Gravis Capital Management Ltd ("Gravis") – Remuneration Policy

Overview

The AIFM Remuneration Code (as set out in Annex II of the Alternative Investment Fund Management Directive and transposed in SYSC 19B of the FCA handbook of rules and guidance)

applies to a full-scope AIFM of:

  • (1) a UK AIF;
  • (2) an EEA AIF; and
  • (3) a non-EEA AIF

Gravis is authorised as a full-scope AIFM managing one UK AIF and two non-EEA AIFs and is therefore subject to the requirements of the AIFM Remuneration Code.  In accordance with the requirements, it has established a Remuneration Policy which it considers:

  • is consistent with and promotes sound and effective risk management;
  • does not encourage excessive risk taking;
  • includes measures to avoid conflicts of interest; and
  • is in line with Gravis’ business strategy objectives, values and long term interests.

Gravis is satisfied that the Remuneration Policy in place is appropriate to its size, internal organisation and the nature, scope and complexity of its activities.

Scope

This Remuneration Policy applies to all employees of Gravis from 20 April 2017 and will apply unless and until amended.  The Board of Directors of Gravis is responsible for setting the Remuneration Policy which is subject to annual review to ensure that it complies with the AIFM Remuneration Code.

AIFM Remuneration Code Staff

AIFM Remuneration Code Staff are defined as 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 profiles of the AIFM or of the AIFs that the AIFM manages ("AIFM Remuneration Code Staff.

The identification of Directors and employees as AIFM Remuneration Code Staff is based on the definition in the AIFM Remuneration Code.

A full list of Gravis AIFM Remuneration Code Staff is available on request.  All AIFMD Remuneration Code Staff are informed that they fall into this category.

Gravis has decided that its Remuneration Policy should apply to AIFM Remuneration Code Staff and non-Code staff.

Remuneration Principles

The structure of remuneration for employees comprises a combination of fixed and variable pay, made up of salary and an annual discretionary cash bonus.  The Board considers that a balanced mix of fixed and variable remuneration supports the business strategy of Gravis and its business activities whilst complying with the AIFMD Remuneration Code.

Gravis was established to facilitate the transfer of the fund management and advisory business originally carried out by Gravis Capital Partners LLP to a limited company.  The beneficial ownership of Gravis is substantially the same as that of the limited liability partnership.  All former Partners of Gravis Capital Partners LLP are now employees of Gravis.  They are also shareholders of Gravis and receive dividends in their capacity as shareholders.

General Remuneration Policy and Practices

  • The Board is responsible for setting the remuneration policy for Gravis;
  • Salaries for all staff are determined and reviewed annually by the Board;
  • In addition to a fixed salary, all employees are eligible for an annual cash bonus. Bonuses are typically discretionary and non-contractual;
  • Individual discretionary bonus allocations for all staff are approved by the Board.

Application of Proportionality

The European Securities and Markets Authority’s (“ESMA”) “Guidelines on sound remuneration policies under the AIFMD” (the “Guidelines”) allow for the disapplication of certain provisions in the AIFM Remuneration Code in the context of an AIFM’s size, nature and scope of its activities.

Consideration of proportionality may result in the disapplication of the following provisions:

  • deferral of between 40% and 60% of variable remuneration for three to five years;
  • payment of at least 50% of variable remuneration other than in cash;
  • performance adjustment; and
  • retention of non-cash instruments for a period following ex post risk adjustments.

These are collectively known at the Pay-out Process Rules.

FCA has provided guidance on the application of proportionality to remuneration policies of AIFMs.  Gravis has taken this guidance (FG14/2 General guidance on the AIFM Remuneration Code) into account in the drafting of this policy.

Gravis has undertaken an analysis of its activities, size and structure and as a result has concluded that it is appropriate to dis-apply the Pay-out Process Rules.  Gravis has not established a separate remuneration committee on the basis it does not consider the firm to be significant in terms of the size of the AIFs it manages, its internal organisation and the nature, scope and complexity of its activities.

Gravis Capital Management Ltd

20 April 2017