Replacement Policy

To avoid encouraging excessive risk-taking, the fund company has adopted a replacement policy. Employees receive a fixed monthly salary, pension contributions, and health insurance. There are no agreements for variable compensation or similar arrangements.

According to Chapter 3, Section 22, and Chapter 9, Section 3 of the Swedish Financial Supervisory Authority’s regulations on managers of alternative investment funds (FFFS 2013:10) and Chapter 8a, Section 3 of the regulations on securities funds (FFFS 2013:9), the Company must have a replacement policy. Furthermore, Article 1 in conjunction with Article 27 of the Commission Delegated Regulation 2017/565 of April 25, 2016, stipulates that the Company, regarding discretionary management, must establish and implement a compensation policy and practices through appropriate internal procedures that consider all the Company’s clients, ensuring that clients are treated fairly and that their interests are not adversely affected by the Company’s compensation policy in the short, medium, or long term. Additionally, the European Parliament and Council Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the “Disclosure Regulation”) requires the Company to provide information in its compensation policy on how the policy is consistent with the Company’s integration of sustainability risks.

The Company has decided to integrate sustainability risks into its investment decision-making process and has therefore established a specific policy for integrating sustainability risks. Consequently, employees whose tasks are related to the investment decision-making process must particularly adhere to the Company’s policy for integrating sustainability risks and, in decisions made on behalf of the funds, also analyze and integrate any potential sustainability risks. The integration of sustainability risks into the investment decision-making process is, therefore, a criterion for determining variable compensation for such personnel.

According to the regulations, the Company must have a compensation policy that is both consistent with and promotes sound and effective risk management, and counteracts excessive risk-taking.

The compensation policy must be designed and applied in a manner appropriate to the company’s size and internal organization, as well as the nature, scope, and complexity of its operations. The compensation policy must also align with the business strategy, goals, values, and long-term interests of the manager and the managed alternative investment funds or the investors in the alternative investment funds, and include a list of measures to be taken to avoid conflicts of interest.

The Company has identified that an improperly designed compensation system and payments of variable compensation could negatively impact the Company’s liquidity and result in non-compliance with regulatory requirements, such as capital adequacy, and create conflicts with the interests of shareholders. Risk-takers could potentially take excessive risks or violate fund rules and the Company’s internal regulations to increase their own compensation levels in the short term with a poorly designed compensation system. Furthermore, the assets in the Fund could potentially be valued higher than market price to increase the Company’s fee income.

Against this background, it is of utmost importance that the Company ensures its compensation policy and compensation system are consistent with and promote sound and effective risk management. A part of this work is to identify and report the measures to be taken. Compensation models that may occur in the Company must have an appropriate balance between fixed and variable components. Guaranteed variable compensation must not occur.

The fixed components must constitute a sufficiently large part of the employee’s total compensation to allow the variable components to be set to zero. The Company must specify in its compensation policy the maximum proportion of variable components relative to fixed components for all categories of employees eligible for variable compensation.

All employees may be eligible for variable compensation. Variable compensation for employees must not, under any circumstances, exceed an amount equivalent to 24 months’ salary.

Variable compensation shall be decided by the board of directors based on the proposal of the chairman of the board. The variable compensation is not calculated according to any predetermined formula but is discretionary in nature. The Company bases the possibility of variable compensation on the following criteria for each employee category.

Investment Personnel:

  • Company’s Performance
  • Employee’s Contribution to the Company’s Earning Capacity
  • Seniority
  • Customer Care/Investor Satisfaction
  • Management Tasks
  • Training Initiatives
  • Compliance with Internal/External Regulations/Risk Management Policy/Policy for Integrating Sustainability Risks

Distribution

  • Customer Care/Investor Satisfaction
  • Strategic Goals
  • Structural Issues
  • New Shareholders
  • Compliance with Internal/External Regulations

Non-Investment Personnel:

  • Audit Results
  • Strategic Goals
  • Structural Issues
  • Adaptation to New Regulations
  • Compliance with Internal/External Regulations, Risk Management Policy/Policy for Integrating Sustainability Risks
  • Teamwork/Motivation
  • Leadership

When the Company decides how much of the total compensation should be variable, the Company must always ensure that its total compensation does not limit the Company’s ability to maintain a sufficient capital base or to strengthen the capital base if necessary. This means that the Company, among other things, must consider:

  • the size and cost of the additional capital required to cover the risks that have impacted the period’s results,
  • Would you like to continue with the translation?
  • the possibility that expectations of future revenues are not realized

For specially regulated personnel, at least 60 percent of the variable compensation shall be deferred for three years before it is paid out or ownership of shares is transferred to the employee. For others, it also applies that at least 60 percent of the variable compensation is deferred for three years before it is paid out.

Deferred variable compensation is only paid out or transferred to the employee to the extent that it is justifiable considering the Company’s financial situation and warranted by the Company’s and the employee’s performance. The deferred portion of the compensation may also be completely forfeited for the same reasons.

Information about the fund company’s compensation is published in the funds’ annual report and on the fund company’s website. Information about the compensation policy can also be sent by mail free of charge upon request. Compliance with the compensation policy is monitored annually by the compliance function.

The Company’s compensation policy has been adhered to and has not undergone any significant changes beyond what is required by law. A paper copy of the Company’s compensation policy can be obtained free of charge upon request.