1. Introduction

The Financial Conduct Authority (“FCA” or “regulator”) in the Prudential sourcebook for MiFID Investment Firms in the FCA Handbook (“MIFIDPRU”) sets out the detailed prudential requirements that apply to Gore Street Capital Limited (“Gore Street” or the “Firm”). Chapter 8 of MIFIDPRU (“MIFIDPRU 8”) sets out public disclosure rules and guidance with which the Firm must comply, further to those prudential requirements.

Gore Street is classified under MIFIDPRU as a small and non-interconnected MIFIDPRU investment firm (“SNI MIFIDPRU Investment Firm”). As such, the Firm is required by MIFIDPRU 8 to disclose information regarding its remuneration policy and practices.

The purpose of these disclosures is to give stakeholders and market participants an insight into the Firm’s culture and to assist stakeholders in making more informed decisions about their relationship with the Firm.

This document has been prepared by Gore Street in accordance with the requirements of MIFIDPRU 8 and is verified by the Board of Directors. Unless otherwise stated, all figures are as at the Firm’s 31/12/2022 financial year-end.

2. Remuneration Policy and Practices

(i)               Overview

As an SNI MIFIDPRU Investment Firm, Gore Street is subject to the basic requirements of the MIFIDPRU Remuneration Code (as laid down in Chapter 19G of the Senior management arrangements, Systems and Controls sourcebook in the FCA Handbook (“SYSC”)). Gore Street, as an alternative investment fund manager, is also classified as a collective portfolio management investment firm, and as such, is also subject to the AIFM Remuneration Code (SYSC 19B). The purpose of the remuneration requirements is to:

• Promote effective risk management in the long-term interests of the Firm and its clients;
• Ensure alignment between risk and individual reward;
• Support positive behaviours and healthy firm cultures; and
• Discourage behaviours that can lead to misconduct and poor customer outcomes.

The objective of Gore Street’s remuneration policies and practices is to establish, implement and maintain a culture that is consistent with, and promotes, sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profile of the Firm and the services that it provides to its clients.

In addition, Gore Street recognises that remuneration is a key component in how the Firm attracts, motivates, and retains quality staff and sustains consistently high levels of performance, productivity, and results. As such, the Firm’s remuneration philosophy is also grounded in the belief that its people are the most important asset and provide its greatest competitive advantage.

Gore Street is committed to excellence, teamwork, ethical behaviour, and the pursuit of exceptional outcomes for its clients. From a remuneration perspective, this means that performance is determined through the assessment of various factors that relate to these values, and by making considered and informed decisions that reward effort, attitude, and results.

(ii)              Characteristics of the Firm’s Remuneration Policy and Practices

Gore Street Capital’s remuneration policy, procedures and practices align individuals’ pay with the interests of our clients and the long-term performance of the business. The remuneration policy aims to motivate senior management and all employees, staff, or other relevant persons in delivering the Gore Street Capital’s strategy while ensuring that the business performance is sustainable over the long-term and aligned with effective risk strategy and appetite, not encouraging excessive risk-taking. It also takes into consideration the size of the company, avoiding unnecessary constraints.

The key principles that underpin the Gore Street Capital’s overall approach to remuneration are:

• Remuneration decisions are based on a sound and effective risk management approach that

  protects investors, staff and the Firm;

• Incentives are designed to encourage behaviour focused on long-term strategic performance and ensure compliance with regulatory and legal frameworks;
• Fair remuneration decisions are based on clear performance assessment data;
• Individuals are valued and rewarded competitively;
• Conflicts of interests are managed to encourage responsible business conduct; and
• Remuneration always maintains a carefully planned balance between fixed and variable components, to mitigate any conflicts of interest between Gore Street Capital, its staff and clients.

(iii)            Definition

Remuneration defined as any form of payment, including salaries, discretionary pension benefits and benefits of any kind.

(iv)            Application

This policy applies to senior management who are able to have a material impact on the service provided and/or corporate behavior of Gore Street.

(v)              Remuneration Committee

As an SNI firm, Gore Street is not required to have a remuneration committee but has nevertheless decided to appoint one.  The Committee considers matters relating to remuneration policy and structures, including approval of individual remuneration decisions for senior management and those considered to have a material impact on the risk profile of the company. The Remuneration Committee ensures that remuneration outcomes take appropriate account of all relevant current and future risks.

(vi)            Annual Assessment

The firm will formally review remuneration of staff and other relevant persons on at least an annual basis as part of the training and competence assessment process. 

(vii)           Management Approval and Monitoring

The Company’s remuneration policy is subject to annual approval by the Company’s Remuneration Committee.

Responsibility for ensuring the remuneration policy is implemented appropriately lies with members of the Company’s Board of Directors.

(viii)          Remuneration elements

Individuals are remunerated based on their individual role, contribution to the Company and performance. Remuneration comprises the following elements:

• Base Salary;
• Bonus schemes – these may be based on balanced scorecards and/or be discretionary;
• Long-term incentive plan – the purpose of the plan is to align the remuneration of certain staff with the long-term results of the asset management business.

(ix)             Training

The firm will ensure staff to whom this policy relates receive periodic training (unless awareness of a significant issue requires this to be sooner) to ensure staff continue to act in accordance with the criteria stated above.

(x)              Determination of variable remuneration

There is no guarantee that variable remuneration will be paid in any given year or to any specific individual. For all individuals their adherence to the ethical and conduct standards of the firm are a key input to the variable remuneration decision.

3. KPI by Role and Functions          

(i)               Non-executive members of the Board of Directors

The remuneration of non-executive Board members is determined at the time of appointment. Remuneration comprises a fixed component only and is independent of Firm performance.

(ii)              Key individuals

The variable remuneration of key individuals including persons holding key control functions is determined by the remuneration committee.  For those in control functions their variable remuneration reflects their personal contribution to the Firm’s performance and is not related to the performance of the functions they control.

(iii)            Other staff

The variable remuneration of other staff is determined by the Board of Directors. For all staff other than those in control functions the criteria for determining variable remuneration include :

• Individual performance;
• Firm Performance;
• Breaches occurred during the period in scope (considering if they are passive, active, material/not material);
• Internal Audit outcomes.

4. Quantitative Remuneration Disclosure

For the financial year 31/12/2023, the total amount of remuneration awarded to all staff was £4,855,809, of which £3,416,582 comprised the fixed component of remuneration, and £1,439,227 comprised the variable component. For these purposes, ‘staff’ is defined broadly, and includes, for example, employees of the Firm itself, directors, partners or members, employees of other entities in the group, employees of joint service companies, and secondees.

5. Risk Management Objectives and Policies

This section describes Gore Street’s risk management objectives and policies for the categories of risk addressed by the requirements of the Firm in the following areas:

• Own funds.
• Concentration risk.
• Liquidity.

6. Business Strategy

Gore Street is a full scope AIFM firm with additional MiFID permissions to manage/advise on non-AIF assets focused on Renewable Energy worldwide. At the time of writing, the Firm manages a listed AIF and hold Advisory contracts.

Gore Street primarily seeks to grow its revenues by growing the underlying asset base on which it charges management, advisory and performance fees depending on the customer. This is achieved by the prudent growth of the Firm’s assets under management.

Costs are controlled carefully to ensure long-term profitability. The business seeks to make investments to expand its business and product lines and to continuously improve its control environment.

Given the Firm’s business model, controls, and controls assessment, it is the conclusion of the Firm that its overall potential for harm is low.

7. Own Funds Requirement

Gore Street is required to maintain own funds that are at least equal to the Firm’s own funds requirement. The own funds requirement is the higher of the Firm’s:

(i)     Permanent minimum capital requirement (“PMR”): The level of own funds required to operate at all times. The firm is a CPMI firm which means it is subject to the rules for both AIFMD firms and MIFID firms.  The AIFMD requirements are higher than the MIFID requirements. Based on the MiFID investment services and activities that the Firm currently has permission to undertake this is set at €125,000 plus 0.02% of assets under management in excess of €250m; and

(ii)    Fixed overhead requirement (“FOR”): This is equal to one quarter of the Firm’s relevant expenditure.

The potential for harm associated with Gore Street’s business strategy, based on the Firm’s own funds requirement, is low.  A method adopted by the Firm to manage the risk of breach of the Firm’s own funds requirement is the maintenance of a healthy own funds surplus above the own funds requirement. In the event that the Firm’s own funds drop to an amount equal to 120% of the Firm’s own funds threshold requirement, the Firm will immediately notify its Board of Directors. The Board consider the necessary steps required in order to increase the own funds buffer; this may include injecting more own funds into the Firm. 

8. Concentration Risk

Although the Firm currently manages one fund, and advises a Sovereign Fund, there are numerous investors in the fund. Moreover, the investors are typically institutional professional investors that invest for the long term. The Fund is a close-end, permanent capital listed AIF. The Firm, therefore, considers that its asset base is ‘sticky’ and not prone to substantial fluctuations, including during stressed market condition.

9. Liquidity

The Firm is required to maintain sufficient liquidity to ensure that there is no significant risk that its liabilities cannot be met as they fall due and to ensure that it has appropriate (liquid) resources in the event of a stress scenario.

The potential for harm associated with Gore Street’s business strategy, based on the Firm’s basic liquid assets requirement, is low. As with regard to its own funds requirement, this is due to the relatively stable and consistent growth in the Firm's revenues and asset base and maintenance of a healthy core liquid assets surplus above the basic liquid assets requirement. The Firm retains an amount it considers suitable for providing sufficient liquidity to meet the working capital requirements under various conditions. Gore Street has always had sufficient liquidity within the business to meet its obligations and there are no perceived threats to this given the cash deposits its holds. Additionally, one of the Firm’s obligations as fund manager is to seek to ensure that the fund will have sufficient liquid assets to pay its liabilities as they fall due this includes paying the fees due to the firm.  The Firm thus has transparency on the ability of its customers to pay its fees and has no history of delayed payments nor bad debts. The cash position of the Firm is monitored by the Chief Financial Officer on a regular weekly basis. 

10. Risk Management Structure

• The Firm’s approach to risk management by reference to its risk management policies;
• Firm’s risk management structure encompass a Chief Risk Officer responsible for all area of risk, and any relevant committees and their responsibilities;
• The Firm has set its risk appetite as low.

The assets Gore Street advises on are invested in energy storage facilities.  There is no trading element to the Firm’s operations.  Gore Street has established a risk management process in order to ensure that it has effective systems and controls in place to identify, monitor, and manage risks arising in the business. The risk management process is overseen by the Chief Risk Officer, with the Board of Directors taking overall responsibility for this process and the fundamental risk appetite of the Firm. The Compliance Officer has responsibility for the implementation and enforcement of the Firm’s risk principles.

The Board of Directors meets on a regular basis and discusses current projections for profitability, cash flow, regulatory capital management, business planning, and risk management. The Board of Directors engages in Gore Street’s risks through a framework of policy and procedures having regard to the relevant laws, standards, principles, and rules (including FCA principles and rules) with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required.

Annually, the Firm formally reviews its risks, controls, and other risk mitigation arrangements and assesses their effectiveness, the conclusions to this informing the overall risk appetite of the Firm. A formal update on operational matters is provided to the Board of Directors on a regular basis. Management accounts demonstrating the continued adequacy of Gore Street’s regulatory capital are reviewed on a regular basis.

Appropriate action is taken where risks are identified that fall outside of the Firm’s tolerance levels or where the need for remedial action is required in respect of identified weaknesses in Gore Street’s mitigating controls.

11. Own Funds