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, 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 (“Products”), 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 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 by the policy 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.
The following definitions are deemed to apply for the purposes of this Policy:
Hermes GroupMeans Hermes and its subsidiary undertakings, including the Company and HIML.UCITS RegulationsMeans the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, as may be amended or replaced from time to time.
UCITSMeans an “Undertaking for Collective Investment in Transferable Securities”.
UCITS DirectiveMeans 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.
||Means the board of directors of the Company.
||Means an alternative investment fund as defined in the AIFMD.
||Means an alternative investment fund manager, as defined in the AIFMD.
||Means the Alternative Investment Fund Managers Directive (2011/61/EU).
||Means the European Union (Alternative Investment Fund Managers) Regulations 2013, as may be amended or replaced from time to time.
||Means the board of directors of the Company.
||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 may be employed by or considered staff of other entities, including other entities within the Hermes 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.
||Means the ESMA Guidelines on sound remuneration policies under the AIFMD (ESMA/2013/232) and the UCITS Directive (ESMA/2016/575), as relevant.
||Means the Funds set out in Appendix 1 hereto (and each is a “Fund”).
||Means Hermes Fund Managers Limited.
||Means Hermes Investment Management Limited, the investment manager of the Funds.
||Means the products managed by the Company on behalf of clients and which will 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.
3. Hermes Group Remuneration Policy
The Company forms part of the Hermes Group. It is intended that the Company will apply the Hermes Group Remuneration Policy subject to the specific amendments outlined in Appendix 2.4.
4. Identified / Code staff
The AIF 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 Hermes 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.
5. Remuneration committee
The AIF 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.
Having considered these criteria, the Company has determined to establish a remuneration committee. Membership of the Remuneration Committee is comprised by the Chairman of the Company, and other non-Executive Director(s) or Hermes 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.
The Board has delegated certain activities, as specified in its Business Plan, in respect of the portfolio management and risk management of the Funds which it manages, to HIML. In those circumstances the ESMA Guidelines require the Company to be satisfied that HIML is subject to regulatory requirements on remuneration that are equally as effective as those applicable under the AIFMD or UCITS Directive, as relevant. HIML is part of the Hermes Group and subject to the Hermes Group Remuneration Policy. The Company is satisfied, on advice of counsel, that HIML is subject to remuneration requirements which are equivalent to the AIFMD and UCITS remuneration requirements.
7. 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.
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.
9. Effective date
The effective date of this Policy is 1 February 2019.
Hermes Investment Funds plc and any sub-funds thereof.
AMENDMENTS TO THE HERMES GROUP REMUNERATION POLICY IN RESPECT OF THE COMPANY
The Hermes Group Remuneration Policy shall be deemed to adopted by the Company subject to the following amendments insofar as it relates to the Company.
- The following paragraph is inserted as the final paragraph under the heading “Purpose”. “To the extent that this policy extends to Hermes Fund Management 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.”
- The following paragraph is inserted as the final paragraph under the heading “Governance”. “For the avoidance of doubt, RemCo shall not be constituted as a committee of the board of HFM Ireland which shall establish its own Remuneration Committee. References to the role and functions of RemCo shall otherwise apply equally to the HFM Ireland Remuneration Committee as the context admits.”
- The following paragraph is inserted as the final paragraph under the heading “Code Staff”. “To the extent that the HFM Ireland Remuneration Committee identifies Code Staff within HFM Ireland, it shall update the board of HFM Ireland accordingly. The Head of Compliance of HFM Ireland shall maintain a record of all Code Staff. 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).”
- The following paragraph is inserted as the final paragraph under the heading “Personal Investment Strategies and Avoidance of SYSC 19”. “In the context of HFM Ireland, the reference to SYSC 19 above shall be deemed to be a reference to Section XI.IV of the ESMA AIFMD Guidelines and to Section 12.4 of the ESMA UCITS Guidelines respectively.”
HERMES GROUP REMUNERATION POLICY
HFML Remuneration Policy