The Shareholder Rights Directive (“SRD II”)
SRD II aims to strengthen shareholder engagement and increase transparency for asset managers and owners that invest in shares traded on regulated markets.
Under the FCA rules, Altum UK is required to either (a) develop and publicly disclose an engagement policy that meets the requirements of the FCA rules, and publicly disclose on an annual basis how this engagement policy has been implemented in a way that meets the requirements of the FCA rules, or (b) publicly disclose why Altum UK has chosen not to comply with these requirements.
While Altum UK supports the aims of SRD II, it has chosen not to maintain and publish such an engagement policy because it currently does not take material positions in in-scope shares.
Altum UK, a wholly-owned subsidiary of Altum US, is authorized and regulated by the United Kingdom Financial Conduct Authority (“FCA”), (FRN # 613245) and has been appointed by Altum US to act as sub-investment manager in respect of its advisory clients. This information is provided solely in order to meet Altum UK’s obligations under applicable FCA rules. This information is representative of Altum UK’s trading activity for the period in question, and not the trading activity of Altum US or the Altum group as a whole. Nothing in this information constitutes a recommendation of any counterparty, whether in respect of their services for trading or otherwise. Subject to applicable law and regulation, Altum group shall have no liability in respect of this information. Please note that information for the Reporting Period has been collated based on the regulatory obligations that applied to Altum UK, its affiliates, brokers and execution venues during that time. In respect of Altum UK and other financial institutions to whom MiFID II applies, those regulatory obligations were different to those that apply to them now and pursuant to which this report has been prepared. Consequently, there are certain sections in this report for which information required under MiFID II for the Reporting Period (i) was not available; (ii) was only available partly; or (iii) was available in a different format. As a result this report has been prepared on a best efforts basis only. The assumptions and available information used to prepare this report may result in inconsistencies in information across asset classes presented herein. Please also note that the assumptions and methodologies used to produce this report may not be used for the preparation of future reports. Altum UK does not guarantee the correctness or completeness of the information in this report and shall not be responsible for or have any liability whatsoever for any loss or damage caused by errors, inaccuracies or omissions in connection with use or reliance on this information.
Altum Capital Management (UK) Ltd
MIFIDPRU 8 Disclosure
April 2024
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 Altum Capital Management (UK) Ltd ("Altum UK" 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.
Altum UK 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 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 Altum UK in accordance with the requirements of MIFIDPRU 8 and is verified by the Board of Directors. Unless otherwise stated, all figures are as at the firm's financial year-end, which is 31 December 2023.
Remuneration Policy and Practices
Overview
As an SNI MIFIDPRU Investment Firm, Altum UK 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;
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.
Remuneration practices are designed to ensure that the interests of Altum UK’s sole client are aligned with that of Altum UK. This practice has been adopted to ensure that staff are not motivated by short-term gain and are not incentivised to adopt an approach which advances risk taking at the expense of a more prudent risk appetite.
In addition, Altum UK 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 most significant competitive advantage.
Altum UK is committed to excellence, teamwork, ethical behaviour, and the pursuit of exceptional client outcomes. From a remuneration perspective, performance is determined by assessing various factors related 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 Altum UK is made up of fixed and variable components. The fixed component is commensurate with staff member seniority, experience and qualifications. The Board of Directors have sought to set the fixed element of remuneration at a sufficient level to provide staff with comfortable living standards, in an attempt to avoid reliance on any variable element of remuneration, whilst ensuring Altum UK’s, capital and liquidity positions are preserved. Discretionary payments of variable remuneration are made entirely at the discretion of senior management and will only be paid after all known liabilities have been settled. This ensures that the capital of the Firm is preserved. As a result of the above, Altum UK believes its remuneration policy is consistent with, and promotes, sound and effective risk management and does not encourage risk-taking that exceeds the level of tolerated risk of Altum UK. It considers the firm's overall financial and non-financial performance (as well as each business unit separately) and the financial and non-financial performance of the individual in contributing to the firm's success. All staff members are eligible to receive variable remuneration.
The below summarises the financial and non-financial criteria of performance used across the firm in assessing the level of variable remuneration to be paid:
Firm:
· Financial Performance Criteria
o The financial performance of Altum UK and its contribution to the overall corporate parent’s, Altum Capital Management LLC (“Altum LLC”), financial performance.
o The impact of Altum UK's remuneration schemes on the its Capital and Liquidity position.
· Non- Financial Performance Criteria
o Altum UK considers how its remuneration schemes contribute to effective risk management of the Firm's operations and the provision of investment services to its client.
o How Altum UK's remuneration schemes assist the promotion of a culture which fosters adherence to the firm's obligations as an Authorised Firm.
o Altum UK considers how its remuneration schemes foster a culture that focuses on the long-term success of Altum UK’s client and avoids or mitigates any conflict of interest between Altum UK and its client.
Business Unit:
· Financial Performance Criteria
o For non-investment management business units, adherence to planned budget expectations.
o For the investment management business unit, the performance of Altum UK’s client and the business unit's contribution to the client’s performance.
· Non- Financial Performance Criteria
o For non-investment management business units, their achievement of assigned tasks to support the success of Altum UK.
o Altum UK shall consider if the investment management business unit delivered a sound risk management programme and promoted a compliant and healthy working culture in the prior financial year.
Individual:
· Financial Performance Criteria
o For all staff, a holistic assessment of a staff member’s contribution to Altum UK in the prior year, when benchmarked against agreed objectives.
o For investment management professionals, their contribution to the portfolio performance of Altum UK’s client and the associated financial performance of Altum UK.
· Non- Financial Performance Criteria
o For all staff, their adherence to the conduct standards that are expected by Altum UK’s Board of Directors in the prior financial year.
o The Firm considers if any remuneration scheme shall impose a conflict of interest between Altum UK and a staff member or Altum UK and a client.
The 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 or where there is a risk that the firm may not be able to meet its capital or liquidity regulatory requirements.
Governance and Oversight
The Board of Directors is responsible for setting and overseeing the implementation of Altum UK’s remuneration policy and practices. In order to fulfil its responsibilities, the Board of Directors:
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 the overall remuneration policy is consistent with the firm's and its client's strategy, objectives, values, and interests.
Altum UK’s remuneration policy and practices are reviewed annually by the Board of Directors.
Quantitative Remuneration Disclosure
For the financial year 1 January to 31 December 2023, the total amount of remuneration awarded to all staff was comprised of 33% as a fixed component of remuneration, and 67% as the variable component. For these purposes, ‘staff’ is defined broadly and includes, for example, firm employees, directors, and secondees. Given the small size of Altum UK, the exact quantitative values are removed from this document. Additional information may be available upon request.