:
Range of exercise prices ($ per share)
0.00–3.00
3.01–5.00
31 December 2020
31 December 2019
Number of
share options
7,724,551
25,776,840
33,501,391
Weighted
average
exercise price
($ per share)
Weighted
average
expected
remaining life
Number of
share options
Weighted
average
exercise price
($ per share)
Weighted
average
expected
remaining life
1.6
4.2
2.5
5,454,279
0.2 38,299,897
43,754,176
1.7
3.9
2.6
1.0
Share awards
The fair values of share awards granted in the year and the assumptions used in the calculations are as follows:
Deferred share plan
Grant dates
Share awards granted in the year
Weighted average fair value per share award granted ($)
Executive directors’ long-term incentive plans
Grant dates
Share awards granted in the year
Weighted average fair value per share award granted ($)
Movements in the number of share awards outstanding are as follows:
Share awards outstanding at beginning of the year
Granted
Forfeited
Exercised
Share awards outstanding at year end
Share awards exercisable at year end
13/3/2020 – 13/11/2020
19,829,902
1.3
1/3/2019 – 23/12/2019
10,668,972
1.8
13/3/2020
4,718,626
1.3
12/3/2019
4,892,392
1.8
Year ended
31 December
2020
Number
Year ended
31 December
2019
Number
35,600,270 34,188,523
24,548,528 15,561,364
(1,437,310)
(6,060,404)
(18,426,596)
(8,089,213)
40,284,892 35,600,270
6,915
43,590
Man Group plc Annual Report 2020
153
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Notes to the Group financial statements continued
20. Capital management
Details of the Group’s capital management and dividend policy are provided within the Chief Financial Officer’s review and the Shareholder
information section on pages 29 and 170 respectively.
Share capital and capital reserves
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as
a deduction from the proceeds, net of tax.
Own shares held through the Employee Trust (Note 19) and Treasury shares are recorded at cost, including any directly attributable incremental
costs (net of tax), and are deducted from equity attributable to the Company’s equity holders until the shares are transferred to employees or sold.
Where such shares are subsequently sold, any consideration received, net of any directly attributable incremental transaction costs and the related
tax effects, is included in equity attributable to the Company’s equity holders.
As detailed in Note 1, the Group adjusted its corporate structure in May 2019. The scheme of arrangement had no impact on the Group’s aggregate
share capital and capital reserves, with a new reorganisation reserve created following the reversal of the existing share premium account, capital
redemption reserve, merger reserve and reorganisation reserve balances. The share premium arising on the issue of shares by Man Group plc was
subsequently cancelled by way of a capital reduction, with an equivalent increase recognised in the profit and loss account in reserves.
Ordinary shares
Ordinary shares have a par value of 3 3/7 US cents per share (2019: 3 3/7 US cents per share) and represent 100% of issued share capital. All issued
shares are fully paid. The shares have attached to them full voting, dividend and capital distribution (including on wind up) rights. They do not confer
any rights of redemption. Ordinary shareholders have the right to receive notice of, attend, vote and speak at general meetings. A holder of ordinary
shares is entitled to one vote per ordinary share held when a vote is taken on a poll and one vote only when a vote is taken on a show of hands.
As part of the corporate reorganisation in May 2019 (as further detailed in Note 1), ordinary shares in the Group’s former holding company
were cancelled and the same number of new ordinary shares were issued to the new holding company in consideration for the allotment to
shareholders of one ordinary share of 3 3/7 US cents in the new holding company for each ordinary share of 3 3/7 US cents they held in the former
holding company.
During the year ended 31 December 2020, $107 million (2019: $92 million) of shares were repurchased at an average price of 122.8 pence (2019:
149.1 pence), buying back 69 million shares (2019: 48 million shares), which had an accretive impact on EPS (Note 8) of 2.6% (2019: 1.6%). This
relates to the completion of the remaining $71 million of the share repurchase announced in October 2019, and the partial completion of $36 million
of the anticipated $100 million share repurchase announced in September 2020. All repurchased shares were held in Treasury. Shares repurchased
during the year represent 4.8% of issued share capital (excluding Treasury shares) as at 31 December 2020. As at 31 December 2020, 86,156,381
shares were held in Treasury. As at 1 March 2021, Man Group had an unexpired authority to repurchase up to 119,289,390 of its ordinary shares.
A special resolution will be proposed at the forthcoming Annual General Meeting (AGM), pursuant to which the Company will seek authority to
repurchase up to 145,399,026 of its ordinary shares, representing 10% of the issued share capital (excluding Treasury shares) at 1 March 2021.
Deferred sterling shares
50,000 unlisted deferred sterling shares with a par value of £1 per share (representing 0.1% of the former Group holding company’s issued share
capital prior to the corporate reorganisation in May 2019) were necessary for the former holding company to continue to comply with Section 763
of the UK Companies Act 2006. Following the corporate reorganisation, which created a new Jersey parent holding company, the deferred shares
were cancelled.
Issued and fully paid share capital
At 1 January
Purchase and cancellation of own shares
Scheme of arrangement (Note 1):
– Cancellation of shares in former holding company
–
At 31 December
Issue of shares in new holding company
Year ended 31 December 2020
Year ended 31 December 2019
Ordinary
shares
Number
Nominal
value
$m
Ordinary
shares
Number
Unlisted
deferred
sterling shares
Number
1,541,794,770
–
–
–
1,541,794,770
53 1,610,142,313
–
(68,347,543)
50,000
–
– (1,541,794,770)
– 1,541,794,770
53 1,541,794,770
(50,000)
–
–
Nominal
value
$m
55
(2)
(53)
53
53
154
Man Group plc Annual Report 2020
21. Pension
Man Group operates 12 (2019: 12) defined contribution plans and two (2019: two) funded defined benefit plans.
Defined contribution plans
Man Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. Man
Group has no further payment obligation once the contributions have been paid. Defined contribution pension costs totalled $12 million for the
year to 31 December 2020 (2019: $12 million) and are recognised as pension costs within compensation in the Group income statement when
they are due.
Defined benefit plans
A defined benefit plan creates a financial obligation to provide funding to the pension plan to provide a retired employee with pension benefits usually
dependent on one or more factors such as age, years of service and compensation. As with the vast majority of similar arrangements, Man Group
ultimately underwrites the risks related to the defined benefit plans. The risks to which this exposes the Group include:
• Uncertainty in benefit payments: the value of the Group’s liabilities for post-retirement benefits will ultimately depend on the amount of benefits
paid out. This in turn will depend on the level of inflation (for those benefits that are subject to some form of inflation protection) and how long
individuals live.
• Volatility in asset values: the Group is exposed to future movements in the values of assets held in the plans to meet future benefit payments.
• Uncertainty in cash funding: movements in the values of the obligations or assets may result in the Group being required to provide higher levels
of cash.
The two defined benefit plans operated are the Man Group plc Pension Fund in the UK (the UK Plan) and the Man Group Pension Plan in
Switzerland (the Swiss Plan). At 31 December 2020, the UK Plan comprised 94% (31 December 2019: 94%) of the Group’s total defined benefit
pension obligations.
The UK Plan is operated separately from the Group and managed by independent trustees. The trustees are responsible for payment of the benefits
and management of the UK Plan’s assets. Under UK regulations, the Group and the trustees of the UK Plan are required to agree a funding strategy
and contribution schedule for the UK Plan.
The UK Plan was closed to new members in May 1999 and to future accrual in May 2011. Employed members of the UK Plan retain enhanced
benefits, including a link to salary, on their accrued benefits in the Plan. Future benefits are provided via a defined contribution plan.
No cash contributions were made to the UK Plan in the year to 31 December 2020. The next actuarial valuation has an effective date of
31 December 2020. As part of this valuation, a new recovery plan may be agreed.
For the UK Plan, the Group has concluded that it has no requirement to adjust the balance sheet to recognise either a current surplus or a
minimum funding requirement on the basis that the Group has an unconditional right to a refund of a current or projected future surplus at some
point in the future.
In Switzerland, the Group operates a retirement foundation with assets which are held separately from the Group. This foundation covers the
majority of employees in Switzerland and provides benefits on a cash balance basis. Each employee has a retirement account to which the
employee and the Group make contributions at rates set out in the plan rules based on a percentage of salary. Every year the pension fund
commission (composed of employer and employee representatives) decides the level of interest, if any, to apply to retirement accounts based
on their agreed policy. At retirement an employee can take their retirement account as a lump sum or have this paid as a pension.
$m
Present value of funded obligations
Fair value of plan assets
Surplus
Amount not recognised due to asset ceiling
Net pension asset
31 December
2020
31 December
2019
(490)
492
2
–
2
(422)
439
17
(1)
16
The decrease in the net pension asset from 31 December 2019 to 31 December 2020 is driven primarily by the UK Plan, largely as a result of a
decrease in the discount rate assumption as well as the changes to expected mortality rates, partially offset by assets performing above the liability
growth rate (discount rate) and inflation being lower than expected over 2020.
Man Group plc Annual Report 2020
155
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Notes to the Group financial statements continued
21. Pension continued
Pensions: actuarial information
Changes in the present value of the defined benefit obligations are as follows:
$m
Present value of funded obligations at beginning of the year
Currency translation difference
Current service cost (employer portion)
Interest cost
Employee contributions
Remeasurements due to:
– changes in financial assumptions
– changes in demographic assumptions
– experience adjustments
Actual benefit payments
Past service credit
Present value of funded obligations at year end
Changes in the fair value of plan assets are as follows:
$m
Fair value of plan assets at beginning of the year
Currency translation difference
Interest income on plan assets
Actual return on plan assets less interest on plan assets
Employer contributions
Employee contributions
Benefits paid
Fair value of plan assets at year end
The plan assets primarily relate to investments in bonds, liability-driven investments (LDIs) and diversified growth funds.
The change in the net pension asset recognised on the Group balance sheet is as follows:
$m
Net pension asset at start of the year
Total pension (expense)/credit
Amount recognised outside profit and loss
Employer contributions
Currency translation difference
Net pension asset at end of the year
The amounts recognised in the Group income statement are as follows:
$m
Current service cost (employer portion)
Interest on net pension asset
Past service credit
Total expense/(credit)
Year ended
31 December
2020
Year ended
31 December
2019
422
18
1
8
1
54
2
(1)
(15)
–
490
376
15
2
10
1
46
(3)
1
(24)
(2)
422
Year ended
31 December
2020
Year ended
31 December
2019
439
19
8
39
1
1
(15)
492
400
16
11
35
–
1
(24)
439
Year ended
31 December
2020
Year ended
31 December
2019
16
(1)
(15)
1
1
2
24
1
(10)
–
1
16
Year ended
31 December
2020
Year ended
31 December
2019
1
–
–
1
2
(1)
(2)
(1)
The $1 million allowance for the estimated costs of removing Guaranteed Minimum Pension inequalities in the UK Plan as at 31 December 2020 is
unchanged from 31 December 2019.
156
Man Group plc Annual Report 2020
21. Pension continued
The amounts recognised in other comprehensive income are as follows:
$m
Net actuarial (losses)/gains in the year due to:
– changes in financial assumptions
– changes in demographic assumptions
– experience adjustments on benefit obligations
Actual return on plan assets less interest on plan assets
Adjustment to recognise the effect of the asset ceiling
Amount recognised in other comprehensive income
The most significant actuarial assumptions used in the valuations of the two plans are:
Discount rate
Price inflation
Future salary increases
Interest crediting rate
Social security increases
Pension in payment increases
Deferred pensions increases
Year ended
31 December
2020
Year ended
31 December
2019
(54)
(2)
1
39
1
(15)
(46)
3
(1)
35
(1)
(10)
UK Plan
Swiss Plan
31 December
2020
% p.a.
31 December
2019
% p.a.
31 December
2020
% p.a.
31 December
2019
% p.a.
1.3
3.0
3.0
–
–
3.6
5.0
2.1
3.1
3.1
–
–
3.6
5.0
0.2
1.1
1.1
0.2
1.0
–
–
0.4
1.2
1.2
0.4
1.0
–
–
At 31 December 2020, mortality rates in the UK Plan are assumed to be in line with 100% of the S2NA Light tables for all members with pensions
of more than £50,000 p.a. at 31 December 2017 (‘high earners’) and S2NA tables for all other members (2019: same as at 31 December 2020).
These mortality tables are assumed to be projected by year of birth with allowance for future improvements in longevity in line with the 2019 CMI
projections with a long-term rate of improvement of 1.25% p.a. for males and females, smoothing parameter of 7 and an initial improvements
parameter of 0.5% p.a. for high earners and 0.25% p.a. for all other members (2019: projected by year of birth with allowance for future
improvements in longevity in line with the 2018 CMI projections with a long-term rate of improvement of 1.25% p.a. for males and females,
smoothing parameter of 7 and an initial improvements parameter of 0.5% p.a. for high earners and 0.25% p.a. for all other members).
At 31 December 2020, mortality rates in the Swiss Plan are assumed to be in line with the Swiss BVG 2015 generational tables (2019: same
as at 31 December 2020).
Illustrative life expectancies are set out in the table below (the UK Plan life expectancies are based on the S2NA tables).
Years
Life expectancy of male aged 60 at year end
Life expectancy of male aged 60 in 20 years
Life expectancy of female aged 60 at year end
Life expectancy of female aged 60 in 20 years
UK Plan
Swiss Plan
31 December
2020
26.8
28.3
29.0
30.6
31 December
2019
26.6
28.2
28.8
30.3
31 December
2020
31 December
2019
27.6
29.3
29.8
31.5
27.4
29.3
29.7
31.4
The table below illustrates the impact on the assessed value of the benefit obligations from changing the most sensitive actuarial assumptions
(in isolation). The calculations to produce the below figures have been carried out using the same method and data as the Group’s pension figures.
Each assumption has been varied individually and a combination of changes in assumptions could produce a different result.
As at 31 December 2020:
$m
Discount rate decreased by 0.1% p.a.
Inflation rate increased by 0.1% p.a.
One year increase in assumed life expectancy
UK Plan
Swiss Plan
Increase in obligation
8
2
18
1
–
–
The duration of a pension plan is the average term over which the plan’s benefits are expected to fall due, weighted by the present value of each
expected benefit payment. The duration of the UK Plan is approximately 17 years, and the duration of the Swiss Plan is approximately 18 years.
Man Group plc Annual Report 2020
157
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Notes to the Group financial statements continued
21. Pension continued
The assets held by the two plans as at 31 December 2020 are as follows:
Swiss equities
Non-Swiss equities
Index-linked government bonds
Absolute return bonds
Swiss bonds
Non-Swiss bonds
Property
Hedge funds
LDI
Diversified growth funds
Man Alternative Risk Premia fund
Cash
Total assets
UK Plan
Swiss Plan
$m
–
–
44
128
–
–
–
–
134
69
51
38
464
%
–
–
9
28
–
–
–
–
29
15
11
8
100
$m
3
8
–
–
9
3
2
2
–
–
–
1
28
%
11
29
–
–
32
11
7
7
–
–
–
3
100
The UK investment strategy is set by the trustees of the UK Plan. The current strategy is broadly split into growth and matching portfolios. The
growth portfolio is invested in diversified growth funds and Man Alternative Risk Premia. The matching portfolio is invested primarily in government
and corporate bonds (the latter through the ‘absolute return bonds’ holdings), and liability-driven investment (LDI) funds.
The government bond assets and diversified growth funds have prices quoted in active markets and the absolute return bonds, LDI and Man
Alternative Risk Premia are primarily unquoted. At 31 December 2020, around 25% of the UK Plan assets relate to those with quoted prices and
75% with unquoted prices (2019: around 25% quoted and 75% unquoted). The UK Plan does not invest directly in property occupied by Man
Group or in the Group’s own transferable financial securities. Part of the investment objective of the UK Plan is to minimise fluctuations in the UK
Plan’s funding levels due to changes in the value of the liabilities. This is primarily achieved using the LDI funds, whose main goal is to hedge
movements in the liabilities due to changes in interest rate and inflation expectations. The current investment strategy aims to hedge around 100%
of the movement in the ‘technical provisions’ funding measure, as opposed to the IAS 19 accounting measure, due to both interest rate and inflation
expectation changes.
LDI primarily involves the use of government bonds (including repurchase agreements) and derivatives such as interest rate and inflation swaps.
There are no annuities or longevity swaps. These instruments are typically priced and collateralised daily by the UK Plan’s LDI manager and/or
central clearing houses. Given that the purpose of LDI is to hedge corresponding liability exposures, the main risk is that the investments held
move differently to the liability exposures. This risk is managed by the trustees, their advisers and the UK Plan’s LDI manager, who regularly assess
the position.
As the Swiss Plan is essentially a defined contribution plan with guarantees, the assets held aim to be at least as much as the total of the member
account balances at any point in time. Member account balances cannot reduce, but interest is only applied to the account balances when sufficient
surplus assets are available. As such, there is no specific asset/liability matching strategy in place, but if the liabilities (the sum of the member
account balances) ever exceed the value of the assets, the Group will consider how to remove a deficit as quickly as possible.
158
Man Group plc Annual Report 2020
22. Segmental analysis
The criteria for identifying an operating segment is that it is a component of the Group whose results are regularly reviewed by the Board and the
Senior Executive Committee to make decisions about resources to be allocated to the segment and to assess its performance. Management
information regarding revenues, net management fee margins and investment performance relevant to the operation of the investment managers,
products and the investor base are reviewed by the Board and the Senior Management Governance Committee. A centralised shared infrastructure
for operations, product structuring, distribution and support functions for each of the five investment managers which Man Group incorporates
(AHL, GLG, FRM, Numeric and GPM) means that operating costs are not allocated to constituent parts of the investment management business.
As a result, performance is assessed, resources are allocated and other strategic and financial management decisions are determined by the Board
and the Senior Executive Committee on the basis of the investment management business of Man Group as a whole. Accordingly, we operate and
report as a single segment investment management business, together with relevant information regarding FUM flows and net margins, to allow for
analysis of the direct contribution of products and the respective investor base.
23. Geographical disclosure
$m
Cayman Islands
Ireland
United Kingdom and the Channel Islands
United States of America
Other countries
Year ended 31 December 2020
Year ended 31 December 2019
Revenues by
fund location
Non-current
assets
Revenues by
fund location
Non-current
assets
384
195
158
104
98
939
–
–
727
224
12
963
540
180
137
115
141
1,113
–
–
828
262
44
1,134
Disclosure of revenue by geographic location is based on the registered domicile of the fund entity paying the Group fees. Revenue from any single
fund during the year did not exceed 10% of total revenues.
Non-current assets are allocated based on where the assets are located, and include goodwill and other acquired intangible assets, other
intangibles, leasehold improvements and equipment, and right-of-use lease assets. For goodwill and other acquired intangible assets, we consider
that the location of the intangibles is best reflected by the location of the individuals managing those assets.
24. Foreign currencies
The majority of revenues, assets, liabilities and financing are denominated in USD and therefore Man Group’s presentation currency is USD.
For consolidated entities with a USD functional currency, monetary assets and liabilities denominated in foreign currencies are translated at each
balance sheet date rate. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing
at the date when the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.
Transactions denominated in foreign currencies are converted at the spot rate at the date of the transaction or, if appropriate, the average rate for
the month in which the transaction occurs. Resulting exchange differences are recognised in the Group income statement.
For consolidated entities that have a functional currency other than USD, the assets and liabilities are translated into USD at the balance sheet date
rate. Income and expenses are translated at the average rate for the period in which the transactions occur. Resulting exchange differences are
recorded in other comprehensive income.
Man Group plc Annual Report 2020
159
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Notes to the Group financial statements continued
25. Fair value of financial assets/liabilities
The Group discloses the fair value measurement of financial assets and liabilities using three levels, as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair value of the Group’s financial assets and liabilities which are held at fair value through profit and loss can be analysed as follows:
$m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
31 December 2020
31 December 2019
Financial assets held at fair value:
Investments in fund products and other
investments (Note 13)
Investments in consolidated funds (Note 13)
Derivative financial instruments (Note 14)
Financial liabilities held at fair value:
Derivative financial instruments (Note 15)
Contingent consideration (Note 15)
3
–
–
3
–
–
–
170
435
4
609
18
–
18
162
17
–
179
–
2
2
335
452
4
791
18
2
20
3
–
–
3
–
–
–
180
385
4
569
13
–
13
169
35
–
204
–
24
24
352
420
4
776
13
24
37
The carrying value of financial assets and liabilities which are carried on the Group’s balance sheet at amortised cost is approximately equal to their
fair value.
During the year, there were no significant changes in the business or economic circumstances that affected the fair value of the Group’s financial
assets (see Note 1 for discussion of COVID-19) and no significant transfers of financial assets or liabilities held at fair value between categories. For
investments in fund products, Level 2 investments comprise holdings primarily in unlisted, open-ended, active and liquid funds, which have daily or
weekly pricing derived from third-party information.
A transfer into Level 3 would be deemed to occur where the level of prolonged activity, as evidenced by subscriptions and redemptions, is deemed
insufficient to support a Level 2 classification. This, as well as other factors such as a deterioration of liquidity in the underlying investments, would
result in a Level 3 classification. The material holdings within this category relate to CLO risk retention assets which are priced using a bottom-up
valuation method. The Group uses third party valuations to price the securities within the underlying portfolios and then applies these valuations in
proportion to the percentage of the CLO notes held by the Group. As the Group expects to hold the assets to maturity, this valuation method is
approximately equal to fair value.
The basis of measuring the fair value of Level 3 investments is outlined in Note 13.1. The movements in Level 3 financial assets and financial liabilities
measured at fair value are as follows:
$m
Level 3 financial assets/(liabilities) held at fair value
At beginning of the year
Purchases
Credited/(charged) to the income statement
Sales or settlements
Change in consolidated funds held
At year end
Total gains/(losses) for the year included in the Group statement
of comprehensive income for assets/(liabilities) held at year end
The financial liabilities in Level 3 relate to the contingent consideration payable.
Year ended 31 December 2020
Year ended 31 December 2019
Financial
assets at
fair value
through profit
or loss
Financial
liabilities at
fair value
through profit
or loss
Financial
assets at
fair value
through profit
or loss
Financial
liabilities at
fair value
through profit
or loss
204
–
10
(17)
(18)
179
10
(24)
–
20
2
–
(2)
20
196
27
(6)
(7)
(6)
204
(6)
(212)
–
19
169
–
(24)
19
$m
Numeric
Aalto
Total
Numeric
Aalto
Other
Total
Year ended 31 December 2020
Year ended 31 December 2019
Contingent consideration payable
At beginning of the year
Revaluation of contingent consideration
Unwind of contingent consideration discount
(Note 6)
Sales or settlements
At year end
2
–
–
(2)
–
22
(22)
2
–
2
24
(22)
2
(2)
2
172
(22)
13
(161)
2
37
(20)
5
–
22
3
5
–
(8)
–
212
(37)
18
(169)
24
The revaluation of contingent consideration in the Group income statement is an adjustment to the fair value of expected acquisition earn-out payments.
The Aalto contingent consideration is dependent on levels of run rate management fees measured following four, six and eight years from
completion on 1 January 2017. The maximum aggregate amount payable by the Group is capped at $207 million. The $22 million decrease
(2019: $20 million) in the fair value of the Aalto contingent creditor is driven by lower than expected actual and forecast growth of the GPM business,
including the impact of COVID-19, as outlined in more detail in the related goodwill impairment assessment in Note 10.
160
Man Group plc Annual Report 2020
26. Related party transactions
Related parties comprise key management personnel, associates and fund entities which Man Group is deemed to control. All transactions with
related parties were carried out on an arm’s length basis.
Management fees earned from fund entities in which the Group holds a controlling interest are detailed in Note 13.2. Contingent consideration
payable to Aalto management is outlined in Note 25. In 2019 Man Group made a charitable donation of £2,500 to Greenhouse Sports Ltd, which
is considered a related party.
The Executive Committee, together with the non-executive directors, are considered to be the Group’s key management, being those directors,
partners and employees having authority and responsibility for planning, directing and controlling the activities at Man Group.
Key management compensation $m
Salaries and other short-term employee benefits1
Share-based payments
Fund product-based payment charge
Pension costs (defined contribution)
Total
Note:
1
Includes salary, benefits and cash bonus.
27. Other matters
Year ended
31 December
2020
Year ended
31 December
2019
32
10
13
1
56
29
13
9
1
52
In July 2019, the Public Institution for Social Security in Kuwait (PIFSS) served a claim against a number of parties, including certain Man Group
companies, a former employee of Man Group and a former third-party intermediary. The subject matter of these allegations dates back over a period
of 20 years. PIFSS is seeking compensation of $156 million (plus compound interest) and certain other remedies which are unquantified in the claim.
Man Group disputes the allegations and considers there is no merit to the claim (in respect of liability and quantum). We will therefore vigorously and
robustly defend the proceedings.
Man Group is subject to various other claims, assessments, regulatory enquiries and investigations in the normal course of its business. The directors
do not expect such matters to have a material adverse effect on the financial position of the Group.
28. Subsequent events
The COVID-19 global pandemic has caused extensive disruption to businesses and economic activity. The Group continues to monitor any impacts
on the business, as outlined in Note 1, and has not identified any material adjustments to balances included in these financial statements, nor any
material impacts on the business, subsequent to the balance sheet date.
Man Group plc Annual Report 2020
161
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Notes to the Group financial statements continued
29. Group investments
Details of the Group’s subsidiaries and consolidated structured entities, which have been consolidated into the Group’s results, and details of
investments in associates are provided below. The country of operation is the same as the country of incorporation, the year end is 31 December,
and effective Group interest represents both the percentage held and voting rights, unless otherwise stated.
Subsidiaries
Principal operating subsidiaries
Registered address
Direct or
indirect
Country of
incorporation
Effective Group
interest %
Asset management
AHL Partners LLP1
GLG Partners LP
Numeric Investors LLC
Group services company
Man Group Operations Limited (previously
E D & F Man Limited)
Man Investments AG
Man Investments Holdings Inc
Group treasury and holding company
Man Property Holdings Limited
Man Investments Finance Limited
Group holding and other subsidiaries
Man Group plc
Man Group Treasury Limited
Man Group Limited
Aalto Invest Cayman Limited
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Riverbank House, 2 Swan Lane, London, EC4R 3AD
4001 Kennett Pike, Suite 302, Wilmington DE 19807
Indirect
Indirect
Indirect
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Indirect
UK
UK
US
UK
Huobstrasse 3, 8808 Pfäffikon SZ
4001 Kennett Pike, Suite 302, Wilmington DE 19807
Indirect Switzerland
US
Indirect
22 Grenville Street, St Helier, Jersey, JE4 8PX
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Indirect
Indirect
Jersey
UK
22 Grenville Street, St Helier, Jersey, JE4 8PX
22 Grenville Street, St Helier, Jersey, JE4 8PX
Riverbank House, 2 Swan Lane, London, EC4R 3AD
PO Box MP10085, 3rd Floor Zephyr House, 122 Mary
Street, George Town, Grand Cayman, KY1-1001
Direct
Indirect
Indirect
Jersey
Jersey
UK
Cayman
E.D.& F. Man Investments B.V
Beurs – World Trade Center, Beursplein 37,
Indirect Netherlands
3011 AA, Rotterdam
E D & F Man Investments Limited
FA Sub 2 Limited
15 Esplanade, St Helier, JE1 1RB
Ritter House, Wickhams Cay II, Road Town,
Indirect
Indirect
Jersey
BVI
Tortola, VG1110
FA Sub 3 Limited
Ritter House, Wickhams Cay II, Road Town,
Indirect
BVI
Tortola, VG1110
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Financial Risk Management Limited
FRM Holdings Limited
Gaspé House, 66-72 Esplanade, St Helier, JE2 3QT
FRM Investment Management GP (USA) LLC 4001 Kennett Pike, Suite 302, Wilmington DE 19807
FRM Investment Management Limited
PO Box 186, Royal Chambers, St. Julian’s Avenue, St
Peter Port, GY1 4HP, Guernsey
FRM Investment Management (USA) LLC
GLG Capital Management LLC
GLG Holdings Limited
GLG LLC
GLG Partners Hong Kong Limited
4001 Kennett Pike, Suite 302, Wilmington DE 19807
4001 Kennett Pike, Suite 302, Wilmington DE 19807
Wickhams Cay, PO Box 662, Road Town, Tortola
4001 Kennett Pike, Suite 302, Wilmington DE 19807
Unit 2206-2207, 22/F Man Yee Building, No. 68 Des
GLG Partners Limited
GLG Partners UK Group Ltd
GLG Partners UK Holdings Ltd
Man Asset Management (Cayman) Limited
Man Asset Management (Ireland) Limited
Man Australia GP Limited
Man Australia LP
Voeux Road, Central
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Riverbank House, 2 Swan Lane, London, EC4R 3AD
PO Box 309, Ugland House, South Church Street,
George Town, Grand Cayman, KY1-1104
70 Sir John Rogerson’s Quay, Dublin 2
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Level 27, Chifley Tower, 2 Chifley Square, Sydney,
NSW 2000
Indirect
Indirect
Indirect
Indirect
UK
Jersey
US
Guernsey
US
Indirect
US
Indirect
BVI
Indirect
Indirect
US
Indirect Hong Kong
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
UK
UK
UK
Cayman
Ireland
UK
Australia
Man (Europe) AG
Man Fund Management (Guernsey) Limited
Austrasse 56, 9490, Vaduz, Liechtenstein
PO Box 186, Royal Chambers, St. Julian’s Avenue,
Indirect Liechtenstein
Guernsey
Indirect
St Peter Port, GY1 4HP, Guernsey
Man Fund Management Netherlands BV
Beurs – World Trade Center, Beursplein 37,
Indirect Netherlands
3011 AA, Rotterdam
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
162
Man Group plc Annual Report 2020
29. Group investments continued
Subsidiaries continued
Group holding and other subsidiaries
Registered address
Direct or
indirect
Country of
incorporation
Effective Group
interest %
Man Fund Management UK Limited
Man GLG Partners LLP1
Man Global Private Markets (UK) Limited
Man Global Private Markets (USA) Inc.
Man Global Private Markets SLP LLC
Man Group Holdings Limited
Man Group Investments Limited
Man Group Japan Limited
Man Group Services Limited
Man Group UK Limited
Man Investments Australia Limited
Man Investments (CH) AG
Man Investments Finance Inc.
Man Investments Holdings Limited
Man Investments (Hong Kong) Limited
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Riverbank House, 2 Swan Lane, London, EC4R 3AD
4001 Kennett Pike, Suite 302, Wilmington DE 19807
4001 Kennett Pike, Suite 302, Wilmington DE 19807
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Riverbank House, 2 Swan Lane, London, EC4R 3AD
PO Box 556, 1st Floor, Les Echelons Court, Les Echelons,
South Esplanade, St Peter Port, GY1 6JB, Guernsey
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Level 27, Chifley Tower, 2 Chifley Square, Sydney,
NSW 2000
Huobstrasse 3, 8808 Pfäffikon SZ
4001 Kennett Pike, Suite 302, Wilmington DE 19807
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Unit 2206-2207, 22/F Man Yee Building, No.68
Des Voeux Road, Central
Man Investments Inc.
Man Investments Limited
Man Investment Management (Shanghai)
15 North Mill Street, Nyack, NY 10960, United States
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Room 1857 Bund Centre, No. 222 Yan An East Road,
Co., Ltd
Shanghai, 200002
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
UK
UK
UK
US
US
UK
UK
Guernsey
UK
UK
Australia
Indirect Switzerland
US
Indirect
Indirect
UK
Indirect Hong Kong
Indirect
Indirect
Indirect
US
UK
China
Man Investments (Shanghai) Limited
Room 1818, Bund Centre, No. 222 Yan An East Road,
Indirect
China
Man Investments (USA) Corp.
Man Investments USA Holdings Inc.
Man Mash Limited
Man Principal Strategies Corp
Man Solutions Limited
Man Solutions (USA) LLC
Man Solutions SLP LLC
Man Strategic Holdings Limited
Man UK Strategies Limited
Man Valuation Services Limited
Man Worldwide Operations
Management Limited
Mount Granite Limited
Numeric Holdings LLC
Numeric Midco LLC
RBH Holdings (Jersey) Limited
RMF Co-Investment Limited
Silvermine Capital Management LLC
GLG Holdings Inc. (in dissolution)
GLG Inc. (in dissolution)
Man Fund Management Limited
(in liquidation)
Man Litchfield Inc. (in dissolution)
Man Washington Inc. (in dissolution)
Seabrook Holding Inc (in dissolution)
Note:
1 The financial year end is 31 March.
Shanghai, 200002
4001 Kennett Pike, Suite 302, Wilmington DE 19807
4001 Kennett Pike, Suite 302, Wilmington DE 19807
Riverbank House, 2 Swan Lane, London, EC4R 3AD
4001 Kennett Pike, Suite 302, Wilmington DE 19807
Riverbank House, 2 Swan Lane, London, EC4R 3AD
4001 Kennett Pike, Suite 302, Wilmington DE 19807
4001 Kennett Pike, Suite 302, Wilmington DE 19807
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Riverbank House, 2 Swan Lane, London, EC4R 3AD
Riverbank House, 2 Swan Lane, London, EC4R 3AD
22 Grenville Street, St Helier, Jersey, JE4 8PX
Wickhams Cay, PO Box 662, Road Town, Tortola
4001 Kennett Pike, Suite 302, Wilmington DE 19807
4001 Kennett Pike, Suite 302, Wilmington DE 19807
IFC 5, St Helier, JE1 1ST, Jersey
PO Box 309, Ugland House, South Church Street,
George Town, Grand Cayman, KY1-1104
4001 Kennett Pike, Suite 302, Wilmington DE 19807
4001 Kennett Pike, Suite 302, Wilmington DE 19807
4001 Kennett Pike, Suite 302, Wilmington DE 19807
Cranford Centre, Stillorgan Road, Dublin 4
4001 Kennett Pike, Suite 302, Wilmington DE 19807
4001 Kennett Pike, Suite 302, Wilmington DE 19807
4001 Kennett Pike, Suite 302, Wilmington DE 19807
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
US
US
UK
US
UK
US
US
UK
UK
UK
Jersey
BVI
US
US
Jersey
Cayman
US
US
US
Ireland
US
US
US
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Man Group plc Annual Report 2020
163
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
100
51
68
100
100
77
100
99
41
100
72
50
41
47
94
71
59
100
100
Notes to the Group financial statements continued
29. Group investments continued
Consolidated structured entities
The following investment funds, which the Group is deemed to control, have been consolidated (Note 13):
Strategy
AHL Insight
Registered address
Country of incorporation/
principal place of
operation
% of net asset
value held
c/o Citi Hedge Fund Services Ltd, Hemisphere House,
Bermuda
Hamilton HM 11
Man GLG Global Emerging Markets Bond
Man GLG Select Opportunities
70 Sir John Rogerson's Quay, Dublin 2
c/o Maples Corporate Services Limited, PO Box 309,
Ugland House, Grand Cayman KY 1-11-4
Man GPM US Residential Real Estate Fund Suite 400, Wilmington, New Castle County, Delaware 19808
Man Numeric China A Core
c/o Maples Corporate Services Limited, PO Box 309,
Ugland House, Grand Cayman KY 1-11-4
Man Numeric European Equity
Man Numeric US Liquid Private Equity
70 Sir John Rogerson's Quay, Dublin 2
c/o Maples Corporate Services Limited, PO Box 309,
Alternative
Man GLG Global Credit Multi
Strategy Alternative
Ugland House, Grand Cayman KY 1-11-4
70 Sir John Rogerson's Quay, Dublin 2
Man GLG Global Debt Total Return
Man GLG Global Consumer Equity
70 Sir John Rogerson's Quay, Dublin 2
70 Sir John Rogerson's Quay, Dublin 2
Alternative
Man AHL TargetRisk Moderate
American Beacon AHL TargetRisk Core Fund 220 East Las Colinas Boulevard, Suite 1200, Irving, Texas 75039
Man GLG Global Emerging Markets Debt
70 Sir John Rogerson's Quay, Dublin 2
70 Sir John Rogerson's Quay, Dublin 2
Ireland
Cayman
US
Cayman
Ireland
Cayman
Ireland
Ireland
Ireland
Ireland
US
Ireland
Local Currency
Man GLG Global Credit Opportunities
c/o Maples Corporate Services Limited, PO Box 309, Ugland
Cayman
House, Grand Cayman KY 1-11-4
Man GLG Global Emerging Markets Debt
70 Sir John Rogerson's Quay, Dublin 2
Total Return
Man GLG Japan Equity Alternative
Man GLG Asia (ex-Japan) Equity
Man GLG Asia Pacific (ex-Japan) Equity
70 Sir John Rogerson's Quay, Dublin 2
70 Sir John Rogerson's Quay, Dublin 2
70 Sir John Rogerson's Quay, Dublin 2
Alternative
Ireland
Ireland
Ireland
Ireland
Man GPM RI Community Housing 1 LP
PO Box 286, Floor 2 Trafalgar Court, Les Banques, St Peter
Guernsey
Port, Guernsey, GY1 4LY
164
Man Group plc Annual Report 2020
Five-year record
Unaudited
$m
Income statement
Core net management fee revenue1
Performance fees1
Pre-tax profit before adjusting items
Adjusting items (excluding tax)1
Statutory pre-tax profit/(loss)
Statutory profit/(loss) for the year
Adjusted profit before tax1
Core profit before tax1
Adjusted management fee profit before tax1
Core management fee profit before tax1
Adjusted performance fee profit before tax1
Statutory EPS (diluted) (cents)
Adjusted EPS1 (cents)
Core EPS1 (cents)
Core management fee EPS1 (cents)
Balance sheet
Net cash
Net assets
Net financial assets1
Other statistics
Cash flow from operating activities (before working capital movements)
Ordinary dividends per share (cents)
Funds under management1 ($bn)
Average headcount2
USD/GBP exchange rates
Average
Year-end
Notes:
1 See pages 166 to 169 for details of the Group’s alternative performance measures.
2 The average headcount includes directors, employees, partners and contractors.
Year to
31 December
2020
Year to
31 December
2019
Year to
31 December
2018
Year to
31 December
2017
Year to
31 December
2016
730
179
284
(105)
179
138
284
284
180
180
104
9.3
16.2
16.2
10.3
351
1,497
716
341
10.6
123.6
1,456
751
325
386
(79)
307
285
386
384
172
170
214
18.4
21.1
21.0
9.7
281
1,624
674
385
9.8
117.7
1,413
777
127
251
27
278
273
251
237
217
203
34
17.0
13.5
12.7
11.0
220
1,593
644
311
11.8
108.5
1,376
711
289
384
(112)
272
255
384
359
203
178
181
15.3
20.3
18.9
9.4
229
1,716
443
431
10.8
109.1
1,313
645
81
205
(477)
(272)
(266)
205
159
178
132
27
(15.8)
10.4
8.1
6.7
277
1,674
721
245
9.0
80.9
1,250
0.7789
0.7315
0.7830
0.7544
0.7489
0.7837
0.7759
0.7396
0.7384
0.8093
Man Group plc Annual Report 2020
165
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Alternative performance measures
We assess the performance of the Group using a variety of
alternative performance measures (APMs). We discuss the
Group’s results on a ‘core’ and ‘adjusted’ basis as well as a
statutory basis. The rationale for using core and adjusted
measures is explained below.
We also explain financial performance using measures that are not
defined under IFRS and are therefore termed ‘non-GAAP’ measures.
These non-GAAP measures are also explained below. The alternative
performance measures we use may not be directly comparable with
similarly titled measures by other companies.
Funds under management (FUM)
FUM is the assets that the Group manages for investors in fund entities.
FUM is a key indicator of our performance as an investment manager
and our ability to remain competitive and build a sustainable business.
FUM is measured based on management fee earning capacity. Average
FUM multiplied by our net management fee margin (see below) equates
to our management fee earning capacity. FUM is shown by product
groupings that have similar characteristics (as shown on page 26).
Management focus on the movements in FUM split between the
following categories:
- Net inflows/outflows
Net inflows/outflows are a measure of our ability to attract and retain
investor capital. Net flows are calculated as sales less redemptions.
Further details are included on page 26.
- Investment performance
Investment performance is a measure of the performance of the funds
we manage for our investors. It is calculated as the fund performance of
each strategy multiplied by the FUM in that strategy. Further details are
included on page 26.
- FX and other movements
Some of the Group’s FUM is denominated in currencies other than USD.
FX movements represent the impact of translating non-USD
denominated FUM into USD. Other movements principally relate to
maturities and leverage movements.
FUM includes advisory-only assets where the firm provides a model
portfolio and does not have decision making or trading authority over the
assets. FUM includes dedicated managed account platform clients for
which Man Group provides platform and risk management services but
does not act as investment manager.
Asset weighted performance versus benchmark
The asset weighted performance relative to peers for the period stated
is calculated using the daily asset weighted average performance
relative to peers for all strategies where we have identified and can
access an appropriate peer composite. The performance of our
strategies is measured net of management fees charged and, as
applicable, performance fees charged. As at 31 December 2020,
it covers 88% of the FUM of the Group and excludes infrastructure
mandates, Global Private Markets and collateralised loan obligations.
Asset weighted performance versus peers is a KPI (page 22).
Net management fee revenue and margins
Margins are an indication of the revenue margins negotiated with our
institutional and retail investors net of any distribution costs paid to
intermediaries and are a primary indicator of future revenues. Net
management fee revenue is defined as gross management fee revenue
less distribution costs, excluding any amounts related to consolidated
fund entities (Note 13.2). Net management fee margin is calculated as
net management fee revenue divided by FUM. Net management fee
revenue is shown on page 26.
Core net management fee revenue and core net revenue
Our ‘core’ metrics exclude earnings relating to legacy businesses (non-
core), in order to assist comparability in our earnings streams over time.
Core net management fee revenue excludes net management fee
revenue relating to guaranteed products in 2019, in order to better
present the management fees of the core business given the roll-off of
the legacy guaranteed product FUM. The detailed calculation of core
net management fee revenue is shown on page 26. Core net revenue
is defined as core net management fee revenue plus adjusted
performance fee revenue.
Run rate net management fee revenue and margins
In addition to the net management fee revenue and margins for the year,
as detailed above, we also use run rate net management fee revenue
and run rate margins as at the end of the year. These measures give the
most up-to-date indication of our revenue streams at the period end
date. The run rate net management fee margin is calculated as net
management fee revenue for the last quarter divided by the average
FUM for the last quarter on a fund-by-fund basis. Run rate net
management fee revenue is calculated as the run rate net management
fee margin applied to the closing FUM as at the period end.
Core and adjusted profit before tax
Core and adjusted profit before tax are measures of the Group’s
underlying profitability. The directors consider that in order to assess
underlying operating performance, the Group’s profit period on period is
most meaningful when considered on a basis which excludes
acquisition and disposal related items (including non-cash items such as
amortisation of acquired intangible assets), impairment of assets, costs
relating to substantial restructuring plans, unrealised foreign exchange
movements on lease liabilities and associated deferred tax and certain
significant event-driven gains or losses, or allocates them to the
appropriate time period, which therefore reflects the revenues and costs
that drive the Group’s cash flows and inform the base on which the
Group’s variable compensation is assessed. Movements in deferred tax
relating to the consumption/recognition of tax assets in the US are
similarly excluded from core and adjusted profit after tax in order to best
reflect cash taxes paid. The directors are consistent in their approach to
the classification of adjusting items period to period, maintaining an
appropriate symmetry between losses and gains and the reversal of any
amounts previously classified as adjusting items. Adjusted profit before
tax is defined as core profit before tax plus non-core net management
fee revenue, which relates to legacy guaranteed products in 2019. Due
to the roll-off of profits from guaranteed products in 2019, core profit
before tax and adjusted profit before tax are equivalent from 2020.
166
Man Group plc Annual Report 2020
Core and adjusted profit before tax
The reconciliation of statutory profit before tax to adjusted and core profit before tax is shown below.
$m
Statutory profit before tax
Adjusting items:
Acquisition and disposal related
Impairment of acquired intangible assets
Impairment of GPM goodwill
Amortisation of acquired intangible assets
Revaluation of contingent consideration
Unwind of contingent consideration discount
Gain on sale of investment in Nephila
Recycling of FX revaluation on liquidation of subsidiaries
Unrealised foreign exchange movements on lease liabilities and associated deferred tax
Lease surrender income relating to future periods
Impairment of investment property right-of-use lease asset
Compensation – restructuring
Other costs – restructuring (corporate reorganisation)
Adjusted profit before tax
Less non-core net management fee revenue
Core profit before tax
Note to the
Group financial
statements
Year ended
31 December
2020
Year ended
31 December
2019
179
307
10
10
10
25
6
18
18
4
5
–
55
63
(22)
2
–
(17)
6
(7)
25
–
–
284
–
284
5
–
78
(37)
18
(1)
–
10
–
–
(1)
7
386
(2)
384
Further details on adjusting items are included within the related notes to the Group financial statements.
Core and adjusted management fee and performance fee profit before tax
Adjusted profit before tax is split between adjusted management fee profit before tax and adjusted performance fee profit before tax to separate
out the underlying management fee earnings of the business from the variable performance fee related earnings. Core management fee profit before
tax is equivalent to adjusted management fee profit before tax excluding profits relating to our legacy businesses, which in 2019 related to net
management fees from our guaranteed products business (non-core net management fee revenue, which rolled-off in 2019). Core profit before tax
is equivalent to adjusted profit before tax excluding these legacy business profits and is made up of core management fee profit before tax and
adjusted performance fee profit before tax. Core profit before tax is a KPI (page 22).
$m
Core net management fee revenue1
Sub-lease rental and lease surrender income
Less:
Asset servicing
Compensation (management fee)
Other costs1
Net finance expense
Core management fee profit before tax
Non-core net management fee revenue
Adjusted management fee profit before tax
Performance fees1
Gains on investments and other financial instruments1
Less:
Compensation (performance fee)
Finance expense
Performance fee profit before tax
Core profit before tax
Adjusted profit before tax
Year ended
31 December
2020
Year ended
31 December
2019
730
18
(55)
(357)
(145)
(11)
180
–
180
179
20
(94)
(1)
104
284
284
751
14
(55)
(352)
(178)
(10)
170
2
172
325
20
(125)
(6)
214
384
386
Note:
1 Core net management fee revenue, performance fees and other costs exclude amounts for consolidated fund entities, with these reclassified to gains on investments together with the
third-party share.
Man Group plc Annual Report 2020
167
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Alternative performance measures continued
Core and adjusted tax rate
The impact of adjusting items on the Group’s tax expense is outlined below:
$m
Statutory tax expense
Less tax credit on adjusting items:
Amortisation of acquired intangible assets
Impairment of right-of-use lease asset – investment property
Unrealised foreign exchange movements on lease liabilities and associated deferred tax
Tax adjusting item on US deferred tax assets
7
Tax expense on adjusted profit before tax
Less tax expense on non-core profit before tax
Tax expense on core profit before tax
Which includes:
Tax expense on core and adjusted management fee profit before tax
Tax expense on performance fee profit before tax
Note to the
Group financial
statements
Year ended
31 December
2020
Year ended
31 December
2019
41
6
4
1
(8)
44
–
44
27
17
22
8
–
2
27
59
–
59
21
38
The core tax rate is the effective tax rate on core profit before tax and is equal to the tax on core profit divided by core profit before tax. The adjusted
tax rate is the effective tax rate on adjusted profit before tax and is equal to the tax on adjusted profit divided by adjusted profit before tax. As
outlined on page 166, core and adjusted profit before tax are measures of the Group’s underlying profitability. The tax expense on adjusted profit
before tax is calculated by excluding the tax benefit/expense related to adjusting items from the statutory tax expense, except for any tax relief
recognised as a result of available US tax assets (Note 7). Tax expense on core profit before tax is equivalent to the adjusted tax expense less tax
on non-core profit before tax at the prevailing management fee or performance fee effective tax rates.
Therefore, the tax on core and adjusted profit best reflects the cash taxes payable by the Group. The core and adjusted tax rate is 16% for 2020
(2019: 15%), which has increased due to a higher weighting of profits in the UK where the applicable statutory tax rate is 19%.
Reconciliation of adjusting items
Certain adjusting items are included within the notes to the Group financial statements, which can be reconciled to their adjusted equivalents as
outlined below:
$m
Total compensation costs
Adjusting items (page 167)
Total compensation costs excluding adjusting items
Made up of:
Fixed compensation (includes salaries and associated social security costs, and pension costs)
Variable compensation (includes variable cash compensation, share-based payment charge,
fund product-based payment charge and associated social security costs)
$m
Total other costs
Adjusting items (page 167)
Total other costs excluding adjusting items
$m
Total finance expense
Total finance income
Net finance expense, including adjusting items
Adjusting items (page 167)
Net finance expense excluding adjusting items
Note to the
Group financial
statements
Year ended
31 December
2020
Year ended
31 December
2019
4
5
6
6
451
–
451
194
257
150
–
150
16
(2)
14
(2)
12
476
1
477
193
284
189
(7)
182
42
(8)
34
(18)
16
168
Man Group plc Annual Report 2020
Core and adjusted management fee EPS
Adjusted management fee EPS is calculated using post-tax profits excluding performance fee profits and adjusting items, divided by the weighted
average diluted number of shares. Core management fee EPS adjusts this to also exclude non-core management fee revenue, which in 2019 related
to our legacy guaranteed products business.
The reconciliation from statutory EPS (Note 8) to core and adjusted EPS is provided below:
Statutory profit after tax
Adjusting items
Tax adjusting items
Adjusted profit after tax
Less non-core net management fee revenue
Core profit after tax
Less performance fee profit after tax
Core management fee profit after tax
Non-core net management fee revenue after tax
Adjusted management fee profit after tax
Compensation ratio
Year ended 31 December 2020
Year ended 31 December 2019
Basic and
diluted post-
tax earnings
$m
Basic
earnings
per share
cents
Diluted
earnings
per share
cents
Basic and
diluted post-
tax earnings
$m
Basic
earnings
per share
cents
Diluted
earnings
per share
cents
138
105
(3)
240
–
240
(87)
153
–
153
9.5
7.2
(0.2)
16.5
–
16.5
(6.0)
10.5
–
10.5
9.3
7.1
(0.2)
16.2
–
16.2
(5.9)
10.3
–
10.3
285
79
(37)
327
(2)
325
(176)
149
2
151
18.9
5.2
(2.5)
21.6
(0.1)
21.5
(11.6)
9.9
0.1
10.0
18.4
5.1
(2.4)
21.1
(0.1)
21.0
(11.3)
9.7
0.1
9.8
The compensation ratio measures our compensation costs relative to our revenue. The Group’s compensation ratio is generally between 40% and
50% of net revenue, depending on the mix and level of revenue. It is calculated as total compensation divided by net revenue. Details of the current
year compensation ratio are included on page 27.
Net financial assets/liabilities
Net financial assets/liabilities is considered a proxy for Group capital, and is equal to the Group's cash and seed book less borrowings, contingent
consideration payable and payables under repo arrangements, made up as follows:
$m
Seeding investment portfolio
Cash and cash equivalents1
Contingent consideration payable
Payables under repo arrangements
Net financial assets
Note:
1 Cash and cash equivalents excludes $62 million (2019: $61 million) of cash relating to consolidated fund entities (Note 13.2).
Note to the
Group financial
statements
31 December
2020
31 December
2019
13
12
25
15
485
289
(2)
(56)
716
514
220
(24)
(36)
674
Man Group plc Annual Report 2020
169
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
The Company is currently undertaking a share repurchase programme
pursuant to which up to a maximum of $100 million is being returned
to shareholders. Details of the number of shares repurchased during
2020 can be found in Note 20 of the financial statements.
The Group will fix the dividend currency conversion rate on 7 May 2021.
The achieved sterling rate will be announced at this time, in advance of
the payment date.
Dividend payment methods
You can choose to receive your dividend in a number of ways.
Dividends will automatically be paid to you by cheque and sent to your
registered address unless you have chosen one of the options below:
1. Direct payment to your bank: We recommend that you apply
for cash dividends to be paid directly into your UK bank or building
society account to speed up the payment process and to avoid
the risk of cheques becoming lost or delayed in the post. The
associated dividend confirmation will be sent direct to your
registered address. To switch to this method of payment simply
download a dividend mandate form from the Dividends section
of our website. Alternatively, dividend mandate forms are available
from the EQ Shareview website. If you have any queries please
contact EQ on 0371 384 21121 (+44 121 415 7592 if calling from
outside the UK), who will be able to assist.
2. Overseas payment service2: If you live overseas, EQ offers an
overseas payment service which is available in certain countries.
This may make it possible to receive dividends directly into your
bank account in your local currency. Further information can be
found on the EQ Shareview website or via the EQ helpline
0371 384 21121 (+44 121 415 7592 if calling from outside the UK).
3. Dividend Reinvestment Plan (DRIP): The Company is pleased
to offer a DRIP, which gives shareholders the opportunity to build
their shareholding in the Company in a convenient and cost
effective way. Instead of receiving your dividend in cash, you receive
as many whole shares as can be bought with your dividend, taking
into account related purchase costs; any residual cash is then
carried forward and added to your next dividend. If you wish to
join the DRIP, you can download copies of the DRIP terms and
conditions and the DRIP mandate form from the Dividends section
of the Man Group website. Simply complete the DRIP mandate
form and return it to EQ. Should you have any questions regarding
the DRIP, or to request a paper mandate form, please contact EQ
on 0371 384 21121 (+44 121 415 7592 if calling from outside the
UK). Please note that if you wish to join the DRIP in time for the
payment of the forthcoming final dividend for the year ended
31 December 2020, EQ must have received your instruction
by 5.00pm on 23 April 2021. Instructions received after this date will
be applied to the next dividend payment.
Shareholder information
In this section we have provided some key
information to assist you in managing your
shareholding in Man Group. If you have a
question that is not answered below, please
contact us at: shareholder@man.com
Man Group (www.man.com)
The Man Group website contains a wealth of information about the
Company, including details of the industry in which we operate, our
strategy and business performance, recent news from Man Group
and corporate responsibility initiatives. The Investor Relations section
is a key tool for shareholders with information on share price and
financial results, reports and presentations. This section of the website
also contains information on dividends and shareholder meeting
details as well as useful Frequently Asked Questions.
EQ Shareview (www.shareview.co.uk/shareholders)
Man Group’s register of shareholders is maintained by EQ, the
Company’s Registrars. Many aspects of managing your shares,
such as checking your current shareholding, managing dividend
payments, and updating your contact details, can be carried out
by registering on the EQ Shareview website. To do this you will need
your Shareholder Reference, which can be found on your share
certificate or dividend confirmation.
Dividends
Final dividend for the year ended 31 December 2020
5.7 cents per share
The directors have recommended a final dividend of 5.7 cents per
share in respect of the year ended 31 December 2020. Payment of this
dividend is subject to approval at the 2021 Annual General Meeting
(AGM). Key dates relating to this dividend are given below:
Ex-dividend date
Record date
DRIP election date
AGM (to approve final dividend)
Sterling conversion date
Payment date
CREST accounts credited with DRIP shares
DRIP share certificates received
8 April 2021
9 April 2021
23 April 2021
7 May 2021
7 May 2021
21 May 2021
26 May 2021
27 May 2021
Dividend policy
The Board has approved a change to the Company’s dividend policy.
As a result, the following dividend policy has been applied to the final
dividend for the year ended 31 December 2020 and will apply to all
future dividends.
Man Group’s ordinary dividend policy will be progressive, taking into
account the growth in Man Group’s overall earnings. In addition, the
Group expects to generate significant capital over time. It is the
Board’s intention that available capital, after taking into account our
required capital and potential strategic opportunities, will be distributed
to shareholders over time through higher dividend payments and/or
share repurchases.
1 Lines are open from 8.30am to 5.30pm, each business day.
2 Please note that a payment charge will be deducted from each individual payment before
conversion to your local currency.
170
Man Group plc Annual Report 2020
Dividend history
To help shareholders with their tax affairs, details of dividends paid in the 2020/21 tax year can be found below. Please note that the dividend
amounts are declared in US dollars but paid in sterling. For ease of reference the sterling dividend amounts have been detailed in the table.
For details of historical payments, please refer to the Dividends section of our website, which can be found under Investor Relations.
Dividends paid in the 2020/21 tax year
Interim dividend for the year ended 31 Dec 2020
Final dividend for the year ended 31 Dec 2019
Dividend
no
0/27
0/26
Payment
date
2/9/20
15/5/20
Amount per
share
(p)
3.7
4.1
Ex-dividend
date
6/8/20
2/4/20
Record
date
7/8/20
3/4/20
DRIP share
price
(p)
122.6328
134.985
DRIP
purchase
date
2/9/20
19/5/20
Shareholder communications
Annual and Interim Reports
Man Group publishes an Annual and Interim Report every year.
The Annual Report is published on the website and is sent to
shareholders through the post if they have requested to receive a copy.
The Interim Report is published on the website in early August and
printed copies are available on request from the Company Secretary.
How your details are protected from cybercrime
Man Group takes the protection of its shareholders’ personal
data from the ever-increasing threat of cybercrime very seriously.
Shareholder details are maintained by EQ, our Registrars, who
safeguard this information to the highest standards. EQ’s security
measures include multiple levels of firewall, no wireless access to the
corporate network, and regular external vulnerability scans and system
penetration tests.
E-communications
You can help Man Group to reduce its printing and postage costs as
well as its carbon footprint by signing up to receive communications
electronically rather than receiving printed documents such as
Annual Reports and Notices of AGMs in the post. To sign up for
e-communications, simply register on the EQ Shareview website.
You will need your Shareholder Reference, which can be found on
your share certificate or dividend confirmation or proxy card, in order
to register. Once registered, you will need to change your mailing
preference to e-communications and provide your email address.
You will then receive an email each time a shareholder communication
or document becomes available on the Man Group website.
Managing your shareholding
Online, by post, or by phone
Many aspects of your shareholding can be managed by registering on
the EQ Shareview website. For enquiries about your shareholding you
can also contact EQ in writing at EQ, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA, or by telephone on 0371 384 2112
(+44 121 415 7592 if calling from outside the UK), quoting Ref No 874.
Please quote your Shareholder Reference when contacting EQ.
Share dealing service
EQ provides a share dealing facility through which you can buy or sell
Man Group plc shares in the UK. The service is provided by Equiniti
Financial Services Limited and can be accessed via the dealing
section of the EQ Shareview website (www.shareview.co.uk/dealing).
To use EQ’s telephone dealing service, please call 03456 037 037
between 8.00am and 4.30pm Monday to Friday. You can also buy
and sell shares through any authorised stockbroker or bank that
offers a share dealing service in the UK, or in your country of
residence if outside the UK.
Be a ScamSmart investor – avoid investment and
pension scams
Even seasoned investors have been caught out by sophisticated share
or investment scams where smooth-talking fraudsters cold call from
‘boiler rooms’ to offer them worthless, overpriced or even non-existent
shares, or to buy shares they currently hold at a price higher than
the market value. All shareholders are advised to be extremely wary
of any unsolicited advice, offers to buy shares at a discount, or offers
of free reports about the Company. The Financial Conduct Authority
(FCA) provides helpful information about such scams on its website,
including practical tips on how to protect your savings and how
to report a suspected investment scam. Man encourages its
shareholders to read the information on the site which can be
accessed at www.fca.org.uk/scamsmart. You can also call the
FCA Consumer Helpline on 0800 111 6768.
Company contact details
Registered office
Man Group plc
22 Grenville Street
St Helier
Jersey JE4 8PX
Telephone: +44 (0) 20 7144 1000
Website: www.man.com
Registered in Jersey with registered no: 127570
London office
Riverbank House
2 Swan Lane
London EC4R 3AD
United Kingdom
Telephone: +44 (0) 20 7144 1000
Investor relations
investor@man.com
Head of Investor Relations – Alex Dee
Company secretariat
shareholder@man.com
Company Secretary – Elizabeth Woods
Company advisers
Independent auditor
Deloitte LLP
Corporate brokers
Credit Suisse
J.P. Morgan Cazenove
Corporate communications
Finsbury
Registrars
EQ
This Annual Report has been prepared for, and only for, the members of the Company, as a body,
and no other persons. The Company, its directors, employees, agents or advisers do not accept
or assume responsibility to any other person to whom this document is shown or into whose
hands it may come and any such responsibility or liability is expressly disclaimed. By their nature,
the statements concerning the risks and uncertainties facing the Group in this Annual Report
involve uncertainty since future events and circumstances can cause results and developments to
differ materially from those anticipated. The forward-looking statements reflect knowledge and
information available at the date of preparation of this Annual Report and the Company undertakes
no obligation to update these forward-looking statements. Nothing in this Annual Report should be
construed as a profit forecast.
Man Group plc Annual Report 2020
171
Shareholder information Employee benefit trust
An employee benefit trust is a type of discretionary
trust established to hold cash or other assets for
the benefit of employees, such as satisfying share
awards, with a view to facilitating the attraction,
retention and motivation of employees
Quantitative or quant
Quantitative strategies use computer models to
make trading decisions. A quant is a person who
specialises in the application of mathematical and
statistical methods to financial and risk
management problems
Employee Trust
The Employee Trust is the employee benefit trust
operated by Man Group
Revolving credit facility
A line of credit, to an agreed limit, that businesses
can access at any time when needed
Glossary
Absolute performance
Percentage rise/fall in the value of the fund over
the stated period
Absolute return
Alternative strategies where clients expect the
strategy may have net long, short or neutral
exposure to asset classes, and that may make use
of leverage to achieve those exposures. This
includes trend following and discretionary long/
short strategies
Actively managed
The management of assets based on active
decision making as opposed to aiming to replicate
an index
AGM
Annual General Meeting
Alpha
Excess return over beta relative to a market
benchmark, or a measure of the ‘value add’ by an
investment manager
Alternative
An alternative investment is an asset that is not
one of the conventional investment types, such as
stocks, bonds and cash
ARCom
Audit and Risk Committee
Basis point (bp)
One one-hundredth of a percentage point (0.01%)
Benchmark
A standard against which the performance of a
security, mutual fund or investment manager can
be measured, generally broad market and
market-segment stock and bond indexes are used
for this purpose
Beta
Market returns
Brexit
A blend of the words ‘British’ and ‘exit’ which
refers to the United Kingdom’s withdrawal from
the European Union
Carbon dioxide equivalent (CO2e)
A standard unit for measuring carbon footprints. It
enables the impact of our different greenhouse
gas emissions on global warming to be expressed
using an equivalent amount of carbon dioxide
(CO2) as reference
Cash costs
Costs excluding depreciation and amortisation
ESG
Environmental, Social and Governance
Executive Committee
Committee of executives considered to be the
firm’s key management, who have authority and
responsibility for planning, directing and controlling
activities at Man Group
External Audit
An external auditor performs an audit, in
accordance with specific laws or rules, of the
financial statements of an organisation and is
independent of the entity being audited
FCA
Financial Conduct Authority
FRC
Financial Reporting Council
Funds under management (FUM)
Calculated as the sum of the absolute value of all
assets of all funds managed by the firm. This
includes funds where the firm has delegated the
management function but excludes funds that it is
managing as a delegate
GDPR
The General Data Protection Regulation
HMRC
Her Majesty’s Revenue and Customs
ICAAP
Internal Capital Adequacy and Assessment
Process
IFRS
International Financial Reporting Standards
Internal Audit
Provide independent assurance that an
organisation’s risk management, governance and
internal control processes are operating effectively
Investment returns
The increase in FUM attributable to investment
performance, market movements and foreign
exchange
CLO
Collateralised loan obligations are a security backed
by a pool of debt, often rated corporate loans
KPI
Key Performance Indicator
Long-only
Long-only refers to a policy of only holding ‘long’
positions in assets and securities
Machine learning
A process in which a range of applied algorithms
recognise patterns and relationships within
observed data
MiFID II
The second iteration of the Markets in Financial
Instruments Directive
Multi-manager solutions
Multi-manager solutions includes traditional fund
of fund and infrastructure and segregated
mandates
Net Asset Value (NAV)
Net Asset Value (NAV) is the sum total of the
market value of all the shares held in the portfolio
including cash, less the liabilities, divided by the
total number of units outstanding
Passive products
Products which are intended to replicate an index
D&I
Diversity and Inclusion
Defined benefit (DB) pension scheme
A pension benefit where the employer has an
obligation to provide participating employees with
pension payments that represent a specified
percentage of their salary for each year of service
Defined contribution (DC) pension scheme
A pension benefit where the employer’s
contribution to an employee’s pension is
measured as, and limited to, a specified amount,
usually a percentage of salary
Discretionary
Discretionary investment management is a form of
investment management in which buy and sell
decisions are made by a portfolio manager. The
term ‘discretionary’ refers to the fact that
investment decisions are made at the portfolio
manager’s discretion
Drive
Drive is our global internal diversity and inclusion
network which is designed to inform, support and
inspire our people. The network’s mission is to
advance Man Group’s efforts in promoting and
valuing diversity and inclusion throughout the firm
172
Man Group plc Annual Report 2020
Sale and repurchase agreement
A sale and repurchase agreement (repo) is a
short-term borrowing arrangement under which
Man Group sells certain of its fund product
investments to a third party, with a commitment to
repurchase them on a prearranged future date for
consideration of the sale proceeds received plus
interest
Scope 1, 2 and 3 emissions
The GHG Protocol Corporate Standard classifies
a company’s greenhouse gas emissions into three
‘scopes’. Scope 1 emissions are direct emissions
from owned or controlled sources. Scope 2
emissions are indirect emissions from the
generation of purchased energy including
electricity, steam, heating and cooling. Scope 3
emissions include all other indirect emissions that
occur within a company’s value chain.
Seed capital
Seed capital comprises initial investment put into a
fund by the business to allow it to develop a
performance track record before it is marketed to
potential clients
Senior Executive Committee (Senior ExCo)
Committee of executives within Man Group that
work together to advise the CEO and are in charge
of specific aspects of the Group
SMCR
Senior Managers Certification Regime. New FCA
regulation which aims to strengthen market
integrity by making senior individuals more
accountable for their conduct and competence
Systematic
Systematic investment managers attempt to
remove the behavioural component of investing by
using computer algorithms to make investment
decisions
TCFD
Task Force on Climate-related Financial
Disclosures
Total return
Alternative strategies where clients expect the
strategy to have some positive exposure to
particular risk factors over the course of a market
cycle although the level of exposure may vary over
time. This includes GLG Global Emerging Markets
Debt Total Return, Man GPM, risk premia, and
CLO strategies
Total return swap (TRS)
A total return swap is a swap agreement in which
Man Group receives the return on an underlying
fund investment in exchange for an interest
payment on the notional investment
Trade execution
The completion of a buy or sell order on a security
in the market
UN PRI
The United Nations-supported Principles for
Responsible Investment initiative is an international
network of investors working together to
implement the six Principles for Responsible
Investment. Its goal is to understand the
implications of sustainability for investors and
support signatories to incorporate these issues
into their investment decision- making and
ownership practices
M
a
n
G
r
o
u
p
p
l
c
A
n
n
u
a
l
R
e
p
o
r
t
2
0
2
0
Man Group plc
Riverbank House
2 Swan Lane
London EC4R 3AD
man.com