Solutions

Alternative Investment Funds (AIFs) remuneration policies

Our experience in implementing new regulatory provisions on remuneration policies enable us to provide our clients with tailor-made solutions in implementing the forthcoming AIFMD guidelines as regards governance, risk management, human resources while ensuring tax efficiency.

Your remuneration policy challenge

The AIFMD framework introduces stringent requirements to ensure that the remuneration policies and practices of AIFMs are consistent and promote sound and effective risk management.

The concept of remuneration shall be understood in its broadest meaning. Carried interest schemes also fall into the scope of the requirements.

The AIFMD requires the AIF to establish a remuneration policy:

  • Promoting sound and effective risk management ;
  • With a clearly-defined governance framework;
  • That is transparent, notably with regard to performance measurement and reward criteria;
  • Reflecting the AIFM nature, scale, business objectives and complexity;
  • Preventing risk taking in excess of the risk profiles, fund rules, etc. of the AIF;
  • That is applicable to senior management, material risk takers, control functions and any employee deriving a total remuneration package that takes him/her into the same remuneration bracket as senior management and risk takers;
  • Providing, under certain circumstances, for: 

◦ A deferral of 40% to 60% of the variable remuneration over a minimum vesting period of 3 years, and

◦ The payment of at least 50% of the variable remuneration in the form of units or shares of the AIF

The AIFMD further provides for disclosure of remuneration information in the annual report of the AIF. The minimum information to be disclosed is:

  • The total amount of remuneration for the financial year (split into fixed and variable remuneration)
  • The number of beneficiaries
  • Carried interest payments, and
  • The aggregate amount of remuneration broken down by senior management and staff members having a material impact on the risk profile of the AIF
AIFs remuneration policies

Our AIFs remuneration policy services

Our services can be articulated over four dimensions:

  • Aligning the AIFM’s remuneration policy with its business objectives and risk culture
  • Reviewing and adapting , respectively, designing the AIFM’s remuneration governance and process
  • Reviewing and adapting, respectively, defining the AIFM’s remuneration policy (including HR and tax optimisation aspects)
  • Supporting the overall implementation/execution of the remuneration governance process

Contact

Basil Sommerfeld

Basil Sommerfeld

Partner | Operations & Human Capital Leader

Basil is a partner within the advisory and consulting department and is specialised in the financial services industry, providing consulting and advisory services to clients in retail and private bank... More