Guidelines on sound remuneration policies under the AIFMD

Consultation paper Guidelines on sound remuneration policies under the AIFMD 28 June 2012 | ESMA/2012/406 Date: 28 June 2012 ESMA/2012/406 Responding to this consultation paper ESMA invites comments on all matters in this paper and in particular on the specific questions summa-rised in Annex V. Comments are most helpful if they: • indicate the specific question to which the comment relates and respond to the question stated; • contain a clear rationale, clearly stating the costs and benefits; and • describe any alternatives ESMA should consider. ESMA will consider all comments received by 27 September 2012. All contributions should be submitted online at www.esma.europa.eu under the heading ‘Your input -Consultations’. Publication of responses All contributions received will be published following the close of the consultation, unless you request otherwise. Please clearly and prominently indicate in your submission any part you do not wish to be publically disclosed. A standard confidentiality statement in an email message will not be treated as a request for non-disclosure. A confidential response may be requested from us in accordance with ESMA’s rules on access to documents. We may consult you if we receive such a request. Any decision we make not to disclose the response is reviewable by ESMA’s Board of Appeal and the European Ombudsman. Data protection Information on data protection can be found at www.esma.europa.eu under the heading ‘Legal Notice’. Who should read this paper? This document will be of interest to asset management companies and trade associations of asset man-agement companies managing funds falling in the scope of the Alternative Investment Fund Managers Directive and investors investing into such funds. ESMA • 103 rue de Grenelle • 75007 Paris • France • Tel. +33 (0) 1 58 36 43 21 • www.esma.europa.eu Contents I. II. III. IV. IV.I. IV.II. IV.III. V. V.I. V.II. V.III. VI. VII. VIII. VIII.I. A. B. C. D. VIII.II. A. B. C. D. VIII.III. A. B. IX. IX.I. A. B. IX.II. A. B. X. X.I. X.II. A. B. 36 a. b. c. d. C. D. a. b. X.III. A. Executive Summary ___________________________________________________ 6 Background_________________________________________________________ 8 Structure of the Guidelines ______________________________________________10 Scope of the Guidelines_________________________________________________12 Which remuneration?_____________________________________________ 12 Which entities and which staff to be identified? ___________________________ 14 Timing of entry into force of these Guidelines_____________________________ 17 Proportionality principle________________________________________________ 17 Proportionality in general__________________________________________ 17 Proportionality with respect to the different characteristics of AIFMs_____________ 18 Proportionality with respect of the different categories of staff__________________19 AIFMs being part of a group ____________________________________________ 20 Financial situation of the AIFM (Annex II, paragraph 1(o) of the AIFMD)_______________21 Governance of remuneration _____________________________________________22 Management body (Annex II, paragraph (1)(b), (c) and (d) of the AIFMD)__________22 Design, approval and oversight of the remuneration policy____________________ 22 Remuneration of members of the management and supervisory function__________ 24 Shareholders’ involvement_________________________________________ 24 Review of the implementation of the remuneration policy____________________ 25 Remuneration Committee (Annex II, paragraph (3) of the AIFMD)______________ 25 Setting up a remuneration committee__________________________________ 26 Composition__________________________________________________ 26 Role________________________________________________________ 27 Process and reporting lines_________________________________________ 28 Control functions (Annex II, paragraph (1)(e) and (f) of the AIFMD)_____________ 28 Roles of control functions__________________________________________ 29 Remuneration of control functions____________________________________ 29 General requirements on risk alignment ____________________________________ 30 The basic principle of risk alignment (Annex II, paragraph (1)(a), (b) and (p) of the AIFMD)_____________________________________________________ 30 The general remuneration policy, including the pension policy_________________ 31 Discretionary pension benefits_______________________________________ 31 General prohibitions_____________________________________________ 32 Severance pay (Annex II, paragraph (1)(k), of the AIFMD)____________________ 32 Personal hedging (Annex II, paragraph (1)(q), of the AIFMD)__________________ 33 Specific requirements on risk alignment _____________________________________33 Fully flexible policy on variable remuneration (Annex II, paragraph 1(j) of the AIFMD)_33 Risk alignment of variable remuneration________________________________ 34 Risk alignment process (Annex II, paragraph 1(g), (h) and (l) of the AIFMD)________ 34 Common requirements for the risk alignment process_______________________ Time horizon__________________________________________________ 36 Levels of risk and performance measurement_____________________________ 36 Quantitative and qualitative measures_________________________________ 36 Judgmental measures____________________________________________ 37 Risk measurement_______________________________________________ 37 Performance measurement (Annex II, paragraph 1(g) of the AIFMD)_____________ 38 Qualitative/Quantitative measures____________________________________ 38 Relative/absolute and internal/external measures_________________________ 39 Award process_________________________________________________ 39 Setting and allocation of pools_______________________________________ 40 3 B. The risk adjustment in the award process (Annex II, paragraph 1(l) and(o) of the AIFMD) ___________________________________________________________ 40 a. Quantitative ex ante risk adjustment__________________________________ 40 b. Qualitative measures for ex-ante risk adjustment__________________________ 41 X.IV. Pay-out process_________________________________________________ 41 A. Non-deferred and deferred remuneration (Annex II, paragraph 1(h) and (n) of the AIFMD)______________________________________________________ 41 a. Time horizon and vesting__________________________________________ 42 b. Vesting point__________________________________________________ 42 c. Proportion to be deferred__________________________________________ 42 d. Time span between end of accrual and vesting of deferred amount______________ 43 B. Cash vs. instruments (Annex II, paragraph 1(m) of the AIFMD)________________ 43 a. Types of instruments_____________________________________________ 43 b. Retention policy________________________________________________ 44 c. Minimum portion of instruments and their distribution over time_______________ 45 C. Ex post incorporation of risk for variable remuneration (Annex II, paragraph 1(o) of the AIFMD)______________________________________________________ 46 a. Explicit ex-post risk adjustments_____________________________________ 46 b. Implicit adjustments_____________________________________________ 48 c. Possibility of upward revisions______________________________________ 48 X.V. Compliance of certain remuneration structures with the requirements on risk alignment of variable remuneration, award and pay-out process_________________________ 48 XI. Disclosure__________________________________________________________49 XI.I. External disclosure______________________________________________ 49 A. Specific and general requirements on disclosure__________________________ 51 B. Policy and practices______________________________________________ 51 XI.II. Internal disclosure_______________________________________________ 52 Annex I Concepts_________________________________________________________ 53 Annex II Mapping of the remuneration principles included in the AIFMD___________________ 53 Annex III Schematic overview of some deferral mechanisms_____________________________ 59 Annex IV Correlation table Recommendation/AIFMD ________________________________ 53 Annex V List of questions____________________________________________________ 53 Annex VI Cost-benefit analysis_________________________________________________ 67 Annex VII Draft guidelines____________________________________________________ 76 4 Acronyms AIF Alternative Investment Fund AIFM Alternative Investment Fund Manager AIFMD Directive 2011/61/EC of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Di-rectives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/20101 EBA ESMA UCITS UCITS Directive European Banking Authority European Securities and Markets Authority Undertakings for Collective Investment in Transferable Securities Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transfera- ble securities (UCITS) (recast)2 1 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:174:0001:0073:EN:PDF. 2 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:302:0032:0096:EN:PDF 5 ... - tailieumienphi.vn