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Remuneration Policy

The objective of a remuneration policy is to ensure all employees are compensated in a way that complies with management guidelines, while offering transparency and consistency in the remuneration strategy, and ensuring compliance with applicable regulations.
In asset management, where human capital is crucial, a company's remuneration policy and practices have a significant impact on competitiveness, helping it recruit and retain talent.
Fostering awareness of our compensation policy and practices among our managers and employees is particularly important to FUNDQUEST ADVISOR, a company part of BNP PARIBAS ASSET MANAGEMENT (BNPP AM), the asset management businessline of BNP Paribas Group.


> What are the key principles of FUNDQUEST ADVISOR's Reward Policy?

  • First, our reward strategy is designed to achieve a sound, responsible and effective remuneration policy and practice. In particular, it is designed to :

          - avoid conflicts of interest ;
         - protect the clients’ interests ; and
         - ensure there is no encouraging of excessive risk-taking.
These three points are central to our policy and are emphasized to all our employees.
To meet these objectives, we use a best practice, which is to align the long-term interests of the employee, the employer and its clients.

 

  • Secondly, in concrete terms, FUNDQUEST ADVISOR’s remuneration policy centres around four guiding business principles :

Pay for Performance: our results-oriented reward policy helps us attract, motivate and retain the best and most effective talent.

Share Wealth Creation: monitoring closely the pay-out ratio of variable remuneration relative to FUNDQUEST ADVISOR’s operating profits (before variable remuneration), allows us to fully align the remuneration of FUNDQUEST ADVISOR’s human capital with that of our shareholders.

Aligning employee’s and company’s goals, particularly for senior managers with long-term incentive plans, enables us to create a closer ”line of sight”, further strengthening the link between performance and rewards.

Promoting an element of employee risk-sharing (which we dub “skin in the game”), ensures senior managers are fully committed to the long term performance of the company and its products.
Together, these guiding principles help shape the FUNDQUEST ADVISOR approach to reward, resulting in what we call "Total Reward".

 

  • Indeed, monetary remuneration is just one part of our total reward package. We also offer our employees competitive benefits, exciting career opportunities and a dynamic workplace offering challenges and a sense of achievement.

> What types of remuneration are awarded in practice?

FUNDQUEST ADVISOR’s compensation structure is made up of three main types of remuneration:

  • Everyone benefits from Fixed Compensation or a base salary, reflecting the individual's role, qualifications and experience, as well as a satisfactory level of commitment.

 

  • Short Term Variable Compensation is a supplement available to a wide range of employees and based on individual and collective performance. It is usually delivered in cash in March after the end of the performance measurement period.

 

  • Long Term Incentive Awards are supplements based on objective criteria defined for targeted populations, such as senior managers. These awards are generally fully deferred, with payment over several years, settled after various risk adjustment factors have been applied.

> How is performance measured and linked to variable remuneration?

 

  • Remuneration depends not just on individual success, but also on the whole company's performance.

For awards of variable remuneration, the global variable remuneration pool is a result of FUNDQUEST ADVISOR's overall performance, reflecting its success in meeting major business objectives. In a top-down approach, this collective performance is assessed and cascaded down to FUNDQUEST ADVISOR departments, based on specific key performance indicators.
The BNPP AM’s Finance and HR teams help FUNDQUEST ADVISOR’s top Management determine the annual global variable remuneration pool, based on an estimate of BNPP AM’s profit before variable remuneration. This estimate is made after adjustments from Risk, Compliance, Legal and Permanent Control have been factored in, as maybe needed. This helps ensure that all existing and foreseeable risks1 are duly taken in to account.

  • Individual performance is assessed at the end of the year, thanks to a performance rating, based primarily on individual objectives2 set at the beginning of the year, for each FUNDQUEST ADVISOR.

Here as well, managers are required to pay specific attention to all existing and foreseeable risks (as defined above), when carrying out their employees’ annual individual appraisal. This can be done using key performance indicators tailored to each employee, pre-defined during the annual objectives’ setting process.
Furthermore, specific methodologies have been developed to measure the performance of sales teams within the context of incentive schemes. In accordance with the regulations, it is ensured that any quantitative indicators do not have a prominent place in the determination of their variable remuneration.

  • For control functions, such as Compliance, Risk, Legal and Permanent Control, fixed and variable compensation is set independently from the performance and the compensation pool of the business areas that they oversee or monitor. This is secured by BNP Paribas’ organisation in integrated central control functions, with their heads directly reporting to BNP Paribas’ CEO.

 

  • Further, for long term incentives, specific risk adjustments maybe applied after their awards, generally at their vesting dates at the end of their deferral periods. The remuneration committee of BNP PARIBAS ASSET MANAGEMENT Holding (BNPP AM Holding), the parent entity of BNPP AM businessline, reviews all these awards annually, before they are paid out, and may apply at its discretion a malus, i.e. a downward adjustment to account for significant risks or underperformance (e.g. severe financial stress of BNPP AM, cases of individual misconduct, etc.).

In case an event of misconduct is identified after a long term incentive award has been paid out, FUNDQUEST ADVISOR can resort to commercial terms of its awards (subject to applicable legislation), to recoup (or “claw-back”) all or part of such unduly perceived variable remuneration.
For the avoidance of doubt, in case of misconduct variable remuneration can be reduced to zero.

> How are the remuneration decisions calculated and taken and how is the remuneration policy governed?

  • Remuneration decisions are made by enforcing the BNP Paribas Group's CRP or Compensation Review Process. CRP is a global end-of-year review used to validate every type of compensation. Its collaborative software platform allows the collective and individual performance impacts to be efficiently managed.

It also helps ensure employees receive equal and fair treatment, delegation rules are respected and remuneration decisions are verified by both a manager and HR at every step.
As a significant input to the Compensation Review Process, individual market benchmarks for fixed as well as variable remuneration are used from leading providers (for example MacLagan and Towers Watson).
As a rule, FUNDQUEST ADVISOR has a discretionary approach to its variable remuneration decisions, and implements them systematically via the BNP Paribas Group’s CRP. In practice, the bonus pool is determined during the fourth quarter, based on estimates of performance indicators calculated by Finance and HR, in liaison with the business, Risk and Compliance, in the frame of the budgetary cycle.

  • Ultimately, the global remuneration policy is designed and overseen by BNPP AM’s board of directors and a three-member remuneration committee, who are responsible for ensuring its relevance and effectiveness at all times. This remuneration committee is chaired by one of its two independent directors.

> Who sits on the BNPP AM Holding remuneration committee and who are the reward decision makers?

The BNPP AM Holding remuneration committee comprises the following directors:
- Hélène Leclerc : independent director, Chairwoman of Remuneration Committee of BNPP AM Holding’s board of directors;
- Alain Kokocinski : independent director, Chairman of Audit Committee of BNPP AM Holding’s board of directors ; and
- Jacques d’Estais : Deputy COO BNPP, Head of IFS, President of BNPP AM Holding’s board of directors

> How is the list of Identified Staff determined?

 

  • FUNDQUEST ADVISOR identifies its staff with a significant impact on the protection of the client interest :

 

  • At FUNDQUEST ADVISOR level, the heads of control functions (notably the heads of risk and compliance) are identified, as well as the board members and the CEO.
  • The staff mentioned by the regulation, for whom it is verified that their remuneration does not entice them to act against the interest of the clients.

> What specific remuneration policy applies to them?

  • In general, Identified Staff have a significant part of their variable remuneration deferred over three years. This deferral is fully in “remuneration instruments” i.e. in the form of cash indexed on relevant indices :
  • For senior managers, the index is the variation in BNPP AM operating income over the three year deferral period.
  • For heads of control function, there is no indexation, to preserve their independence.

> How does FUNDQUEST ADVISOR implement proportionality?

  • FUNDQUEST ADVISOR being a relatively small entity, where non-complex investment services are provided, the implementation of regulatory obligations is carried out by simplifying, where possible, the corresponding operational processes and documentations (in particular, deferral levels and payment in instruments requirements applicable to investment firms and banks).

This disclosure of FUNDQUEST ADVISOR’s remuneration policy and practices was prepared by the HR, Compliance, Risk and Legal departments of BNPP AM, and was approved by FUNDQUEST ADVISOR’s management.

1e.g., market, credit, operational, liquidity, compliance, litigation risks…
2BNPP AM ensures that quantitative objectives are always supplemented with qualitative objectives