GESIURIS ASSET MANAGEMENT, SGIIC, S.A. (hereinafter “Gesiuris” or the “Manager” or the “Company”) is a Management Company of Undertakings for Collective Investment in Transferable Securities (UCITS) registered in the Administrative Register of the National Securities Market Commission under the number 37.
The following policy has been taken into consideration:
The current regulatory framework as well as the ESMA guidelines:
– Article 46 bis of Law 35/2003, of 4 November, on Collective Investment Institutions, and article 115.3 of Royal Decree 1082/2012, of 13 July, approving its regulations.
– Guidelines on appropriate remuneration policies under the UCITS Directive
Evaluation of the Company’s risk profile, as well as its size, nature and the complexity of its activity.
This document updates the remuneration policy existing at Gesiuris, with the sole purpose of making it more comprehensive and guaranteeing the correct management of the risk of the UCITS.
2. Objectives of the policy
i.) Provide Gesiuris with:
Corporate governance procedures adjusted to the size of the Company and to the scale and complexity of the services provided by the Company;
Remuneration policies and practices consistent with adequate risk management
Means to guarantee the long-term survival of the Company
ii.) Comply with applicable remuneration regulations.
3. Scope of application
This Policy shall apply to the whole management staff and to all remuneration received by the Company’s Personnel, remuneration being understood to mean all forms of payment or benefits paid by the Company.
This remuneration includes both the fixed and variable portions. These two components also include both monetary and non-monetary payments or benefits that may be established by the Company in the future, such as, for example, medical insurance, group pension plan, restaurant cheques, nursery cheques, etc.
Payments or profits obtained as a consequence of the capital yields obtained from investment in the Company’s own UCITS, as well as profits distributed by the Company as a return on the capital invested by the owners of the same, will not be considered remuneration.
4. Assessment of the scale of complexity of the company and of the risks inherent in its activity.
All of the investment funds and investment companies managed by Gesiuris, except for one small SICAV, are harmonised UCITS. All UCITS have a well-defined investment policy. There are no incentives in any UCITS to assume risks incompatible with the risk profiles of each UCITS.
Gesiuris is an independent fund manager that does not belong to any financial group, nor does it have its own extensive distribution network. The Company’s shareholders are made up of 4 partners, all of whom are represented on the Board of Directors. This means that the value of the Company for its shareholders and directors lies in the consistency of the management results obtained by the different UCITS managed over time.
The company’s long-term viability and sustainability, taking into account the lack of support from a financial group as well as its lack of a distribution network of its own, is only possible if the trust of investors is maintained. Therefore, it logically follows that there is no incentive to assume risks incompatible with the risk profile of each of the UCITS managed by Gesiuris.
There is also a dual alignment between the interests of the shareholders of Gesiuris and the participants of the UCITS managed by Gesiuris:
On the one hand, Gesiuris has invested practically all of its assets in the different UCITS it itself manages.
On the other hand, the remuneration of the Company is based on a double income scheme: management fees on assets and the management fee on results.
With regard to the management fee on assets, the assumption of excessive and unjustified risks may lead to negative returns and, as a consequence, a decline in the assets under management.
For any UCITS in which the performance management fee is incorporated, the manager is incentivized to achieve the best management result possible, while on the other hand, assuming no unnecessary risks, since if losses materialise, the amount lost will have to be recovered for the manager to have any chance of earning the performance fee.
Gesiuris’ activity is based exclusively on management on behalf of third parties in the form of Investment Funds or Investment Companies.
Gesiuris has solid procedures and tools for the analysis, valuation and management of risks.
The Company’s remuneration policies and practices do not include elements that encourage risk taking.
The Control and Regulatory Compliance Department is independent from the rest of the company’s departments and reports directly to the Board of Directors.
The determination of the variable remuneration of employees, which is supervised and approved by the Chairman of the Board of Directors, is based on the contribution of the employee to the proper functioning of the Company, which is based on risk prevention and control.
5. Application of the principle of proportionality
The remuneration regulations stipulate that remuneration policies and practices must be in accordance with rational and effective risk management as well as with the Company’s business strategy, so that the principles must be applied in a manner commensurate with the size of the entities, their internal organisation and the nature, scope and complexity of their activities. Article 14 of the UCITS Directive and the Recommendation provide that the Company shall adopt a proportionate approach in order to comply with the principle of remuneration.
It is the responsibility of Gesiuris to consider its own characteristics and, on the basis of these, to develop and apply remuneration policies that are appropriate to these characteristics.
Below are the factors which, after a detailed analysis carried out by the Company’s Management and by the Board of Directors, ensure that Gesiurism adopts a proportionate approach to remuneration:
Nature, scope and complexity of the activities
The Company is only authorised to manage, administer and represent harmonised and non-harmonised UCITS and to market its own UCITS. It is not authorised to carry out discretionary portfolio management, investment advice, custody and administration of securities or reception and transmission of client orders.
All the investment funds managed by Gesiuris are harmonised and have the character of non-complex financial instruments. And of the 27 Investment Companies currently managed by Gesiuris, 26 are also harmonised.
All derivative instruments used in the management of UCITS are from regulated markets.
In summary, Gesiuris’ activity has a low risk profile when compared to the broad set of Spanish and European UCITS management companies, which manage much wider and more complex ranges, and some of which provide investment services in addition to the mere management of UCITS.
5.2. Size of the Company
We limit ourselves to carrying out analysis of our company’s comparative size on the basis of the data provided monthly by INVERCO (Spanish employers’ association which groups together all collective investment entities).
Based on the data provided by INVERCO, the value of the assets under management of the Company represents around 0.20% of the total assets under management of the entire sector, and the participants/shareholders of the Gesiuris number around 10,000, or almost 0.1% of the total accounts opened in UCITS.
5.3. Internal organisation and ownership structure
Gesiuris has both a simple legal structure and an uncomplicated internal governance structure.
The members of the Board of Directors of the Company are not remunerated for this function, without prejudice to the functions that some directors may perform within Gesiuris.
Gesiuris invests a large part of its liquidity in the UCITS it manages, which discourages excessive risk taking.
The internal audit function is outsourced, thus guaranteeing even greater independence of the analyses carried. Its remuneration has only a fixed component in accordance with the contract for the provision of services.
Gesiuris’ majority shareholder is a leading force within the management team, which helps to ensure that no risks that contravene business strategy or that could undermine the Company’s long-term viability and sustainability are taken.
Gesiuris is only authorised to manage and market UCITS, and all of the UCITS it manages, with the exception of one small Investment Company, are non-complex products. The investment strategies of the different UCITS are clear and simple, and Gesiuris only carries out its activity within Spanish territory.
Therefore, taking into account the criteria of internal organization, size, and the nature and complexity of the activity and applying the principle of proportionality, the Company may not apply certain principles with regard to remunerations. Its Remuneration Policy is defined as follows.
6. General principles of remuneration policy
It shall not provide incentives to assume risks incompatible with the risk profiles, fund rules or statutes of UCITS.
It shall be compatible with the business strategy, objectives, values and interests of the UCITS and the S they manage or the investors of the UCITS, and shall include measures to avoid conflicts of interest.
There is the possibility of variable remuneration. But this is not contractually based and will never be undertaken if it undermines the financial situation of the company or poses any kind of a threat to its future economic viability.
In total remuneration, the fixed and variable components will be properly balanced. The manager will apply the “principle of proportionality” taking into account the criteria set out in the UCITS regulations as well as the size, internal organisation, nature, scope and complexity of the activities carried out.
7. Fixed remuneration policy
The fixed remuneration shall be the result of negotiation between the employees and the Company and shall be commensurate with the level of training, experience, knowledge and duties assigned to the employees. In the case of employees managing UCITS, the number of UCITS managed and the value contributed will also be taken into account.
The employees who are members of the Board of Directors may have a fixed salary according to the responsibilities they have, the Committees they sit on and the work they carry out.
The fixed remuneration shall constitute a sufficiently high part of the total remuneration that the variable remuneration may end up being negligible.
8. Variable remuneration policy
Firstly, a distinction is made between two main types of employees: those whose professional activities have a significant impact on Gesiuris’ risk profile or the management of the UCITS, and those who do not.
The first group includes the members of the board of directors, the general management, the members of the control department and the managers of the UCITS, and in the second group are the rest of the employees.
Variable remuneration will never mean the acquisition of a consolidable right for future remuneration. There is no contractual commitment to variable remuneration, since it is a form of remuneration whose amount is decided in a discretionary manner by the Company.
8.1 Remuneration policy for employees whose professional activities do not have a significant impact on the risk profile of Gesiuris or the UCITS it manages.
This group includes members of the UCITS Administration Department, the Customer Service department, the Company’s Administration Department and members of the Management department that do not deal with UCITS.
Salary supplements may be granted based on various criteria, both financial (quantitative) and non-financial (qualitative): the employee’s performance in his or her daily work, compliance with the Internal Code of Conduct and Gesiuris’ procedures, the degree of involvement with Gesiuris, collaboration with the rest of the departments, the functioning of his or her department and the company in general.
Variable remuneration will generally be annual, but this may be changed if deemed appropriate.
8.2 Remuneration policy for those employees whose professional activities have a significant impact on Gesiuis’ risk profile or the UCITS it manages.
This group includes the UCITS managers, the General Management and the members of the Board of Directors.
They may receive a variable remuneration based on the results generated by the UCITS they manage, although this remuneration is not recognised by contract and therefore does not constitute an obligation for Gesiuris and will never be an incentive for the excessive assumption of risks by the employee.
The disimbursement of this variable remuneration depends on several criteria, both financial (quantitative) and non-financial (qualitative): correct compliance with the requirements of the regulations in force, the use of GESIURIS AM’s own action protocols, compliance with the IRC, the number of complaints from participants/shareholders in relation to its activity, the requirements of the supervisory bodies related to its tasks, involvement in the IMSS and the short, medium and long term results of the UCITS they respectively manage.
Variable remuneration shall never represent remuneration in excess of 90% of the income obtained by Gesiuris as a management fee for the UCITS managed by the manager.
General Management reports hierarchically to the Board of Directors, which determines its variable remuneration based on the achievement of the objectives set.
The Control Department reports hierarchically to the Board of Directors, which is why it is the Board that determines its variable remuneration based on the achievement of the department’s objectives, independently of the controlled business areas.
Gesiuris shall publish, in its own annual report (and in the annual reports of its UCITS), the following information on its remuneration policy:
– The total amount of remuneration paid to its staff, broken down into fixed and variable remuneration, the number of beneficiaries and, where applicable, remuneration based on a share of the profits of the UCITS obtained by Gesiuris as compensation for management and excluding any share of the profits of the UCITS obtained as a return on the capital invested by Gesiuris in the UCITS.
– The aggregate amount of the remuneration, broken down between senior management and employees of Gesiuris whose actions have a material impact on the UCITS’ risk profile.
10. Approval and review of remuneration policy
Given the size of the Company and in accordance with the principle of proportionality, it is not considered necessary to create a Remuneration Committee. Instead this function will be assumed by the General Management and the Chairman of the Board of Directors.
The Board of Directors will be the body responsible for approving the Remuneration Policy, which will be reviewed, updated and/or modified, at least annually.
For its part, the General Management will be responsible for implementing and applying the approved remuneration policy, verifying at all times that its application does not violate the principles set out therein.
11. Internal Communication
This remuneration policy will be made known to all Gesiuris employees. This document and its successive modifications will always be accessible and available to any employee who requires it.