b'Strategic report Governance Financial statementsRemuneration reportRemuneration Committee The review outputs, which were endorsed by the Committee and The Remuneration Committee is responsible for determining andremain relevant today, included a recommendation that the Group agreeing with the Board the framework for the remuneration of the adopts a policy of active remuneration review which is event rather Chair, the Executive Directors and other designated senior executives.than time-driven, ie growing net asset value (NAV) above an agreed Within the terms of the agreed framework, it is also responsible fortarget. More specific agreed recommendations in respect of the determining the total individual remuneration packages of such personsExecutive Directors are summarised below:including where appropriate salaries, bonuses, share options and other long-term incentives. The remuneration of Non-executive Directors is Base salariesthese should move gradually towards lower quartile a matter for the Chair and the Executive Directors. No Director is involvedmarket levels of the comparator group, reflecting the lower market in any decision as to his or her own remuneration. capitalisation of the Group in its stage of development.Annual bonusesthe review recommended that maximum bonuses For the year to 31 March 2020 the Remuneration Committee comprisedof up to 100% of base salary should be capable of being earned for Ian Metcalfe as Chair, Susan Searle and Caroline Plumb OBE until 2 Julyexceptional performance. The review also suggested that the 2019. From that date the Committee comprised Ian Metcalfe as Chair,Committee should consider deferring an element of future bonus Caroline Plumb OBE and Dr Jonathan Pell. The Remunerationawards into Mercia shares, to be retained for three years.Committee meets at least twice a year and otherwise as required.Long-term incentivesasset management groups (be they listed or During the year the Committee met formally five times, with allunlisted) typically implement carried interest plans which allocate meetings being fully attended, and on several other occasions on an20% carried interest to the senior executive and investment team. asrequired basis. Mercias plan provides for 10% carried interest to be allocated because the Group also has a share option scheme, although the Remuneration policy current operation of the two schemes still does not bring the senior The Remuneration Committee believes that the success of the Groupteam fully in line with market. The review therefore recommended depends, in part, on the performance of the Executive Directors andthat for at least the three years to 31 March 2019 annual share option senior management team and in being able to attract, retain andawards be made to Executive Directors at the level of 1x base salary. motivate people of high calibre and experience. The Committee alsoHaving taken soundings from both the Groups Nominated Adviser recognises the importance of ensuring that employees are incentivisedand remuneration specialists, the Committee agreed in principle to and identify closely with the achievement of the Groups strategiccontinue with this policy for the next three years to 31 March 2022, objectives, the leading one of which is to achieve incrementalalthough this will be reviewed annually.shareholder value over the medium term through successful syndicated investment in, and subsequent exit from, technology- Having carefully considered these and other recommendations,basedcompanies. the Committee adopted them as the Groups performance-focused remuneration policy. Having agreed to a maximum bonus of 100% of Accordingly, the Committee seeks to provide a fair, balanced,base salary for exceptional performance for 2019/20, the Committee competitive and affordable remuneration package for its Executivedetermined that any bonus award would be payable in cash up to 50% Directors and staff, while ensuring that a significant proportion of theof base salary with the remainder in deferred shares. The agreed total remuneration of each Executive Director is linked to thecriteria for determining the ultimate 2019/20 award were:performance of the Group, against a set of pre-agreed and largely financial objectives. The main elements of the remuneration package1.Material growth in assets under management30% weighting for Executive Directors are base salary, an annual performance-related2.Qualitative and quantitative progress by the direct investment bonus scheme and participation in the Groups long-term share optionportfolio40% weighting scheme and carried interest plans. Other benefits include contributions3.Operational efficiency10% weighting to a defined contribution personal pension scheme, life assurance,4.Subjective measure of performance by each Executive Director private health insurance and permanent health insurance. Only basereflecting their specific areas of responsibility and influence, salaries are pensionable. including Mercias core values20% weightingGiven the Groups stage in its development, there has remained aNotwithstanding actual performance against these targets, the natural tension between affordability and the need to attract andExecutive Directors voluntarily offered to cap their bonus scheme for retain talent in what remains a competitive sector. In 2016 the2019/20 at 50% of salary, recognising the near-term challenges posed Committee engaged external remuneration consultants to reviewby COVID-19. This gesture was welcomed by the Committee.executive remuneration throughout the Group. The review focused on four elements of remunerationbase salary, annual bonuses,Having considered the performance of the Group and the Executive long-term incentives and benefit packagesin the context of currentDirectors against each of these criteria, as well as the self-imposed remuneration practices, the Groups own objective of sustained,bonus cap, the Committee awarded bonuses to each Executive Director long-term capital growth and benchmarking the existing remunerationof 33% of their base salary for 2019/20.packages against a defined comparator group.Mercia Asset Management PLC 65Annual Report and Accounts 2020'