UAB Alpha Asset Management Remuneration Policy
1.1. This Remuneration Policy (the “Policy”) establishes the remuneration framework applicable to the identified staff of UAB Alpha Asset Management (the “Company”) and the investment funds managed by the Company (the “Funds”), whose professional activities may have a material impact on the services provided by the Company and/or on the Company's risk profile.
1.2. This Policy also sets out the measures adopted to mitigate potential risks arising from inappropriate or disproportionate remuneration arrangements.
1.3. The purpose of this Policy is to establish a remuneration framework for identified staff that promotes the best interests of both the Company and its clients, while also ensuring fair and appropriate compensation for employees. The Policy is designed to allow for a flexible variable remuneration structure and, where appropriate, provides for the possibility of reducing or eliminating variable remuneration altogether. This Policy applies to all employees whose duties may have an impact on the Company's risk profile.
1.4. This Policy has been prepared in accordance with the European Securities and Markets Authority (ESMA) Guidelines of 14 October 2016 on sound remuneration policies under the UCITS Directive, the ESMA Guidelines on Remuneration Policies and Practices (MiFID) (ESMA/2013/606), and applicable legislation of the Republic of Lithuania governing remuneration policies, including, but not limited to, the Law on Managers of Alternative Collective Investment Undertakings of the Republic of Lithuania, resolutions of the Board of the Bank of Lithuania regarding the organisation and conduct of management company activities, and other applicable legal acts.
1.5. The following definitions shall apply for the purposes of this Policy:
1.5.1. Company – a market participant supervised by the Bank of Lithuania and a management company whose principal activity is the management of collective investment undertakings intended for informed investors. Unless stated otherwise, references to the Company in this Policy include both the management company and the Funds managed by it.
1.5.2. Senior Management – the individual or individuals who effectively direct the activities of the management company and participate in decision-making processes.
1.5.3. Identified Staff (or Employee(s)) – categories of employees whose professional activities have a material impact on the management company's risk profile, including senior management, risk-taking staff, control function staff, employees whose total remuneration places them in the same remuneration bracket as senior management and risk-taking staff, and certain categories of employees of entities to which portfolio management or risk management functions have been delegated. The list of Identified Staff shall be approved by the Board.
1.5.4. Remuneration – any form of payment or benefit provided directly or indirectly by the Company to relevant persons in respect of their employment and performance of duties. Remuneration may include financial benefits (such as shares, options, pension contributions, profit-sharing arrangements, salary increases, or debt forgiveness) as well as non-financial benefits (such as promotions, health insurance, vehicle allowances, expense reimbursements, and similar benefits). Remuneration consists of fixed and variable components.
1.5.5. Quantitative Criteria – primarily numerical or financial indicators used in determining remuneration, such as the value of transactions completed, sales volumes, sales targets achieved, or new client acquisition targets.
1.5.6. Qualitative Criteria – primarily non-financial criteria used to evaluate an employee’s performance or the quality of services provided to clients. Such criteria may also include measurable indicators, such as investment performance achieved for clients, a consistently low number of client complaints, and similar factors.
1.5.7. Fixed Remuneration – the permanent component of remuneration that is not dependent on performance results.
1.5.8. Variable Remuneration – the component of remuneration linked to performance and results, including bonuses, supplementary pension contributions, rights to Company shares, share-linked instruments, and other financial or non-financial incentives.
1.5.9. Supervisory Function Holder (Risk Controller) – a person responsible for overseeing senior management and for assessing and periodically reviewing the adequacy and effectiveness of the Company's risk management framework, policies, procedures, and controls.
1.5.10. Control Function Staff – an employee (other than a member of senior management) responsible for risk management, compliance, internal audit, or similar control functions, who reports to the Board on the Company's control activities at least annually.
1.6. Other terms used in this Policy shall have the meanings assigned to them in the legal acts referred to in Section 1.4 of this Policy.
2.1. In order to align the personal performance objectives of Employees and incentive arrangements with the long-term interests of the Company's sustainable operations, this Policy establishes the principles for determining fixed and variable remuneration and the relationship between them.
2.2. The fixed component of an Employee's remuneration shall constitute a sufficiently high proportion of total remuneration and shall reflect the Employee's professional experience, responsibilities, market conditions, and the level of responsibility assigned to the respective individual. The fixed remuneration of each Employee shall be determined individually based on the above criteria and shall remain stable in nature.
2.3. This Policy has been developed taking into account the size, nature, and scope of the Company's activities. The principles established herein and the Variable Remuneration calculation model are designed to:
2.3.1. Be consistent with the long-term interests of the Company's sustainable operations;
2.3.2. Support the Company's business strategy;
2.3.3. Support the Company's objectives;
2.3.4. Reflect the Company's values;
2.3.5. Promote sound and effective risk management;
2.3.6. Help prevent conflicts of interest;
2.3.7. Ensure that Employees are not encouraged to assume excessive levels of risk that are unacceptable to the Company or the Funds managed by it;
2.3.8. Ensure compliance with investor and client protection principles in the provision of the Company's services.
2.4. This Policy establishes a clear relationship between fixed and variable remuneration. Variable Remuneration shall not exceed 100% of the respective Employee's Fixed Remuneration.
2.5. Variable Remuneration may only be awarded on an annual basis.
2.6. Variable Remuneration for a specific Employee shall be awarded annually by decision of the Board.
2.7. Employees performing control functions shall receive Variable Remuneration based solely on the performance of their assigned duties and responsibilities and shall not be rewarded based on the financial performance or business results of the Company.
3.1. Variable Remuneration shall be awarded to a specific Employee by order of the Chief Executive Officer following the annual performance evaluation of the Employee, as provided in Section 4 of this Policy, and after the Board has adopted a decision regarding the amount of Variable Remuneration in accordance with Section 5.3 of this Policy.
3.2. Variable Remuneration may be awarded only if all of the following conditions are satisfied:
3.2.1. The Company's financial performance during the preceding financial year was positive;
3.2.2. The Employee has been continuously employed by the Company for at least 12 months;
3.2.3. The Employee has acted in good faith, no breaches of legal or regulatory requirements have been identified in relation to the Employee's activities, and the Employee has received a positive performance assessment during the preceding three years (or throughout the entire period of employment with the Company if shorter than three years);
3.2.4. The award of Variable Remuneration is consistent with the principles set out in Section 2.3 of this Policy.
3.3. The only form of Variable Remuneration applied by the Company shall be cash payments (bonuses).
3.4. The Company does not apply any deferral period and does not defer any portion of Variable Remuneration.
3.5. The Company does not apply any retention period.
3.6. Once awarded, Variable Remuneration shall be paid together with the next payment of Fixed Remuneration.
3.7. The Board shall have the right to decide not to pay awarded Variable Remuneration or to reduce its amount if the Company's performance does not meet the targets established in the Company's business strategy or if the Company's operations become loss-making.
3.8. The Company shall also have the right not to pay awarded Variable Remuneration and/or to recover Variable Remuneration already paid to an Employee if:
3.8.1. It was awarded or paid on the basis of information that subsequently proves to have been inaccurate or misleading; or
3.8.2. It is subsequently determined that the Employee committed breaches of applicable laws, regulations, or the Company's internal policies; or
3.8.3. The Employee became entitled to Variable Remuneration through dishonest, fraudulent, or otherwise improper conduct; or
3.8.4. The Employee's actions resulted in losses to the Company and/or the Funds managed by the Company; or
3.8.5. Accounting, calculation, or administrative errors were made in the determination and/or payment of Variable Remuneration.
3.9. Payments relating to the termination of employment shall reflect the Employee's performance over the period determined by the Company and shall be structured so as not to reward failure or misconduct. No remuneration shall be paid where the Employee's conduct has resulted in losses to the Company, except where mandatory payments are required by applicable law.
3.10. Employees performing control functions shall receive Variable Remuneration based solely on the performance of duties and responsibilities assigned to them and shall not be rewarded based on the performance of the business units or activities they supervise.
4.1. The calculated Variable Remuneration pool shall not limit the Company's ability to maintain and strengthen its capital base. Variable Remuneration and the Variable Remuneration pool shall be determined based on the Company's overall performance, taking into account current and future risks, as well as the costs associated with maintaining adequate liquidity and capital resources.
4.2. Total Remuneration shall be based on an assessment of both the Employee's individual performance and the overall performance of the Company. Variable Remuneration shall be determined taking into account the Company's financial results during the assessment period and the following evaluation criteria (the list is non-exhaustive and additional criteria may also be considered):
4.2.1. Employee initiative and proactiveness;
4.2.2. Generation of new ideas and contributions to innovation;
4.2.3. Compliance with applicable laws, regulations, internal policies, and the Company's values;
4.2.4. Achievement of objectives and tasks assigned by direct supervisors (for example, achievement of targets established in the business plan for the relevant period);
4.2.5. Feedback from direct supervisors and clients, including the absence of client complaints;
4.2.6. The Employee's position within the Company;
4.2.7. The Employee's professional experience;
4.2.8. Length of service with the Company;
4.2.9. The scope, duration, and complexity of responsibilities assumed by the Employee and the level of accountability associated with those responsibilities;
4.2.10. The size of the group of individuals who collectively have a material impact on the management company's risk profile;
4.2.11. The size of the Company (including assets under management, capital, liabilities, and the total number of Employees);
4.2.12. The nature, scale, complexity, organisational structure, and risk profile of the Company's activities;
4.2.13. Other relevant factors, including, for example, the admission of the Company's securities to trading on a regulated market, authorisations to apply advanced risk assessment methodologies for capital adequacy purposes, or assessments of the Employee based on internal reviews, audits, or other supervisory findings.
4.3. In order to avoid conflicts of interest, the Variable Remuneration awarded to Employees shall not depend exclusively on, nor be determined solely by, the Employee's individual financial performance indicators, such as client acquisition, sales results, fees generated by clients, or similar metrics.
4.4. Employee performance shall be assessed annually within the first three months following the end of the Company's financial year. The performance assessment process shall be documented through annual performance reports completed by Employees, evaluations prepared by direct supervisors, the establishment of objectives and tasks for the following year, recommendations submitted by direct supervisors to the Company's management regarding Variable Remuneration, and the corresponding decisions adopted by the Board.
4.5. Variable Remuneration shall be determined based on performance assessments covering a period of no less than three years. Where an Employee has been employed by the Company for less than three years, the available performance assessment period shall be used. The actual payment of Variable Remuneration components shall be structured over a period that appropriately reflects the Company's business cycle and the risks associated with its activities.
5.1. Oversight of this Policy shall be performed by the Supervisory Function Holder. Taking into account the size and organisational structure of the Company, no Remuneration Committee has been established. Should the Company's structure grow to a size where applicable laws and regulations require remuneration oversight to be performed by a Remuneration Committee, such committee shall be established and its responsibilities and scope of authority shall be regulated in a separate document.
5.2. The Employee responsible for the Supervisory Function or the Control Function (where a separate Control Function has been established) shall review the implementation of this Policy at least annually and shall report the results to the Board in writing. Where deviations from this Policy or deficiencies in its implementation are identified, the Employee performing the Supervisory Function or Control Function shall submit specific recommendations to the Board together with information regarding measures taken or proposed to remedy such deficiencies.
5.3. The Board shall directly oversee the determination, payment, and all other matters relating to Employee Remuneration. Decisions regarding the award and amount of Variable Remuneration shall be made by the Board upon recommendation of the Employee's direct supervisor, in a manner that avoids conflicts of interest and promotes sound and effective risk management within the Company.
5.4. The Board shall directly oversee the Variable Remuneration awarded to senior Employees responsible for risk management and compliance functions.
5.5. In carrying out its responsibilities, the Board shall take into account the long-term interests of the Company's shareholders, investors, and other stakeholders.
5.6. The Employee responsible for the Control Function shall conduct a centralised and independent internal review of the Company at least annually in order to assess whether the provisions of this Policy remain appropriate in light of the Company's business position, strategy, objectives, and values, and whether the Policy is effectively implemented in practice. The Employee shall prepare and submit to the Board recommendations regarding any necessary amendments to the Policy together with draft amendments.
As part of such review, control measures may include assessments of the quality of services provided to clients, such as monitoring telephone conversations where sales activities are conducted by telephone, and performing sample reviews of investment advice and client portfolio suitability assessments.
5.7. The Employee responsible for the Control Function shall also monitor compliance with the requirement that Employees do not use personal hedging strategies or insurance arrangements designed to offset the risk-adjustment effects incorporated into their Variable Remuneration arrangements.
5.8. The Supervisory Function Holder shall ensure that this Policy and its implementation are reviewed at least annually. As part of such centralised and independent reviews, the Supervisory Function Holder shall assess whether the overall remuneration framework:
5.8.1. Operates as intended, including ensuring that all agreed remuneration arrangements are covered, remuneration outcomes remain appropriate, and due consideration is given to the Company's risk profile, long-term objectives, and strategic goals; and
5.8.2. Complies with applicable national and international laws, regulations, principles, and standards and, where regulatory changes occur, proposes appropriate amendments to this Policy.
In all cases, the Supervisory Function Holder shall be responsible for conducting the review and ensuring that appropriate consideration is given to the review findings. The Supervisory Function Holder shall also monitor compliance by Employees with the Company's risk management policies, procedures, and controls.
5.9. The requirement that Employees refrain from using personal hedging strategies or insurance arrangements designed to reduce the risk-adjustment effects embedded in their remuneration arrangements shall also apply to Variable Remuneration. Employees responsible for supervisory and control functions shall implement effective measures on an ongoing basis to ensure compliance with this requirement. Such measures may include incorporating provisions into employment agreements whereby Employees formally confirm that they have not entered into any prohibited hedging or insurance arrangements.
The Company may adjust Variable Remuneration calculations to reflect elevated risk levels and adverse business conditions affecting the Company.
6.1. This Policy shall be approved by the Board of the Company. The Policy forms an integral part of the Company's risk management framework and is binding on all Employees.
6.2. The Board shall be responsible for establishing the principles of this Policy and the Variable Remuneration calculation models, as well as for reviewing this Policy periodically, at least once every three years and, where necessary, more frequently.
6.3. The Chief Executive Officer shall be responsible for the implementation of this Policy. The Chief Executive Officer shall also be responsible for ensuring that Employees' employment agreements comply with the requirements of this Policy.
6.4. Prior to commencing their duties within the Company, relevant individuals shall be informed of this Policy and acknowledge such information in writing. The fact of such acknowledgement shall be recorded in the Company's activity register. Employees shall also be informed of the criteria that will be used in determining their remuneration and shall be familiarised with the applicable performance evaluation process.
6.5. The Supervisory Function Holder shall be responsible for overseeing compliance with this Policy within the Company. The Supervisory Function Holder shall assess whether the Policy is being followed, whether it remains compliant with applicable regulatory requirements, propose amendments where necessary and/or appropriate, and monitor Employees' compliance with the Company's risk management framework, procedures, and controls.
6.6. The Company shall submit any amendments to this Policy to the Bank of Lithuania, if such amendments have been made, no later than 30 April of each calendar year. In addition, where a Remuneration Committee is established, or where changes are made to its composition, and in the event of any amendments to the list of identified Employees, the Bank of Lithuania shall be notified within five business days of such changes.
The Chief Executive Officer shall be responsible for the timely submission of the information specified in this Section to the Bank of Lithuania. The Employee performing the Control Function within the Company shall be responsible for monitoring compliance with this requirement.
6.7. Without prejudice to confidentiality obligations and personal data protection requirements, the Company shall publicly disclose information regarding Employee Remuneration as required by Article 450 of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012.
Such information shall be disclosed once annually on the Company's website on the same date as the publication of the Company's financial statements.
The Company shall also disclose internally the criteria applied in determining the remuneration of Employees. However, confidential quantitative aspects of individual Employee remuneration shall not be disclosed within the Company.
