Remuneration Policy & Disclosure
Mayar Capital Ltd.
Remuneration Policy
Contents
Version Control
2. About this policy
3. Details
1. Version Control
Date Version Updates Name
22 June 2021 1.0 Original Abdulaziz Alnaim
30 September 2023 2.0 Updates Abdulaziz Alnaim
2. About this policy
Scope and Objective
This document contains the Remuneration Policy (the “Policy”) of Mayar Capital (“Mayar”), including the Mayar Remuneration Principles that underpin all remuneration policies, processes, and decision making within Mayar.
The Policy is compliant with the FCA’s remuneration code SYSC 19C (‘BIPRU code’) and the draft requirements for SNI firms under SYSC 19G (‘IFPR’).
The Policy applies to all staff employed by Mayar and seeks to promote sound and effective risk management as well as discouraging risk-taking that exceeds the Mayar risk appetite.
3 Details
1. Mayar Remuneration Principles
The below provides an overview of the Remuneration Principles that underpin all aspects of remuneration within Mayar.
Alignment with stakeholders: The remuneration policy must support the delivery of the business strategy and the long-term creation of sustainable value for the shareholders of Mayar without driving towards an external corporate liquidity event
Line of sight: There should be clear alignment between reward outcomes for individuals and the KPIs or objectives that they are being asked to deliver on
Attract and retain: The policy should be effective in both retaining existing key talent and attracting new talent in a competitive industry
Alignment with market practice: The design of any arrangements should be tailored to Mayar’s specific circumstances however they should also be competitive in the context of relevant market practice
Progressive performance linkage: Incentive arrangements should be affordable, yet be capable of delivering competitive levels of remuneration to employees in the event of strong sustainable growth in the value of the business over the long-term
Simplicity: The framework should be as simple as possible to implement, understand and communicate
Transition across generations: The remuneration policy should be future proofed to the extent possible and acknowledge the need for succession planning over time on the assumption that the company will always be privately held
2. Total Compensation Framework
Mayar’s Remuneration Principles are translated into practice through a number of company-wide arrangements encompassing both fixed and variable pay. Although performance criteria and the level of remuneration opportunity varies according to role, all employees participate in the same arrangements.
Fixed pay comprises basic salary and benefits including pension. Variable pay comprises a discretionary (although structured and transparent) annual incentive arrangement, a bonus deferral plan and a long-term performance plan (‘LTPP’).
3. Governance
The Remuneration Policy together with the implementation and operation of all remuneration arrangements are overseen by the Nomination & Remuneration Committee (‘NRC’). The committee is comprised solely of Non-Executive Directors although others may join the meetings by invitation to provide input, guidance and support.
4. Base salary
Base salaries are set at a competitive and sustainable level taking into account a range of factors including:
• The individual’s skills, performance and experience;
• Internal relativities and wider workforce salary levels;
• External benchmark data from a range of sources; and
• The size and responsibility of the role.
Base salary levels must be sufficient so that Mayar is not contractually bound to make any incentive payments where such a payment is not warranted. Circumstances where no short-term incentive payment may be awarded include if the business has made a loss, or if an employee’s behaviour materially breaches accepted risk or compliance limits (in the context of their role).
Base salaries may be reviewed annually within an approved budget aligned with the business plan in effect at the time of the review - there is no contractual obligation to increase base salaries annually. Interim reviews will only be considered on an exceptional basis.
The firm’s policy is that base salaries will not exceed £150,000 p.a., with the exception of the Chief Executive Officer role. This base salary cap shall be increased annually at the rate of inflation.
5. Benefits
Benefit packages are designed to be:
• Competitive but not excessive, aligning with market practice for businesses with which we compete for talent;
• Compliant with relevant legal, regulatory and tax regimes;
• Proportionate and affordable for the business; and
• Align with the culture and values of Mayar.
6. Pension
Pension benefits are provided through an externally administered [Group Personal Pension] arrangement with consistent terms for all colleagues irrespective of seniority. Mayar’s pension plan complies with all relevant UK tax, legal and regulatory requirements.
For 2023/24 tax year, qualifying earnings for pension are equal to an employee’s base salary above £6,240 p.a. and up to £50,270 p.a.
Company contribution rates are:
• 3% of qualifying earnings for employees with less than three years’ qualifying service
• 6% of qualifying earnings for employees with more than three years’ qualifying service
Employee contribution rates must be a minimum of:
• 5% of qualifying earnings for employees with less than three years’ qualifying service
• 2% of qualifying earnings for employees with more than three years’ qualifying service
7. Discretionary annual short-term incentive
Mayar’s annual short-term incentive arrangement supports the alignment of staff to the company’s financial and strategic objectives, customer outcomes, culture, values and risk management policies.
The total cost of short-term incentives must be affordable and justifiable in the context of the overall financial performance of Mayar and shareholder interests. The funding of short-term incentive plans must have clear and transparent linkages to:
• Financial performance;
• Effectiveness of risk management; and
• Delivery of non-financial objectives (including customer outcomes) determined in accordance with the approved strategy.
Individual incentive outcomes transparently reflect individual performance in accordance with the company’s performance management process, adherence to risk management policies, conduct and behaviour.
All short-term incentive plans comply with regulatory requirements for control functions and Material Risk Takers under relevant regulations. The NRC are responsible for approving the introduction of a new or a material amendment to any short-term incentive plan before it can be implemented.
To recognise both financial and non-financial performance, a balanced scorecard of individual Key Performance Indicators (‘KPIs’) is used for every role under the two categories of (a) Job specific competency and (b) Culture & Behaviour. The outcome of the balanced scorecard assessment provides a ‘baseline incentive’ for each individual which is then subject to a series of potential adjustments:
a) Company performance: For exceptional business performance relative to expectations taking into account budget and market conditions, the NRC (supported by the board) have discretion to ‘flex’ all outcomes up and down equally by +/- 20%.
b) Discretionary overlay: All bonuses are discretionary in nature and the Managing Director and NRC reserve the right to adjust outcomes to reflect any factors not taken into account in the balanced scorecard.
c) Red card principle: A zero rating against any KPI will result in a downward adjustment to the final total bonus. Multiple zero ratings result in a greater adjustment.
Annual incentive costs in any given performance year cannot exceed 75% of total pre-tax operating profits. If no profit is generated, no bonuses will be awarded.
8. Bonus deferral
Deferral must be operated in accordance with the company’s deferral policy, as approved by the NRC. Unless there is an approved commercial, regulatory or tax/legal justification to do otherwise, deferral must be invested into investment funds managed by Mayar to support retention and the alignment of staff with Mayar’s clients.
The deferral policy will be reviewed annually to ensure it continues to support the principles of the Remuneration Policy. Where regulation defines more onerous requirements on the level of deferral or different requirements on the form of deferral for regulated roles, these requirements must be applied.
The arrangement is administered via a company sponsored Employee Benefit Trust (‘EBT’) established and run by professional trustees who act on behalf of the beneficiaries of the EBT i.e. Mayar employees. In respect of any deferred bonuses, the trustees will acquire and hold the interest in the underlying investments until participants choose to realise their investments, at which point the investments are transferred in-specie directly to the employee. Any funds or investments sitting in the EBT may only be used in the interest of the trust’s beneficiaries and are ring-fenced from the company.
There are three main components to Mayar’s bonus deferral plan:
9a. Mandatory bonus deferral
All employees earning an annual incentive of more than a threshold of £50,000 are required to defer 45% of the amount above the threshold for a period of three years.
In situations where the amount of annual incentive to be mandatorily deferred is calculated to be less than £5,000 any requirement to defer will be waived.
Any deferred amounts are notionally invested gross of tax into the Mayar Responsible Global Equity Fund and vest one-third on each of the first three anniversaries from the date of deferral. On vesting the awards will be transferred in specie (net of any taxes due) to the individual unless cash settlement is requested.
9b. Minimum investment holding for investment teams
All investment professionals earning sufficient levels of bonus to be subject to mandatory deferral are required to build and maintain a minimum level of exposure to the portfolios that their teams manage. In addition to any vesting period, investment staff are only able to realise benefits from bonuses that have been mandatorily deferred if the equivalent of at least 50% of their base salary continues to remain notionally invested after any realisation. The calculation of the notional investment at any time includes both vested and unvested awards. On vesting, the value of any units that are sold specifically to settle income tax and employee NIC liabilities will continue to be included for the purposes of the calculation for as long as the individual holds the vested units.
9c. Voluntary co-investment
All employees are eligible to invest their annual incentive (after tax) into the Mayar Responsible Global Equity Fund for a period of their choosing provided this is at least twelve months.
9. Long-Term Performance Plan
Mayar operates a company-wide long-term performance plan open to all employees to complement the annual incentive arrangements. A minimum period of service will be required before becoming eligible.
The plan will operate as a share in a unitised pool determined as a percentage of cumulative profits over a multi-year period. The following principles will apply:
• Each plan cycle operates over a three-year performance period with the first cycle running from 1 July 2021 to 30 June 2024.
• Over the performance period the company will ringfence 10% of the cumulative profits generated over the period above a threshold level of annual profits.
• Each pool cycle will be unitised and awards made at the start of each performance cycle. A minimum of 20% of the units will be held as unallocated at the outset to allow for new hires and top-up awards to be made throughout the performance period.
• At the end of the performance period the pool will be distributed to participants in three equal tranches at the end of years 3, 4 and 5 subject to continued employment throughout.
• Change of control and appropriate leaver provisions will apply to all awards.
• The NRC is responsible for overseeing the LTPP and for approving all LTPP awards.
The LTPP is subject to an uncapped downward risk adjustment.
As with bonus deferral arrangements, the LTPP is administered independently of the company by the trustees of the Employee Benefit Trust.
10. Risk Adjustment
All incentive arrangements operated within Mayar include a provision whereby the NRC has discretion to apply an uncapped downward risk adjustment either to the funding of the plan or on an individual outcome basis.
11. Malus and clawback terms
The deferred bonus plan and the LTPP include discretion to reduce unvested variable remuneration (malus) and discretion to clawback vested variable remuneration (clawback) in circumstances deemed appropriate by the NRC.
Circumstances include but are not limited to a material misstatement of the company’s audited financial statement; any failure of risk management, fraud or other material financial irregularity; material corporate failure; an error in the information or assumptions on which the award was granted, vests or is released as a result of erroneous or misleading data or otherwise and serious misconduct by a participant or otherwise.
12. Guarantees and buy-outs
Guarantees (a future fixed short-term incentive payment or entitlement to a fixed short-term incentive/LTIP award which is not subject to performance conditions) must only be awarded to new hires in exceptional circumstances where a commercial requirement exists and will operate for no longer than 12 months following the date of hire. In truly exceptional circumstances (e.g. corporate restructuring), existing staff may be awarded guarantees.
Where it is considered appropriate to replace unvested awards granted by a previous employer (e.g. forfeited LTIP or a guaranteed short-term incentive to be paid out in future), this will only be acceptable where sufficient evidence is produced to quantify the amount and terms that are being bought out. Any replacement award must be no more generous than the existing amount/terms of the previous employer's arrangements including the deferral/vesting period and performance conditions.
13. Severance payments
Any payments made relating to the early termination of employment must adhere to contractual entitlements and the rules of any relevant incentive plans. Payments must take into account performance over time and adhere to the principle of avoiding payments that reward failure.
14. Regulatory Requirements
Mayar is subject to a number of regulatory regimes which contain remuneration requirements. The majority of these regimes require the company to have a remuneration policy in place that is consistent with and promotes sound and effective risk management, and which does not encourage risk-taking that exceeds the company’s level of tolerated risk. Furthermore, it is a general requirement that the policy should be aligned with the business strategy, objectives, values and long-term interests of the company, and include measures to avoid any conflicts of interest.
For 2021 Mayar Capital Ltd. is subject to the FCA’s BIPRU remuneration code (SYSC 19C) on a proportionate basis and from 2022 onwards will be subject to the FCA’s MIFIDPRU remuneration code (SYSC 19G), initially as a small non-interconnected (SNI) firm.
Mayar Responsible Global Equity Fund is a self-managed UCITS fund registered in Ireland an operated by an independent board of directors. It is the responsibility of the independent directors to ensure that complies with all remuneration requirements under the UCITS directive. Where activities are delegated to Mayar Capital Ltd. there is no requirement to apply UCITS remuneration requirements to employees operating under those delegation agreements as Mayar Capital Ltd. is already subject to an equally effective regulatory regime in BIPRU/MIFIDPRU.
Identification of Material Risk Takers
Where there is a regulatory requirement to identify Material Risk Takers (“MRTs”) for the company as a whole or a specific entity, the principles through which staff are identified are established by the Managing Director in collaboration with the Chief Operations Officer and Risk & Compliance functions. Any principles or process are approved by the NRC which is also required to specifically oversee the remuneration of all MRTs.
Policy approval
This Policy will be reviewed, approved and adopted by the relevant subsidiary boards of the company, as appropriate.
Conflicts of interest
The operation of the NRC and, in accordance with its terms of reference ensures that there is appropriate independent oversight of the company’s compliance with the Policy and review of conflicts that may arise from remuneration practices.
An assessment of the principles and processes for managing conflicts of interest from a remuneration perspective is documented and reviewed periodically. Overall accountability for the identification and management of conflicts of interest rests with the business, however, any conflicts must be taken into consideration in the context of remuneration outcomes with the NRC receiving input from control functions where appropriate.
4 Disclosure
As per MIFIDPRU 8.6 Remuneration policy and practices, a an SNI-MIFIDPRU investment firm Mayar is required for the financial year to which the disclosure relates. to disclose the total amount of remuneration awarded to all staff, split into:
a. Fixed remuneration
b. Variable remuneration
Please find below the disclosure for Mayar Capital Ltd.’s financial year 2022/23:
a. Fixed remuneration: £700,014.62
b. Variable remuneration £123,409