Harrison Street Real Estate Capital Ltd
MIFIDPRU 8 Disclosure
The Financial Conduct Authority (the “FCA”) in the Prudential sourcebook for MiFID Investment Firms in the FCA Handbook (“MIFIDPRU”) sets out the detailed prudential requirements that apply to Harrison Street Real Estate Capital Ltd (“HSUK”). Chapter 8 of MIFIDPRU (“MIFIDPRU 8”) sets out public disclosure rules and guidance with which HSUK must comply, further to those prudential requirements.
HSUK is classified under MIFIDPRU as a small and non-interconnected MIFIDPRU investment firm (“SNI MIFIDPRU Investment Firm”). As such, HSUK 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 HSUK’s culture and to assist stakeholders in making more informed decisions about their relationship with HSUK.
This document has been prepared by HSUK in accordance with the requirements of MIFIDPRU 8 and is verified by the Board. Unless otherwise stated, all figures are as at HSUK’s 31 December financial year-end.
Remuneration Policy and Practices
As an SNI MIFIDPRU Investment Firm, HSUK 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”)). The purpose of the remuneration requirements is to:
- Promote effective risk management in the long-term interests of HSUK 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 HSUK’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 HSUK and the services that it provides to its clients.
In addition, HSUK recognises that remuneration is a key component in how HSUK attracts, motivates, and retains quality staff and sustains consistently high levels of performance, productivity, and results. As such, HSUK’s remuneration philosophy is also grounded in the belief that its people are the most important asset and provide its greatest competitive advantage.
HSUK 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.
Characteristics of HSUK’s Remuneration Policy and Practices
Remuneration at HSUK is made up of fixed and variable components. The fixed component is set in line with market competitiveness at a level to attract and retain skilled staff. Variable remuneration is paid on a discretionary basis and takes into consideration the firm’s financial performance, and the financial and non-financial performance of the individual in contributing to HSUK’s success. All staff members are eligible to receive variable remuneration.
Compensation is based upon a balance of financial and non-financial measures, with all staff compensated based upon the performance of their role, function and the business as a whole. HSUK ensures proper goals and rewards are clear and transparent to the employees, and the general review criteria that are applicable to all employees are based on the firm’s Cultural Core Values (Teamwork, Innovation, Passion, Integrity and Excellence).
The fixed and variable components of remuneration are appropriately balanced: the fixed component represents a sufficiently high proportion of the total remuneration to enable the operation of a fully flexible policy on variable remuneration. This allows for the possibility of paying no variable remuneration component, which HSUK may do where HSUK’s profitability performance is constrained, or where there is a risk that HSUK may not be able to meet its capital or liquidity regulatory requirements.
Governance and Oversight
Harrison Street Real Estate Capital LLC’s (the “Parent”) remuneration committee (“Remuneration Committee”) has discretion to pay bonuses to all staff, based on the performance of the Group as a whole, and the performance of the individual in contributing to the success of HSUK. As such the Remuneration Committee is responsible for setting and overseeing the implementation of HSUK’s remuneration policy and practices. In order to fulfil its responsibilities, the Remuneration Committee:
- Is appropriately staffed to enable it to exercise competent and independent judgment on remuneration policies and practices and the incentives created for managing risk, capital, and liquidity;
- Prepares decisions regarding remuneration, including decisions that have implications for the risk and risk management of HSUK;
- Ensures that HSUK’s remuneration policy and practices take into account the public interest and the long-term interests of shareholders, investors, and other stakeholders in HSUK; and
- Ensures that the overall remuneration policy is consistent with the business strategy, objectives, values, and interests of HSUK and of its clients.
HSUK’s remuneration policy and practices are reviewed on at least an annual basis.
Quantitative Remuneration Disclosure
For the financial year 1 January to 31 December 2022, the total amount of remuneration awarded to all HSUK staff was £9,814,288 of which £4,452,053 comprised the fixed component of remuneration, and £5,362,235 comprised the variable component.