Regulatory

Stewardship Code

Rule 2.2.3R of the Financial Conduct Authority (“FCA”) Conduct of Business Sourcebook (“COBS”) requires an FCA authorised firm, such as Exponent Private Equity LLP (“Exponent” or “Firm”), to disclose the nature of its commitment to the FRC’s UK Stewardship Code or, where it does not commit to the code, its alternative investment strategy. Adherence to the Code is voluntary.  

 

Exponent has chosen an alternative approach to stewardship consistent with its overall approach to responsible investment. Consequently, while Exponent generally supports the objectives that underlie the Code, the provisions of the Code are not considered to be relevant to the activities currently undertaken by the Firm. If Exponent’s activities changes in such a manner that the provisions of the Code become relevant, the Firm will amend this disclosure accordingly. 

 

Shareholder Rights Directive II Disclosure

Rule 2.2B.5R of the FCA COBS, requires an FCA authorised firm to either develop and publicly disclose an engagement policy that meets the requirements of the Shareholder Rights Directive II (“SRD II”) or to publicly disclose a clear and reasoned explanation of why it has chosen not to develop an engagement policy that meets the SRD II requirements. For the purpose of the SRD II, an engagement policy should include a description of how an asset manager integrates shareholder engagement, relating to companies that are listed on regulated markets, in its investment strategy. 

  

Exponent has chosen not to develop an engagement policy as it considers its investment strategy, which does not include trading securities on regulated markets, as not in keeping with the outcomes sought under the SRD II. Exponent ensures that the investors in its managed funds are regularly and routinely informed of its funds’ investment strategies. 

 

Remuneration

The FCA in the Prudential sourcebook for MiFID Investment Firms within the FCA Handbook (“MIFIDPRU”) sets out the detailed prudential requirements that apply to Exponent. Chapter 8 of MIFIDPRU (“MIFIDPRU 8”) sets out public disclosure rules and guidance with which the Firm must comply, further to those prudential requirements. 

 

Exponent 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. 

 

This disclosure has been prepared by Exponent in accordance with the requirements of MIFIDPRU 8 and is verified by the Governing Body. Unless otherwise stated, all figures are as at the Firm’s 31 March financial year-end. 

 

Overview 

As an SNI MIFIDPRU Investment Firm, Exponent 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”)). Exponent, 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 investors; 
  • Ensure alignment between risk and individual reward; 
  • Support positive behaviours and healthy firm cultures; and 
  • Discourage behaviours that can lead to misconduct and poor investor outcomes. 

 

The objective of Exponent’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 investors. 

 

In addition, Exponent 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.

Exponent is committed to excellence, teamwork, ethical behaviour, and the pursuit of exceptional outcomes for its investors. 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 the Firm’s Remuneration Policy and Practices 

Remuneration at Exponent 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 and non-financial performance as well as the financial and non-financial performance of the individual in contributing to the Firm’s success. All staff members are eligible to receive variable remuneration. 

 

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 the Firm would do in certain situations, such as where the Firm’s profitability performance is constrained, or where there is a risk that the Firm may not be able to meet its capital or liquidity regulatory requirements. 

 

Governance and Oversight 

The Governing Body is responsible for setting and overseeing the implementation of Exponent’s remuneration policy and practices. In order to fulfil its responsibilities, the Governing Body: 

  • Prepares and makes decisions regarding remuneration, including decisions that have implications for the risk and risk management of the Firm. 
  • Ensures that the Firm’s remuneration policy and practices take into account the long-term interests of the Firm and other stakeholders, including the investors in the funds that it manages. 
  • Ensures that the overall remuneration policy is consistent with the business strategy, objectives, values, and interests of the Firm and the investors in the funds that it manages. 

Exponent’s remuneration policy and practices are reviewed annually by the Governing Body. 

 

Quantitative Remuneration Disclosure

For the financial year 1 April 2025 to 31 March 2026, the total amount of remuneration awarded to all staff was £7.7m, of which £6.1m comprised the fixed component of remuneration, and £1.6m comprised the variable component. For these purposes, ’staff’ is defined broadly, and includes the Firm’s Partners and its employees.