Description of the Remuneration Policy according to Art. 69 and as well as Art. 78 in connection with Art. 14a and 14b of the DIRECTIVE 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS- Directive) – recast of Allianz Global Investors GmbH (“AllianzGI”)
Further details of the Company’s current remuneration policy are published on the Internet at regulatory.allianzgi.com. This includes a description of the calculation methods for remuneration and benefits awarded to certain groups of employees, as well as details of the persons responsible for allocation [including members of the remuneration committee]. On request, the information will be made available by the Company in hard copy without charge.
Remuneration decisions are regularly taken by the management of the company. Decisions are based on a bottom-up/top-down methodology which is used to assess performance and make year-end compensation decisions. This methodology involves input from managers, functional heads, and AllianzGI management. Decisions on remuneration for the management itself will be taken by the shareholder.
Additionally, the Supervisory Board has constituted a Remuneration Committee, currently consisting of two Supervisory Board members. At the moment, the members of the remuneration committee are Dr. Markus Deliano and Mr David Newman (employee representative). This Remuneration Committee shall administer and discharge the supervisory tasks assigned to them, in particular the review of the remuneration system of the senior officers in the risk management and compliance functions.
The Remuneration Policy, which was jointly developed by HR, L&C and Risk Management, seeks to implement regulatory requirements with regard to the organization of the remuneration systems of employees and members of the management board, as laid down in the AIFM- and UCITS directive. It applies to the AllianzGI GmbH. The policy was adopted by the Supervisory Board in December 2014 and was last amended in March 2017.
Compensation at AllianzGI
The primary components of monetary remuneration are the base salary, which typically reflects the scope, responsibilities and experience required in a particular role, and an annual discretionary variable compensation award. Variable compensation typically includes both an annual cash bonus that pays out following the end of the performance year and a deferred component for all members of staff whose variable compensation exceeds a certain threshold. Due to the dynamic nature of our business, variable compensation is determined on a discretionary basis with input from managers and functional heads.
The size of the company-wide pool for variable compensations will depend on the company’s business performance and risk position and will therefore vary every year. The risk assessment of the variable compensation pool is based on AllianzGI’s existing risk management standards and processes that enable the identification of any significant risks including significant legal or compliance breaches that are to be considered in the assessment of the need to adjust the variable compensation pool.
The level of pay awarded to employees is tied to both quantitative and qualitative performance indicators. Quantitative indicators are aligned around measurable goals. Qualitative indicators take into account actions reflecting our core values of excellence, passion, integrity and respect. For all employees, a 360 degree feedback evaluation forms part of the qualitative input.
For investment professionals, whose decisions make a real difference to delivering successful outcomes for our clients, quantitative indicators are aligned around sustainable investment performance. In particular for portfolio managers, the quantitative element is aligned with the benchmarks of the client portfolios they manage or with the client’s stated investment outcome objective measured over a multi-year framework.
For employees whose annual variable compensation award exceeds a specific threshold, a proportion of the award is allocated in the form of a long-term award. This is an important feature, linking individual performance with long-term value creation for AllianzGI, clients, and shareholder. The allocation is proportional to the amount of variable compensation awarded; larger awards have a larger proportion allocated long-term. Awards vest after a period of three years.
For employees identified by the Company as staff engaged in Control Functions (e.g. Risk Management, Compliance), the goals depend primarily on function-specific goals of the control units (generally on the level of the individual and/or organizational criterion).
Remuneration requirements for Identified Staff
In accordance with the regulation, certain groups of employees are classified as “Identified Staff”: members of the management, risk takers and employees in controlling positions as identified in current organizational charts and job profiles, as well as all employees whose total remuneration puts them into the same remuneration category as members of the management and risk takers whose activities have a significant effect on the risk profiles of the company and the investment funds managed by it.
Employees classified as “Identified Staff” are subject to additional standards relating to performance management, the form of variable compensation, and the timing of payments. More specifically:
At least one goal is determined on the basis of a multi-year time frame
A significant partof the total variable compensation is deferred into long-term incentive awards
Additional holding periods, so called "Retention periods" for portions of Short- and Long-Term incentives, are introduced
50% of variable compensation (deferred and non-deferred) has to consist of units or shares of investment funds managed by the Company or comparable instruments
an Ex-post Risk Adjustment enables explicit adjustments to previous years‘ performance evaluation and related compensation, to prevent the vesting of all or part of the amount of a deferred remuneration award (Malus), or the return of ownership of an amount of remuneration to the Company (Clawback)
Malus or Clawback will only be applied to the respective member of Identified Staff in cases of negligence or willful misconduct (e.g. breach of code of conduct and other internal rules, especially concerning risks), which for malus to be applied, must have let to:
the Company, a business unit and/or a fund suffering a significant downturn in financial performance; or
the Company suffering a significant failure of risk management;
For claw-back to be applied, must have let to:
fraud being committed; or
misleading information being provided to clients, regulators, the public (the market in particular) or the Company (i.e. Board of Management, superiors, other departments); or
remuneration being received by Identified Staff in breach of applicable regulations