Aurum Funds Limited Remuneration Policy
Dated as of 29 March 2022
Aurum Funds Limited (the “Company”) is authorised and regulated by the Financial Conduct Authority (the “FCA”) with FRN 180770. The Company is a MiFID investment firm and within scope of the MIFIDPRU Remuneration code (the “Code”) in the FCA Handbook at SYSC 19G.
The Company has prepared this Remuneration Policy (the “Remuneration Policy”) to document how it applies remuneration principles.
The purpose of this Remuneration Policy is to provide a clear direction and policy regarding the Company’s remuneration policies and practices.
This document forms the written element of the remuneration policy for the Company. This supplements and should be read in conjunction with, the Company’s other regulatory framework documentation.
The board of directors of the Company (the “Board”) recognise the important role played by sound risk management in protecting shareholders. Moreover, the Board acknowledges that inappropriate remuneration structures could, in certain circumstances, result in situations whereby individuals assume more risk on the Company’s behalf than they would have done had they not been remunerated in an inappropriate way.
In addition to ensuring that this Remuneration Policy aligns the risk-taking behaviour of staff with the Company’s risk appetite, the remuneration policy is designed to ensure that the Company is able to attract, retain and motivate highly qualified staff in order to produce long term value creation for shareholders.
In preparing this Remuneration Policy, the Company has considered the nature, scale and complexity of its activities. Due consideration has also been given to the resources available to the Company and the resources and expertise of the various third parties engaged to support the Company and carry out certain functions on its behalf.
This Remuneration Policy covers all aspects of remuneration which could have a bearing on effective risk management, including salaries, cash variable remunerations, long-term incentive awards, hiring bonuses, severance packages ad pension arrangements. It is principally concerned with the risks created by the way remuneration arrangements are structured.
The Company’s success depends on its ability to successfully engage talent through a combination of career opportunities, a productive work environment and competitive compensation. Compensation and reward programmes are intended to attract, retain, and motivate individuals who can utilise their knowledge, expertise, business acumen and leadership skills to serve clients effectively. Nonetheless, the Directors do not believe that incentive levels in the Company are of a magnitude that would encourage excessive risk taking.
This Policy generally applies to all employees and directors of the Company.
3. Remuneration principles
Principle 1 – Risk management and risk tolerance
The Company has a low appetite for risk. The Company does not seek actively to take risks other than those inherent in running and developing its business.
This is reflected by:
- Governance arrangements which routinely address key strategic issues (noting that a failure to innovate and develop the business carries its own risks)
- Regular reporting to and discussion of risk issues to the Board.
- Regular strategic reviews encompassing market and environmental developments
- Comprehensive insurance.
The Company seeks to align its remuneration policy accordingly through the following principles:
- Overall compensation is regularly benchmarked against appropriate comparators
- Unless in exceptional circumstance, there is no contractual entitlement to commission payments
- Salary reviews for employees, and discretionary bonuses for employees are considered in the light of overall Company performance, individually measured performance, and market conditions.
Principle 2 – Supporting Business Strategy, Objectives, Values and Long Term Interests
The Company is a wholly owned subsidiary of Aurum Fund Management Ltd. (“AFML”) and provides the following services to it:
- Marketing services;
- Sales advice;
- Advisory services regarding investors;
- Advisory services regarding introducers, and
- Legal and regulatory advice.
AFML is a specialist investment manager focused on selecting hedge funds and building fund of hedge fund portfolios. AFML constructs portfolios of hedge funds designed to grow and protect client capital and in pursuance of five investment tenets:
- To achieve real, inflation adjusted, returns
- To ensure capital protection during turbulent market conditions
- To achieve low volatility of returns
- To have a high consistency of positive performance
- To have a low correlation to equities and bonds
The Company’s appraisal and remuneration policies were specifically designed to align with the strategy and principles of the business.
Overall remuneration relies extensively on the appraisal process which reviews the achievement of individual objectives. These are, in turn, closely aligned to the Company’s business objectives.
The principles of the remuneration policy are wholly in line with these tenets, focusing on overall performance with no incentive for “short termism”.
Principle 3 – Avoiding Conflicts of Interest
The Company’s business strategy is focused on client outcomes and does not lend itself to conflicts of interest. There is no contractual entitlement to any variable remuneration based on any transactional outcome or achievement. Awards are not made based on short term factors.
Employment contracts and performance appraisal documentation make it clear to all staff that there is no entitlement to variable remuneration. Reward is linked to external and internal reward relativities and the discretionary element is based on overall Company performance, with due regard to team and appraisal-measured individual performance levels.
The Company’s Conflict of Interest policy is brought to the attention of all staff as part of the Company’s Induction process.
The Company shall ensure that it does not remunerate or assess the performance of its staff in a way that conflicts with its duty to act in the best interests of its clients or encourages short termism or excessive risk taking. Remuneration and other incentives shall not be solely or predominately based on quantitative commercial criteria and will take fully into account appropriate qualitative criteria reflecting compliance with applicable regulations, conduct, the fair treatment of clients and the quality of services provided to clients.
In addition, a balance between fixed and variable components of remuneration will be maintained by the Company at all times so as to ensure the remuneration structure does not favour the interests of the Company or its relevant persons against the interests of any client. In determining the appropriate balance, the directors will ensure that the fixed component represents a sufficiently high proportion of the total remuneration to enable a fully flexible policy on variable remuneration, including the possibility of paying no variable remuneration.
Principle 4 – Oversight of Remuneration Policies and Practices
The Board of the Company is ultimately responsible for this Remuneration Policy and overseeing its implementation.
This Policy will be reviewed by the Board on an annual basis after taking into account feedback from all relevant business units.
Principle 5 – Control Functions
The control functions form an overall oversight function reporting to the Chief Executive Officer and the Board.
Remuneration including that of individuals performing control functions is benchmarked against appropriate external comparators. Control function performance appraisals are based on function and role specific performance that is independent of the performance of the business units that they oversee.
Principle 6 – Remuneration and Capital
The Company’s policy is to create and build long term business relationships with clients and key stakeholders. The directors set remuneration levels on the basis that the Company has sufficient infrastructure and capital to ensure that it can meet its needs in the short and long term.
Principle 7 – Categorisation of Fixed and Variable Remuneration
The following components shall be considered when determining any staff remuneration and shall ensure that criteria for setting basic fixed remuneration reflecting an employee’s professional experience and organisational responsibility is clearly distinguishable from the criteria for setting variable remuneration reflecting performance in excess of what is required to fulfil an employee’s job description and terms of employment.
A description of the different remuneration components, how they are determined and the link between pay and performance is set below.
|Component||Purpose||Detail of component|
|Base salary||To help recruit and retain talent.||Base salaries are generally reviewed annually as part of the annual performance evaluation process.
Base salaries are set considering the individual’s skills, the size and scope of their role and the market rate at comparator companies.
|Benefits||To help recruit and retain talent and promote health and wellbeing.||Benefits provided include defined contribution pensions with a Group contribution, private medical, dental and life insurance.|
|Discretionary Bonus (variable remuneration)||To provide motivation and reward to individuals for achievement of objectives aligned with the Company’s strategy. These objectives may be in-year, or longer in duration.||Cash variable remuneration rewards individual, relevant business division and Company performance and the achievement of strategic and personal objectives.|
|Long term incentive awards||To incentivise long term loyalty to the Company.||Staff who have been with the Company on a long term basis (generally 5 year increments) may be awarded (on a non-contractual basis) a travel or similar award, together with additional leave entitlements.|
Principle 8 – ESG Functions
Consideration has been given to Regulation (EU) 2019/2088 on sustainability – related disclosures in the financial sector (“SFDR”). Sustainability risk is defined in SFDR as “an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investment”.
Although SFDR does not apply to the Company, sustainability risk is one of the risks the Company considers as part of its overall risk management strategy.
4. Board oversight and updates to this remuneration policy
The Board will be responsible for the oversight of compliance with this Remuneration Policy. It will review the appropriateness of this Remuneration Policy regularly and will ensure that it is operating as intended. It will also review this Remuneration Policy to ensure that it continues to be compliant with applicable national and international regulations, principles and standards.
Material changes to this Remuneration Policy will be approved by the Board.