b'68 Mercia asset Management PLc Annual Report and Accounts 2021Remuneration reportRemuneration Committee The review outputs, which were endorsed by the Committee at The Remuneration Committee is responsible for determining andthat time and in subsequent years, included a recommendation agreeing with the Board the framework for the remuneration ofthat the Group adopt a policy of active remuneration review the Chair, the Executive Directors and other designated seniorwhich was event rather than time-driven, i.e. moving from net executives. Within the terms of the agreed framework, it is alsoexpenses to net revenues or growing the value of the direct responsible for determining the total individual remunerationinvestment portfolio above an agreed annual target. The packages of such persons including where appropriate salaries,historically agreed remuneration parameters were:bonuses, share options and other long-term incentives. The remuneration of Non-executive Directors is a matter for the ChairBase salariesthese should move gradually towards lower and the Executive Directors. The remuneration of the Chair is aquartile market levels of the comparator group, reflecting the matter for the Board. No Director is involved in any decision as tolower market capitalisation of the Group in its early stage of his or her own remuneration. developmentAnnual bonusesthe review recommended that maximum For the year to 31 March 2021, the Remuneration Committeebonuses of up to 100% of base salary should be capable of comprised Ian Metcalfe as Chair, Caroline Plumb OBE andbeing earned for exceptional performance. The review also Dr Jonathan Pell. The Remuneration Committee meets at leastsuggested that the Committee should consider apportioning twice a year and otherwise as required. During the year, thean element of bonus awards into some form of deferred Committee met formally four times, with all meetings being fullyMercia sharesattended, and on other occasions on an as required basis. Long-term incentivesasset management groups (be they listed or unlisted) typically implement carried interest plans Remuneration policy which allocate 20% carried interest to the senior executive The Remuneration Committee believes that the success of theand investment team. Mercias plan provides for 10% carried Group depends on the performance of the Executive Directorsinterest to be allocated because the Group also has a share and senior management team and in being able to attract, retainoption scheme. The review recommended that for at least the and motivate people of high calibre and experience. Thethree years to 31 March 2019, annual share option awards be Committee also recognises the importance of ensuring thatmade to Executive Directors at the level of 1x base salary. employees are incentivised and identify closely with theHaving taken soundings from both the Groups Nominated achievement of the Groups strategic objectives, the leading onesAdviser and remuneration specialists the Committee agreed of which are to achieve incremental shareholder value over theto adopt this policy, to be reviewed annually.medium term through successful investment in, and subsequent exit from, technology-based companies, as well as growth of theThe Committee continued to adopt these recommendations as Groups assets under management. the Groups performance-focused remuneration policy up to 31 March 2021. Having agreed to a maximum bonus of up to 100% Accordingly, the Committee seeks to provide a fair, balanced,of base salary for exceptional performance in the year to competitive and affordable remuneration package for its31 March 2021, the Committee determined that any bonus award Executive Directors and staff, while ensuring that a significantwould be payable in cash up to 50% of base salary with the proportion of the total remuneration of each Executive Directorremainder in a form of deferred Mercia shares. The agreed is linked to the performance of the Group, against a set ofcriteria for determining the ultimate award were:pre-determined and largely financial objectives. For Executive Directors, the main elements of the remuneration package are1.Total shareholder return45% weightingbase salary, an annual performance-related bonus scheme and2.Funds under management performance30% weightingparticipation in the Groups long-term share option scheme,3.Environmental, Social and Governance (ESG) progress, carried interest and performance plans. Other benefits includehigh-performing teams and Mercia core values25% employer contributions to a defined contribution personalweighting.pension scheme, life assurance, private health insurance and permanent health insurance. Only base salaries are pensionable. In determining the bonus payable for the year to 31 March 2021, the Committee first noted that the Groups financial performance In the Groups earlier stages of its development, there was awas achieved without having to apply for any Government-backed natural tension between affordability and the need to attractfinancial support, delay any payments to HMRC or suppliers, and retain talent in a competitive sector. In 2016, the Committeeimpose any pay cuts or make any of its valued staff redundant as a engaged external remuneration consultants to review executiveresult of the pandemic.remuneration throughout the Group. The review focused on four elements of remunerationbase salary, annual bonuses,Having considered the record financial performance of the Group long-term incentives and benefit packagesin the context ofand the successful leadership of the Executive Directors against current remuneration practices and the Groups own objective ofeach of the above criteria, the Committee awarded bonuses to sustained long-term capital growth. The external consultantseach Executive Director at 98% of their base salary for the year to also benchmarked the then existing remuneration packages31 March 2021. Of the total, 50% of each bonus has been paid in against a defined comparator group. cash with the balance of 48% in deferred shares, settled in cash, with the net payment receivable by the Executive Directors applied by purchasing shares in Mercia, which will be held for a minimum of one year.'