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Metzler’s Remuneration System

Principles

Staff retention and risk avoidance have top priority. With currently around 850 employees and a clearly defined business focus, the Metzler Group has a low-risk corporate structure. This is reflected in the personal liability of the partners and restrictive policy on own-account trading and lending as well as in the avoidance of disproportionately high risk positions – leading to a uniform and transparent remuneration system for the entire Group. This remuneration system is embedded in the business and risk strategy and therefore has a long-term focus.

Legal framework

Metzler is not defined as a major institution within the meaning of Section 17 of the German Remuneration Ordinance for Institutions (IVV) due to the Group’s aforementioned principles (in particular its risk-conscious business orientation), the size of the Group, and its average balance sheet total in the past three years. Therefore, it has, in accordance with Section 17 Paragraph 3 IVV, refrained from identifying risk takers, i.e. employees whose activities have a significant impact on the risk profile.

Further legal requirements applicable for the Metzler Group are the remuneration principles for employees of asset management companies set out in Section 37 of the German Investment Code (KAGB) in conjunction with Article 13 and Appendix II of EU Directive 2011/61/EU (Alternative Investment Fund Managers Directive/AIFMD), the “Guidelines on Key Concepts of the AIFMD” in the final report issued by the European Securities and Markets Authority (ESMA), and the guiding principles declared as binding by the Federal Financial Services Authority (BaFin). Based on Metzler’s business strategy and the principle of proportionality for the capital management company, the decision has been taken not to apply the guidelines for the remuneration process and the Remuneration Committee to the employees of the capital management company.

Remuneration system

Metzler’s remuneration system is comprised of a fixed base salary and variable components (bonus and special payments) – as well as other fixed remuneration components within the meaning of Section 2 (6) IVV 3.0 and ancillary services. The current company pension scheme is designed in such a way as to exclude all elements of a measurement-dependent pension scheme. Hedges that would limit or cancel the risk orientation of the remuneration are excluded on account of the company structure alone. Strict organizational separation of market activities and risk controlling, extending from operational responsibility to the responsibility of the management, ensures that no parallel remuneration parameters are applied.

Metzler’s remuneration system distinguishes between staff covered by the collective agreement for employees of private banks (TA employees) and employees who are not covered by the collective agreement (AT employees).

The remuneration system is reviewed annually to identify any changes that are required as a result of changes in business and risk strategy or the legal situation.

Fixed remuneration components (base salary and other payments)

The base salary provides our employees with basic remuneration for their work. It prevents significant dependence on variable remuneration components and therefore avoids giving employees an incentive to take unreasonable risks.

Metzler pays TA employees a monthly base salary on the 15th of each month twelve times a year. An additional monthly payment is made on November 15th as a special Christmas bonus in line with the collective agreement. The remuneration amount depends on the employee’s classification and number of professional years in accordance with the collective agreement of the private banking industry. The base salary of TA employees is regularly adjusted in line with the collective wage agreements.

AT employees receive a fixed monthly base salary on the 15th of each month twelve times a year. The remuneration amount depends on the employee’s tasks, the qualifications required, the complexity of the tasks and the corresponding responsibility, the level of remuneration for similar tasks within the company and particular market conditions. The base salary of AT employees is reviewed annually and adjusted if necessary.

Basic remuneration (according to IVV) also takes into account the non-cash benefit of company cars as well as Metzler’s special payment into the BVV Versicherungsverein des Bankgewerbes a. G. for Directors, Managing Directors and Partners. Metzler also makes other payments of about EUR 180 per month, which, for the sake of simplicity, are not shown separately and are in line with the levels accepted by the regulator. These include benefit programs that promote health, sports and a better work-life balance, group accident insurance, commuter job tickets and the staff canteen.

Variable remuneration components (special payments and bonuses)

Metzler’s variable remuneration components consist of special payments and bonuses.

TA employees receive a special payment in the form of a 14th monthly salary in April of each year.

AT employees receive a bonus payment in April of each year (for the previous calendar year), the amount of which depends on the employee’s attainment of individual objectives (as agreed upon in employee talks and documented in Metzler’s “Management Navigator”) and the business performance of the entire bank and the relevant division. The exact amount of the bonus is set at the discretion of the individual's line manager and based on the budget the Partners’ Committee has made available to the division for bonus payments.

Metzler’s remuneration system and base salaries are structured in such a way to prevent significant dependence on variable bonus payments. Generally, variable payments are capped at 100% of the individual employee's base salary for all organizational units and companies in the Metzler Group.

Guaranteed bonuses are granted only in exceptional cases and only in the first year of employment – as long as they do not exceed Metzler’s risk-bearing capacity.

Additional one-off payments and discretionary special payments for AT and TA employees are paid in April of each year (for the previous calendar year) and pertain to special projects, individual success, etc.

Remuneration of the group management board members

Remuneration of the group management board members is based on the individual agreements in their employment contracts. They receive a contractually agreed fixed salary (= base salary) plus a bonus set at the discretion of the Supervisory Board and aligned to the sustained development of the company over several years.

Remuneration of controlling units

In accordance with Paragraph 9 IVV, this pertains to all organizational units with a monitoring function, i.e. Compliance, Risk Controlling, Central Settlement, Group Auditing and the HR department. Remuneration of employees in these areas focuses on base salary in order to avoid payments that conflict with the employees’ monitoring functions. Therefore, the annual bonuses for employees in these control units are kept below the level of annual base salary.

Severance payments

Metzler makes severance payments when operational changes take place or in individual cases. When a large proportion of staff is affected, a social plan is generally applied. In individual cases, severance payments are aligned to the employee’s salary. Other criteria are also relevant, such as years of company service, any applicable social particularities, and individual legal risk.