SNI Remuneration Disclosure
MIFIDPRU Public Disclosure Document
Sturgeon Ventures LLP
Date: as of 1st December 2023
For the period: 1st April 2022 to 31st March 2023
The Financial Conduct Authority (“FCA” or “regulator”) in the Prudential Sourcebook for MiFID Investment Firms (“MIFIDPRU”) within the FCA Handbook, sets out the detailed prudential requirements that apply to Sturgeon Ventures LLP (“the firm”, “Sturgeon”, “we”). Chapter 8 of MIFIDPRU (“MIFIDPRU 8”) sets out public disclosure rules and guidance with which the firm must comply, further to those prudential requirements.
Sturgeon 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 Sturgeon in accordance with the requirements of MIFIDPRU 8 and is verified by the firm’s Management Committee. Unless otherwise stated, all figures are as at 31st March 2023, covering the financial period 1st April 2022 to 31st March 2023.
The firm’s main business activity is as a Sub Threshold AIFM, to UK and overseas closed ended funds with zero leverage. We are a portfolio manager for Single Managed Accounts of Elective Professional Clients, and for delegated mandates of offshore managers in liquid strategies. We advise offshore funds which are managed in offshore jurisdictions, either ourselves or with our Appointed Representative Firms. We undertake Corporate Finance whether it is buying or selling a stake in a private or public company or raising capital for new shares. A percentage of our business is as a Regulatory Incubator also known as a Regulatory Host with the use of Appointed Representative Firms.
As an SNI MIFIDPRU Investment Firm, Sturgeon 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.
The objective of Sturgeon’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, Sturgeon 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.
Sturgeon 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 Sturgeon 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 performance of each business unit 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 ultimate decision on variable remuneration to be awarded to staff members is made by the firm considering its current profits and any future capital required to be put aside for expansion plans or for regulatory capital purposes on the basis of forecasts. The outcome of these considerations will then be used to determine a bonus pool to be distributed to staff members. The amount allocated to each individual will be based on their overall contribution to the firm as a whole, is fully discretionary and the decision rests with the Management Committee. Any bonus pool will always be based on the profit of the Firm and not future income. The Management Committee will also consider the firm’s financial and capital position, taking into account any potential costs/capital strains which may occur over the coming year. The bonus pool is linked to the performance of the firm as a whole and not individual performance. The key financial performance measures used to determine the total variable pay-out is the firm’s net profit/loss after all expenses have been paid and this will be supplemented by an assessment of other key performance measures and identified risks outlined within the firm’s Internal Capital Adequacy Risk Assessment (“ICARA”).
Individual staff performance at Sturgeon is determined using financial and non-financial criteria on a meritocratic basis which is gender neutral. Performance is based on a range of criteria on which each staff member, taking into account their role, is assessed. The performance of staff members is not based upon contribution to revenue only; it also includes factors such as their adherence to the firm’s compliance policies and risk limits. Any violations of these policies will be considered when determining variable remuneration and may have a negative impact on the amount of variable remuneration awarded.
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.
Summary of Qualitative Remuneration Disclosures
In accordance with MIFIDPRU 8.6.2 the firm makes the following summary qualitative remuneration disclosures:
- The firm’s remuneration policies and practices are reviewed annually to ensure they are appropriate and proportionate to the nature, scale and complexity of the risks inherent in the business model and the activities of the firm.
- The Management Committee is directly responsible for the overall remuneration policy. The firm does not have a separate Remuneration Committee.
- The firm ensures that its remuneration structure promotes effective risk management and balances the fixed and variable remuneration components for all staff.
- Variable remuneration is adjusted in line with capital and liquidity requirements as well as the firm’s performance.
The following categories of staff eligible to receive variable remuneration are as follows:
- All staff
Sturgeon’s Remuneration Policy sets out the criteria for setting fixed and variable remuneration. All remuneration paid to staff members is clearly categorised as either fixed or variable remuneration.
Fixed remuneration is based upon a staff member’s professional experience and organisational responsibility. It is permanent, pre-determined, non-discretionary, non-revocable and not dependent on performance.
Variable remuneration is based upon staff members performance or, in exceptional cases, other conditions. Performance reflects the long-term performance of the staff member as well as performance in excess of the staff member’s job description and terms of employment, and
- includes discretionary pension benefits; and
- includes carried interest, as referred to in SYSC 19G.1.27R.
Total remuneration is based on balancing both financial and non-financial indicators together with the performance of the firm and the staff member’s business unit.
The firm ensures that fixed and variable components of the total remuneration are appropriately balanced; and the fixed component represents a sufficiently high proportion of the total remuneration to enable the operation of a fully flexible policy on variable remuneration.
The firm monitors fixed to variable compensation to ensure SYSC 19G is adhered to with respect to Total Remuneration.
Governance and Oversight
The Management Committee is responsible for setting and overseeing the implementation of Sturgeon’s remuneration policy and practices. In order to fulfil its responsibilities, the Management Committee:
- 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 partners, clients 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.
Sturgeon’s remuneration policy and practices are reviewed annually by the Management Committee.
Quantitative Remuneration Disclosure
All firms are required to publicly disclose certain quantitative information in relation to the levels of remuneration awarded.
As an SNI firm and in accordance with MIFIDPRU 8.6.8, Sturgeon is required to disclose the total amount of remuneration awarded to all staff, split into fixed and variable remuneration.
For the financial year 1st April 2022 to 31st March 2023, the total amount of remuneration awarded to all staff was £416,311, of which £158,714 comprised the fixed component of remuneration and £257,597 comprised the variable component. For these purposes, ‘staff’ is defined broadly, and includes, for example, employees of the firm itself, partners/members and secondees.