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 Caius Capital LLP (“Caius” 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.

Caius 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 to disclose information regarding its remuneration policy and practices.

The Firm has not issued additional tier 1 instruments and, as such, it is not required to disclose any information in relation to the below areas:

  • Risk management objectives and policies;
  • Own funds; and
  • Own funds requirements.

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 Caius in accordance with the requirements of MIFIDPRU 8 and is verified by the Governing Body (the Executive Committee of the Firm). Unless otherwise stated, all figures are as at the Firm’s 31 March financial year-end.

Remuneration Policy and Practices

Overview

As an SNI MIFIDPRU Investment Firm, Caius 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”)). Caius, as an alternative investment fund manager, is also classified as a collective portfolio management investment firm, and as such, is also subject to the AIFM Remuneration Code (SYSC 19B). The purpose of the remuneration requirements is to:

  • Promote effective risk management in the long-term interests of the Firm and its clients;
  • Ensure alignment 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 the Firm’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.

In addition, Caius 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.

Caius 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 Caius is made up of fixed and variable components. The fixed component is paid as salary to employees and as an advance draw on profits by staff who are members of the LLP. Fixed remuneration is paid monthly in arrears to each member of staff. The variable remuneration component takes the form of a discretionary bonus. Senior staff who are members of the LLP are also eligible for a profit share. Bonus remuneration is paid in the first calendar quarter following the end of the performance period to which it relates and members profit shares are paid after the end of the financial year.

The fixed and variable components of total remuneration are appropriately balanced such that the fixed component represents a sufficiently high proportion of 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 is constrained, or where there is a risk that the Firm may not be able to meet its capital or liquidity regulatory requirements.

Base Salary and Advance

In order to both attract and retain skilled staff, we review the fixed remuneration element for all staff annually taking account of a number of factors including but not limited to, market competitiveness and individual performance.

Bonus

The Firm’s bonus scheme is a discretionary reward scheme based on the performance of the Firm as a whole. All bonuses are dependent on the Firm’s overall financial result to ensure a sound capital base. On an individual level, the scheme is designed and linked to both financial and nonfinancial criteria, rewarding behaviours that promote positive non-financial outcomes for the firm and limiting eventual behaviours contrary to the firm’s values. The bonus pool and other individual bonuses will be adjusted as deemed necessary by the Governing Body of the Firm in consideration of the following: (i) any compliance or regulatory issues that have occurred or are under investigations internally or externally; (ii) any persistent or significant breaches in either financial or non-financial KPI’s; (iii) Any conduct related matters that have occurred or are under investigation internally or externally; any matters that adversely impact client outcomes; any other factors that may publicly impact the Firm’s brand or reputation.

Profit Share

If after payment of the Firm’s operating expenses, including fixed remuneration and bonuses, the Firm has generated additional profit then each member is entitled to a share of such profits according to a fixed percentage. The profit share is designed to reflect an ownership reward stream based on the performance of the Firm rather than one based on individual performance.

Control function staff are functionally and hierarchically independent from the business units they oversee and are remunerated in line with the achievement of the objectives of their functions. The determination of the level of remuneration of such staff is independent of the performance of the business areas they oversee.

Guarantees

The Firm may award the following remuneration from time to time and when it is deemed to be appropriate: (i) sign-on bonus: only in the first year of service of the newly hired material risk takers where the firm has a strong capital base; (ii) buy-out award: involves the Firm compensating a new employee for reduced, revoked, or cancelled variable remuneration by the previous employer; (iii) retention award: this is dependent on a material risk taker remaining in role until the end of a restructuring or a wind-down of the firm; (iv) severance pay: in case of early termination of the employment contract, the Firm retains the ability to make severance payments as long as they reflect the individual’s performance over time and do not reward failure or misconduct.

Governance and Oversight

Following an assessment of the size, internal organisation and the nature, scope and complexity of Caius Capital, the Firm’s Governing Body has determined that it is not required to appoint a Remuneration Committee. The Governing Body shall be responsible for determining appropriate levels of remuneration and for ensuring that the Firm’s Remuneration Policy complies with the requirements of the AIFM Remuneration Code.

Senior management are responsible for setting the remuneration of all staff and the Compliance Officer is a member of the Governing Body. No external consultants have been engaged on remuneration matters.

The Governing Body is responsible for setting and overseeing the implementation of the Firm’s remuneration policy and practices. In order to fulfil its responsibilities, the Governing Body: (i) 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; and (ii) prepares decisions regarding remuneration, including decisions that have implications for the risk and risk management of the Firm; (iii) 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; and (iv) ensures that the overall remuneration policy is consistent with the business strategy, objectives, values, and interests of the Firm and of its clients.

The Firm’s remuneration policy and practices are reviewed annually by the Governing Body.

Quantitative Remuneration Disclosure

During the financial year between 1 April 2022 and 31 March 2023, the total remuneration of staff of Caius Capital fully or partly involved in the activities of the AIF was £14,597,194. Within such figure, the proportion of the fixed remuneration of these Caius Capital LLP staff was £2,453,718 and the proportion of variable remuneration of these Caius Capital LLP staff was £12,143,476. For these purposes, ‘staff’ is defined broadly, and includes, for example, employees of the Firm itself, partners or members, employees of other entities in the group, employees of joint service companies, and secondees.