MIFIDPRU 8 Disclosure
The Financial Conduct Authority (“FCA” or “regulator”) in the Prudential sourcebook for MiFID Investment Firms in the FCA Handbook (“MIFIDPRU”) sets out the detailed prudential requirements that apply to Affiliated Managers Group Limited (“AMG Ltd” or the “Company”). Chapter 8 of MIFIDPRU (“MIFIDPRU 8”) sets out public disclosure rules and guidance with which the Company must comply, further to those prudential requirements.
AMG Ltd is classified under MIFIDPRU as a small and non-interconnected MIFIDPRU investment firm (“SNI MIFIDPRU Investment Firm”). As such, the Company is required by MIFIDPRU 8 to disclose information regarding its remuneration policy and practices.
The purpose of these disclosures is to give stakeholders and market participants an insight into the Company’s culture and to assist stakeholders in making more informed decisions about their relationship with the Company.
This document has been prepared by AMG Ltd in accordance with the requirements of MIFIDPRU 8. Unless otherwise stated, all figures are as at the Company’s 31 December financial year-end.
Remuneration Policy and Practices
As an SNI MIFIDPRU Investment Firm, AMG Ltd is subject to the basic requirements of the MIFIDPRU Remuneration Code (as laid down in Chapter 19G of the Senior management arrangements, Systems and Controls sourcebook in the FCA Handbook (“SYSC”)). The purpose of the remuneration requirements is to:
- Promote effective risk management in the long-term interests of the Company and its clients;
- Ensure an appropriate relationship between risk and individual reward;
- Support positive behaviours and healthy firm cultures; and
- Discourage behaviours that can lead to misconduct and poor customer outcomes.
The objective of AMG Ltd’s remuneration policies and practices is to establish, implement, and maintain a culture that is consistent with, and promotes, sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profile of the Company and the services that it provides to its clients.
In addition, AMG Ltd recognises that remuneration is a key component in how the Company attracts, motivates, and retains quality employees and sustains consistently high levels of performance, productivity, and results. As such, the Company’s remuneration philosophy is also grounded in the belief that its people and its reputation are its most important assets and provide its greatest competitive advantage.
AMG Ltd is committed to excellence, teamwork, ethical behaviour, and the pursuit of positive outcomes for its clients. From a remuneration perspective, this means that performance is determined through the assessment of various factors that relate to these values, and by making considered and informed decisions that reward effort, attitude, and results.
Characteristics of the Company’s Remuneration Policy and Practices
Remuneration at AMG Ltd is made up of fixed and variable components. Fixed remuneration, or ‘base salary’, is pre-determined, non-discretionary, and except for the case of termination of employment, non-revocable. Due consideration is given to market practice to ensure competitive, but not excessive, base salaries are set, reflective of individual experience, expertise, and role.
Variable remuneration, or the ‘discretionary bonus’, is based on several factors, including corporate and individual performance and an individual’s regulatory conduct and sales and client servicing performance throughout the year. The individual may have their variable bonus payments blocked in the event that there has been a material and relevant breach of Company policy by such individual. By ensuring that the fixed element of remuneration is sufficient, and the discretionary bonus is linked to broader factors than just individual performance, the Company seeks to minimise excessive risk-taking by its employees and encourages them to act with integrity. Ultimately, the payment of any variable bonus is discretionary. This also allows for the possibility of paying no variable remuneration component, which could be done in certain situations, such as where the Company’s profitability performance is constrained, or where there is a risk that the Company may not be able to meet its capital or liquidity regulatory requirements.
Governance and Oversight
The AMG Ltd Board of Directors is responsible for overseeing AMG Ltd’s remuneration policy, which is then implemented by management. In order to fulfil its responsibilities, management:
- Is appropriately staffed to enable it to exercise competent and independent judgment on remuneration policies and practices and the incentives created for managing risk, capital, and liquidity.
- Makes decisions regarding the structure of remuneration, including decisions that have implications for the risk and risk management of the Company.
- Ensures that the Company’s remuneration policy and practices take into account the public interest and the long-term interests of shareholders, investors, and other stakeholders in the Company.
- Ensures that employees receive training on the importance of avoiding the appearance or act of promoting one AMG Affiliate over another including when competing for the same mandate. Furthermore, the favouring of one AMG Affiliate over another in the provision of services by the Company is expressly prohibited.
- Ensures that the overall remuneration policy is consistent with the business strategy, objectives, values, and interests of the Company and of its clients.
AMG Ltd’s remuneration policy and practices are reviewed annually.
Quantitative Remuneration Disclosure
For the financial year 1 January to 31 December 2022, the total amount of remuneration awarded to all personnel was £6,390,730, of which £2,663,727 comprised the fixed component of remuneration, and £3,727,003 comprised the variable component. For these purposes the definition of ‘personnel’ is defined to include employees of the Company itself, directors, and secondees.