1. Principles and Strategy
The following principles and strategy, on which MIL's remuneration policy is based, apply to all companies belonging to the Metzler Group, including Metzler Ireland Limited (“MIL”), and to the Partners and Managing Directors of all Metzler Group companies. The principle of proportionality has been applied, i.e., to the extent that is appropriate to the size, internal organisation, and the nature, scope and complexity of MIL’s, and the Metzler Group’s, activities.
Due to its moderate size of currently around 700 employees, and its clear business strategy, the Metzler Group has a very low-risk corporate structure. MIL’s business strategy complies with the overall Group strategy and with its size of just 19 staff can also be deemed as being low risk. In addition, the personal liability of the Managing Directors and the limited focus of business activities relating to proprietary trading and lending business (no such activities exist at MIL) contribute to ensuring that excessive risk positions within the Metzler Group are avoided. This can also be seen in the competence and limit systems in place and the centralisation of various controlling and risk-relevant core departments (such as the human resources, legal, controlling and compliance departments).
Sustainability and the avoidance of excessive risks have also always been given top priority in the Metzler Group remuneration system. The remuneration system forms part of the business and risk strategy of the Metzler Group, and is thus based on a long-term perspective. Metzler has taken the decision to apply a uniform remuneration structure to all Group companies. This enhances transparency and ensures that the employees identify with the Metzler Group as being their employer.
In view of the Group’s principles, as outlined above, and in particular its risk-sensitive business orientation, the size of the company, and the average total assets recorded over the past three years, Metzler can conclude that no further risk analysis, as prescribed under the AIFMD and UCITS V Directive, is required.
The Board of MIL believe that its Remuneration Policy is in line with the strategy, objectives, values and interests of MIL, the funds under management and the underlying shareholders. One of the key aims of the Remuneration Policy is the alignment of risks taken by the identified staff with the interests of MIL and the funds under management. The Board of MIL, in applying the Remuneration Policy, aims to avoid or appropriately manage conflicts of interest in order to prevent such conflicts from adversely affecting the interests of MIL, the funds under management or the underlying shareholders.
In addition, the remuneration principles for employees of financial investment management companies (pursuant to article 13 and Annex II of the AIFM Directive, the UCITS V Directive and ESMA Final Report - Guidelines on sound remuneration policies under the UCITS Directive and AIFMD (the “ESMA Guidelines”)) have been considered and applied. Due to the business orientation of the Metzler Group, the decision was taken by the Board of MIL (and the Partners), by reference to the principle of proportionality in the AIFMD and UCITS V Directive, in the absence of any contrary guidance from ESMA, that the requirements relating to the pay out process and the remuneration committee are not to be applied.
2. Remuneration Structure
The Metzler remuneration structure provides for the awarding of fixed (basic remuneration) and variable components (bonus and other one-off payments) only. The current occupational pension scheme contains no elements of discretionary pension payments. Hedging activities by any Group company that would limit or cancel the risk orientation of the remuneration are impossible due to the corporate structure. The strict organisational separation of market areas from risk management/controlling, at operational level right up to the responsibility borne by the designated Partners, ensures that no parallel remuneration parameters for these different functions can be applied.
2.1 Basic Remuneration
The basic remuneration ensures that every employee receives a basic salary according to his/her position and aims to promote a long-term relationship between employees and Metzler. Employees are therefore not substantially dependent on the variable remuneration component which in turn ensures that no incentive for taking disproportionate risks exists. This is also the result of Metzler's extremely flexible remuneration policy, which allows the variable remuneration component to be reduced to zero in certain circumstances.
2.2 One-Off Payments and Bonuses
The variable remuneration components at Metzler comprise one-off payments and bonuses only. The criteria for such remuneration include both the achievement of individual targets (i.e., the extent to which an employee’s direct superior assesses that qualitative and quantitative targets have been met) and the business results of the Group as a whole and of the employee’s Group company and department and an assessment of current and future risks facing the Group. The Partners, however, may decide the final amount of any one-off payments and bonuses at their complete discretion considering all of these factors.
As set out above, the structure of the remuneration system and, in particular, the level of the basic remuneration, ensures that substantial dependence on the variable remuneration component is avoided in the long-term. The upper limit of the variable remuneration is defined at a maximum of 70% of the entire remuneration package. This applies to all departments and companies within the Metzler Group.
Guidelines for annual pay reviews and bonuses in any particular year are initially recommended by the Partners of the Metzler Group. Specific figures for individuals are then put forward by senior management for sign off by Board members of MIL with ultimate Partner approval being required for all employee salaries and bonuses.
3. Application of Remuneration Policy to Delegates
Where MIL has delegated certain portfolio activities in respect of a particular fund to an Investment Manager, MIL will either:
- obtain confirmation in writing from such Investment Manager, on an annual basis, that it is already subject to regulatory requirements on remuneration that are equally as effective as those applicable to MIL and that the staff of the entity which are “identified staff” for the purpose of the ESMA Guidelines are subject to those requirements; or
- where this is not the case, put in place appropriate contractual arrangements to ensure that there is no circumvention by the Investment Manager of the remuneration requirements set out in MIL's Remuneration Policy, related policies and practices, or regulatory framework.