ALTORFER FINANCIAL MANAGEMENT LIMITED
Prior to 1st January 2022 AFM adhered to SYSC 19C: BIPRU Remuneration Code.
From 1st January 2022 the rules governing our Remuneration Policy can be located in SYSC 19G: MIFIDPRU Remuneration code, and SYSC 19F which covers the requirements relating to remuneration of sales staff and advisers. The policy below explains how we comply with these rules.
As a small Non-Interconnected investment firm (SNI) we are subject to the ‘basic remuneration requirements’ only.
MIFIDPRU Remuneration Code: Basic remuneration requirements
Our remuneration policy is:
- Simple, reflecting the relatively small size of the company, and simple internal organisational structure – the same benefits are paid to all staff, no matter what their role, though in line with regulation an NED is not entitled to bonuses or a pension contribution. As predominantly investment managers, our remuneration policy promotes retaining long-term relationships with clients providing them with independent advice, and maintaining and fostering client funds. Our remuneration structure is made up of the following:
- (fixed remuneration) A fixed salary, based on the role/s undertaken. This makes up the majority of every employee’s total earnings, and is designed to be sufficient without the addition of any variable remuneration. Entitlement to salary increases is assessed through performance of the individual’s role as assessed through KPIs, environmental factors such as the cost of living, and the financial resources of the company.
- (variable remuneration) A company-wide bonus scheme, based on funds under management. This pays the same percentage of salary to all staff (except NEDs). The targets and rate of bonus is set annually by the Remuneration Committee, and is only paid when/if targets are met.
- (3% of salaries is fixed remuneration, with 5% variable remuneration) Employer pension contributions of either 3% paid to the NEST Scheme, or a non-guaranteed 8% paid to an alternative Transact PPP, available at the same rate for all staff. Currently, our NED does not receive any pension contributions, and any future NED would not be entitled to variable remuneration.
- (variable remuneration) FCA guidelines require dividends paid to employees to be classed as variable remuneration, so they are listed here. Employees who have been with the company for at least three years may be able to purchase B ordinary shares in the company, if some become available by an existing member leaving Altorfer. AFM is a private limited company, and the B shares are non-transferrable and forfeit when employment ceases. They can only be held by serving employees. Occasionally, management will issue share options via a Share Option Scheme, but entitlement to this is not guaranteed. When options and/or shares are issued the senior management will assess and decide their allocation based on role and length of service. It is anticipated that little, if any, capital gain is created by the ownership of these shares. However, the board aims to pay 70% of annual post tax profits, after allowing for the safe management of the company, as a dividend.
- As evidenced above, the policy is gender‑neutral, and also does not discriminate on the grounds of any of the protected characteristics (age, disability, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, sexual orientation). This includes when assessing performance for the purpose of awarding variable remuneration.
- Consistent with, and promotes, sound and effective risk management, by applying a fixed salary to all staff including sales staff, rewarding all for looking after and retaining our clients and their investments, by taking management accounts into consideration in setting the annual targets and bonus rates, and taking into account the role undertaken when allocating shares and/or share options, by allocating shares only to those who have shown commitment to the company through service over three years in length, and by collecting and regularly assessing a number of financial and non-financial qualitative KPI, and regular training of staff.
- These same factors support the fact that our policy is in line with the firm’s long-term business strategy and objectives, to remain trading ad infinitum, and to either maintain our size, or have an organic level of growth. Our business model is therefore based on maintaining our long-term relationships with clients, and as such we consider the long-term effects of investment decisions taken.
- Contain measures to avoid conflicts of interest, encourage responsible business conduct, and promote risk awareness and prudent risk‑taking. These are monitored through the collection and regular assessment of Key Performance Indicators including, but not limited to file checks, observed meetings, the method of holding meetings, CPD and increased qualifications, suitability assessments, lost and gained client numbers, dealing errors, as well as other precautions such as ensuring the remuneration of senior staff in risk management and compliance is directly overseen by the Remuneration Committee.
Governance and oversight
- The management body adopts and has responsibility for overseeing the implementation of the remuneration policy. The Managing Director is also the Finance Director, who together with the NED Chairman form the Remuneration Committee. Together they decide remuneration matters, and decisions made are reported to the board at quarterly board meetings. The Compliance Director is responsible for the periodic review of the policy, ensuring the Remuneration Committee has the information it needs to remain in line with legislation.
- Due to the small size of the company it is necessary for senior management to hold more than one role, as follows:
- Roger Taylor: NED, Chair of Board, Chair of Remuneration Committee.
- Daniel Wackett: Managing Director, Finance Director, Investment Adviser (including PTS), Lead Investment Manager, Chair of Investment Committee, Supervisor, Deputy Compliance Officer.
- Helen Wake: Compliance Director (including Compliance Oversight, MLRO, Supervisor), Company Secretary.
- Louisa Bracey: HR Director, IT Director, Head Paraplanner, Investment Manager, Supervisor.
- It is therefore not entirely possible to ensure staff with control functions are independent from the business units they oversee. However, as much independence as possible is achieved, for example, by ensuring Daniel is unable to give compliance approval for his own work (except in extremis), that Daniel and Helen are each-other’s supervisors, that Helen is unable to sign her own dividend vouchers or Certification Regime certificate, that there are least two DFMs (AKA Investment Managers).
- Due to the size of the company one set of remuneration parameters covers all employees, including senior management. Each employee’s performance in relation to their individual roles (including senior managers), as assessed through ongoing observation and regular one-to-one review meetings, is taken into account when deciding on salary rises.
- Remuneration of senior staff in risk management and compliance functions is directly overseen by the Remuneration Committee.
Fixed and variable remuneration
- Fixed remuneration is permanent, pre‑determined, non‑discretionary, non‑revocable, and not dependent on performance.
- Variable remuneration is based on performance. It includes discretionary pension benefits.
- As can be seen above, the criteria applied to determine each of the fixed and variable remunerations is dependent on different factors.
- We believe that it is in the company’s and our clients best long-term interests to ensure that the majority of every employee’s salary is made up of fixed remuneration, thus rewarding looking after clients, rather than promoting sales.
- When assessing individual performance, both financial and non‑financial criteria are considered through the collection and assessment of KPI. This ensures quality is assessed and rewarded.
Restrictions on variable remuneration
- Variable remuneration does not, and will not be allowed, to affect the firm’s ability to ensure a sound capital base, as it is not awarded, paid out, or allowed to vest if doing so would endanger this.
- Altorfer has not and does not intend to benefit from extraordinary public financial support. If we did so, our remuneration policy would need to be reviewed and altered, to ensure no variable remuneration is paid to members of the management body.
- Under the Remuneration Code conflicts of interest are to be avoided by ensuring that no NED is awarded variable remuneration, to ensure they remain independent. This is enforced as far as possible, though an exception is made regarding Roger Taylor’s share ownership. This is because Roger founded the company in 1990 and as such previously owned 100% of its’ share capital. In order to secure the longevity of the company beyond his tenure as an executive, Roger transferred the majority of his shareholding to employees before becoming the NED. Roger is the only person to hold A ordinary shares, which are retained beyond employment and are transferrable. Whilst RT remains the largest shareholder, he restricts his influence by ensuring he does not retain a simple majority.