Remuneration Policy

Hermes Fund Managers Ireland Limited

1. Introduction

The Company is authorised to carry out the functions of an AIFM pursuant to the AIFMD Regulations and UCITS management company pursuant to the UCITS Regulations. These functions include investment management (portfolio management and risk management), administration services and marketing. In addition, the Company is authorised to provide individual portfolio management (“IPM”) services pursuant to the AIFMD Regulations.

The Company is obliged to establish, implement and maintain a remuneration policy (the “Remuneration Policy”) which is in accordance with the requirements of Annex II of the AIFMD and Articles 14a and 14b of the UCITS Directive as well as the relevant remuneration requirements under MiFID II, together with any related ESMA Guidelines.

This Remuneration Policy is aimed at ensuring that any relevant conflicts of interest can be managed appropriately at all times and sets out practices for those categories of staff, including senior management, risk takers, control functions, and any employees receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on the risk profile of the Company or of the Products which it manages for clients, that are consistent with and promote sound and effective risk management and do not encourage risk-taking which is inconsistent with the risk profiles of the Company and those Products.

This Remuneration Policy is in line with the business strategy, objectives, values and interests of the Company, the Products which it manages and the investors in those Products and includes measures to avoid conflicts of interest by ensuring appropriate membership of the Company’s Remuneration Committee and compliance with the ESMA Guidelines.

Pursuant to the proportionality principle, the Company will comply with the ESMA Guidelines (as defined below) in a way and to an extent that is appropriate to its size, internal organisation and the nature, scope and complexity of its activities. The Company will adhere to the principles of proportionality in applying the provisions of the Remuneration Policy.

2. Definitions

“AIF”
Means an alternative investment fund as defined in the AIFMD.
“AIFM”
Means an alternative investment fund manager, as defined in the AIFMD.
“AIFMD”
Means the Alternative Investment Fund Managers Directive (2011/61/EU).
“AIFMD Regulations”
Means the European Union (Alternative Investment Fund Managers) Regulations 2013, as may be amended or replaced from time to time.
“Board”
Means the board of directors of the Company.
“Business Plan”
Means the business plan of the Company which sets out the manner in which the Company will conduct its business as an AIFM and UCITS Management Company in accordance with applicable law, and as may be amended or updated from time to time.
“Code Staff”
Code Staff may be employed by or considered staff of other entities, including other entities within the FHL group of companies.
Code Staff can be interpreted to mean:
(i) members of the governing body (Board);
(ii) senior management;
(iii) staff responsible for risk management and compliance functions; and
(iv) staff members whose professional activities can exert material influence on the risk profile of the Company.
“Company”
Means Hermes Fund Managers Ireland Limited.
“ESMA Guidelines”
Means the ESMA Guidelines on sound remuneration policies under the AIFMD (ESMA/2013/232) and the UCITS Directive (ESMA/2016/575), as relevant.
“FGIM”
Means Federated Global Investment Management Corp., an investment manager of one or more of the Funds or their sub-funds.
“FHL”
Means Federated Hermes Limited.
“FIC”
Means Federated Investment Counseling, an investment manager of one or more of the Funds or their sub-funds.
“Funds”
Means the Funds set out in Appendix 1 hereto (and each is a “Fund”).
“FHL Group”
Means FHL and its subsidiary undertakings, including the Company and HIML.
“HGPE”
Means Hermes GPE LLP, an investment manager of one or more of the Funds or their sub-funds.
“HIML”
Means Hermes Investment Management Limited, an investment manager of one or more of the Funds or their sub-funds.
“Products”
Means the products managed by the Company on behalf of clients and which includes the Funds and any segregated portfolios or other mandates which may be managed by the Company from time to time on behalf of individual clients.
“UCITS”
Means an “Undertaking for Collective Investment in Transferable Securities”.
“UCITS Directive”
Means Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities, as amended
“UCITS Regulations”
Means the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, as may be amended or replaced from time to time.

3. Federated Hermes Limited Group Remuneration Policy

The Company forms part of the FHL Group.  It is intended that the Company will apply the FHL Group Remuneration Policy subject to the specific amendments outlined in Appendix 2.

4. Identified/Code staff

The AIFMD Regulations and the UCITS Regulations require the Company to identify the categories of staff whose professional activities have a material impact on the risk profiles of the Company or the Funds which it manages. The identified staff for the Company will be identified in accordance with the FHL Group Remuneration Policy which will have regard to staff who may have a material impact on the risk profile of any Product managed by the Company or the Company.

5. Remuneration Committee

The AIFMD Regulations and the UCITS Regulations require AIFMs or UCITS Management Companies that are significant in terms of their size or the size of the Funds they manage, their internal organisation and the nature, scope and complexity of their activities to establish a remuneration committee.

Whilst the Company considers that it is not required to establish a remuneration committee based on these criteria, the Company has determined to establish a remuneration committee (the “Remuneration Committee”). Membership of the Remuneration Committee is comprised of non-Executive Director(s) and/or FHL Group representatives who are appointed from time to time. The Remuneration Committee and the Board agree the broad policy and framework for the remuneration of Code Staff.

6. Alignment with our approach to sustainability

Our philosophy is to reward individual contribution, as demonstrated by the delivery of long-term sustainable results that are aligned with our business strategy, values, behaviours and which serve the best interests of our clients and shareholders while enabling the business to grow to its potential. These values are reflected in the Federated Hermes Pledge. Our reward strategy principles reinforce this approach, including linking remuneration to the values of the Company and to demonstration of corporate behaviours alongside investment, business and personal performance. Our focus on long term awards encourages employees to create a sustainable business, discouraging excessive or concentrated risk taking and avoids conflicts of interest.

7. Delegation

The Board has delegated certain activities, as specified in its Business Plan, in respect of the portfolio management and risk management of one or more of the Funds which it manages, to HIML, HGPE, FIC and/or FGIM. In those circumstances the ESMA Guidelines require the Company to be satisfied that HIML/HGPE/FIC/FGIM are:

  • subject to regulatory requirements on remuneration that are equally as effective as those applicable under the AIFMD or UCITS Directive, as relevant; or
  • appropriate contractual arrangements are put in place with the investment manager in order to ensure that there is no circumvention of the remuneration rules set out in the ESMA Guidelines. These contractual arrangements should cover any payments made to the investment manager’s identified staff as compensation for the performance of investment management activities on behalf of the Funds.

HIML

HIML is part of the FHL Group and has adopted the FHL Group Remuneration Policy.  The regulatory requirements on remuneration applicable to HIML include the MIFIDPRU remuneration code issued by the Financial Conduct Authority in the UK.  The Company is satisfied that HIML is subject to remuneration requirements which are equally as effective as the AIFMD and UCITS remuneration requirements.

HGPE

HGPE is part of the FHL Group and subject to the HGPE Remuneration Policy.  The regulatory requirements on remuneration applicable to HGPE include the AIFM remuneration code and MIFIDPRU remuneration code issued by the Financial Conduct Authority in the UK.  The Company is satisfied that HGPE is subject to remuneration requirements which are equivalent to the AIFMD and UCITS remuneration requirements.

FIC

The investment management agreement entered into by the Company and FIC includes a contractual obligation that FIC shall ensure its remuneration arrangements for personnel involved in the provision of services to a Fund pursuant to that agreement who are “identified staff (as defined in the ESMA Guidelines) shall not circumvent the principles and rules relating to remuneration under the UCITS Regulations and the ESMA Guidelines. FIC shall also ensure that appropriate contractual provisions with regard to remuneration are put in place with any appointed delegate performing investment management functions in relation to a Fund in accordance with the ESMA Guidelines.

FIC is required to provide a confirmation on an annual basis (or as otherwise reasonably required by the Company) that the statement above was accurate during relevant Period.

FGIM

The investment management agreement entered into by the Company and FGIM includes a contractual obligation that FGIM shall ensure its remuneration arrangements for personnel involved in the provision of services to a Fund pursuant to that agreement who are “identified staff (as defined in the ESMA Guidelines) shall not circumvent the principles and rules relating to remuneration under the UCITS Regulations and the ESMA Guidelines. FGIM shall also ensure that appropriate contractual provisions with regard to remuneration are put in place with any appointed delegate performing investment management functions in relation to a Fund in accordance with the ESMA Guidelines.

FGIM is required to provide a confirmation on an annual basis (or as otherwise reasonably required by the Company) that the statement above was accurate during relevant Period.

8. Annual review

On an annual basis the Board will review the terms of this Remuneration Policy and assess whether its overall remuneration system operates as intended and is compliant with the obligations on remuneration policy as set out in the AIFMD and the UCITS Directive. The Remuneration Policy will be updated by the Board as and when required.

9. Disclosure

The Company will make such disclosure concerning remuneration as may be required by law or regulation, including to the Central Bank of Ireland (or its successor) through public disclosures on the firm’s website and in the financial reports of the Company and / or the Funds.

10. Effective date

This Policy is to be effective from 7 December 2023.

Appendix I

List of Funds
  1. Federated Hermes Investment Funds plc and any sub-funds thereof
  2. Federated Hermes Direct Lending Master Fund SCS, SICAV-SIF
  3. Federated Hermes European Direct Lending Master Fund SCS, SICAV-SIF
  4. Federated Hermes European Direct Lending Fund II Master SCA, SICAV-RAIF
  5. Federated Hermes Alternative Funds ICAV and any sub-funds thereof
  6. Federated Hermes International Funds Plc and any sub-funds thereof
  7. Federated Unit Trust and any sub funds thereof
  8. Federated Hermes European Real Estate Debt Master Fund SCA, SICAV-RAIF
  9. Hermes GPE PEC V Europe SCSp
  10. Federated Hermes GPE Innovation Fund II (Direct) SCSp
  11. Federated Hermes GPE Innovation Fund II (Funds) SCSp

Appendix II

Amendments to the FHL Group remuneration policy in respect of the company

The FHL Group Remuneration Policy shall be deemed to have been adopted by the Company subject to the following amendments insofar as it relates to the Company.

  1. The following paragraph is inserted as the final paragraph under the heading “Purpose”.

“To the extent that this Policy extends to Hermes Fund Managers Ireland Limited (“HFM Ireland”) and its Code Staff, we confirm that we also believe this Policy to be consistent with requirements of  the ESMA Guidelines on sound remuneration policies under the AIFMD (ESMA/2013/232) (the “ESMA AIFMD Guidelines”) and the ESMA Guidelines on sound remuneration policies under the UCITS Directive (ESMA/2016/575) (the “ESMA UCITS Guidelines” and together with the ESMA AIFMD Guidelines, the “ESMA Guidelines”), as relevant. In the context of HFM Ireland any reference hereunder to the “Code” shall be deemed to include the ESMA Guidelines.”

  1. The following paragraph is inserted as the final paragraph under the heading “Governance

“For the avoidance of doubt, in relation to HFM Ireland, the RAC shall not be constituted as a committee of the board of HFM Ireland. HFM Ireland has established its own Remuneration Committee. The RAC may support the Remuneration Committee and Board of HFM Ireland in relation to remuneration matters.  References in the Policy to the role and functions of the RAC shall be capable of referring to the RAC and/or the HFM Ireland Remuneration Committee as the context admits.”

  1. The following paragraph is inserted as the penultimate paragraph under the heading “Material Risk Takers and Code Staff”.

“To the extent that the HFM Ireland Remuneration Committee identifies Code Staff, it shall update the board of HFM Ireland accordingly. The Head of Compliance of HFM Ireland shall maintain a record of all Code Staff of HFM Ireland. The board of HFM Ireland retains the authority to review or amend any determination or recommendation of the HFM Ireland Remuneration Committee (subject to any directors of the board of HFM Ireland who are Code Staff complying with relevant conflicts of interest requirements).”