MIFIDPRU 8.6 DISCLOSURE
Introduction
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 Isomer Capital LLP (“Isomer” or the “Firm”). Chapter 8 of MIFIDPRU (“MIFIDPRU 8”) sets out public disclosure rules and guidance with which the Firm must comply, further to those prudential requirements.
Isomer is classified under MIFIDPRU as a small and non-interconnected MIFIDPRU investment firm (“SNI MIFIDPRU Investment Firm”). As such, the Firm is required by MIFIDPRU 8.6 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 Firm’s culture and to assist stakeholders in making more informed decisions about their relationship with the Firm.
This document has been prepared by Isomer in accordance with the requirements of MIFIDPRU 8.6 and is verified by the Management Committee. Unless otherwise stated, all figures are as at the Firm’s 31 March 2023 financial year end.
Remuneration Policy and Practices
Overview
As an SNI MIFIDPRU Investment Firm, Isomer 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 Firm and its clients,
- Discourage risk-taking inconsistent with the risk profile of the funds under management,
- Support positive behaviours and healthy firm cultures, and
- Discourage behaviours that can lead to misconduct and poor client outcomes.
The objective of Isomer Capital LLP’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 Firm and the services that it provides to its clients.
Isomer Capital LLP recognises that remuneration is a key component in how the Firm attracts, motivates and retains quality staff and sustains consistently high levels of performance, productivity and results. As such, the Firm’s remuneration philosophy is also grounded in the belief that its people are the most important asset and provide its greatest competitive advantage.
Isomer Capital LLP is committed to excellence, teamwork, ethical behaviour and the pursuit of exceptional 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 Firm’s Remuneration Policy and Practices
Remuneration at Isomer Capital LLP is made up of fixed and variable components. The fixed component is set in line with market competitiveness at a level to attract and retain skilled staff. Variable remuneration is paid on a discretionary basis and takes into consideration the Firm’s financial performance as well as the financial and non-financial performance of individuals in contributing to the Firm’s success. All staff members are eligible to receive variable remuneration subject to annual performance reviews and the meeting of these objectives on a meritocratic basis, which is gender neutral.
Variable remuneration has two components, within which staff are subject to annual performance review before awards are given. The review covers a variety of areas, as applicable to each individual’s roles and responsibilities.
- Bonuses, paid on a discretionary basis at a varying percentage of fixed remuneration and taking into consideration the Firm’s financial performance and the financial and non-financial performance of the individual in contributing to the Firm’s success.
- Long-term Profit Shares, which include carried interest and GP commitments in funds advised by Isomer Capital. These areas are subject to relevant fund performance hurdles being met and pay out from the funds over a period of time, acting as a long-term incentive to ensure aligned interests on investment performance and the retention of key staff.
Fixed and variable components of remuneration are appropriately balanced: the fixed component represents a sufficiently high proportion of the total remuneration to enable the operation of a fully flexible policy on variable remuneration. This allows for the possibility of paying no variable remuneration component, which the Firm would do in certain situations, such as where the Firm’s profitability performance is constrained, where there is a risk that the Firm may not be able to meet its capital or liquidity regulatory requirements, or where the performance hurdles set for relevant funds are not met.
Governance and Oversight
The Management Body is responsible for setting and overseeing the implementation of Isomer Capital LLP’s remuneration policy and practices. In order to fulfil its responsibilities, the Management Body:
- 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.
- Prepares decisions regarding remuneration, including decisions that have implications for the risk and risk management of the Firm.
- Ensures that the Firm’s remuneration policy and practices take into account the public interest and the long-term interests of shareholders, investors and other stakeholders in the Firm.
- Ensures that the overall remuneration policy is consistent with the business strategy, objectives, values and interests of the Firm and of its clients.
Isomer Capital LLP’s remuneration policy and practices are reviewed annually by the Management Body.
Quantitative Remuneration Disclosure
For the financial year 1 April to 31 March 2023, the total amount of remuneration awarded to all staff was £2,586,357, The ratio between fixed and variable component is approximately 2:1. For these purposes, ‘staff’ is defined broadly and includes, for example, employees of the Firm itself, partners, employees of other entities in the Isomer Capital LLP.