BLUE WHALE CAPITAL LLP MIFIDPRU 8 DISCLOSURE

Introduction

The Financial Conduct Authority, in its Prudential sourcebook for MiFID Investment Firms (“MIFIDPRU”), sets out the detailed prudential requirements that apply to Blue Whale Capital LLP (“Blue Whale” or the “Firm”).

Chapter 8 of MIFIDPRU sets out public disclosure rules and guidance with which the Firm must comply, further to those prudential requirements. Blue Whale is classified under MIFIDPRU as a small and non-interconnected MIFIDPRU investment firm (“SNI Firm”).

The Firm is required 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 better informed decisions about their relationship with the Firm. This document has been prepared by Blue Whale in accordance with the requirements of MIFIDPRU 8 and is verified by the Management Committee. This disclosure relates to the Firm’s financial year ending 31st March 2023. This disclosure has not been audited by the Firm’s external auditors and does not constitute any form of financial statement.

 

Remuneration Policy and Practices Overview

As an SNI Firm, Blue Whale 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).

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 Firm operates a simple business model with its revenue being from ad valorem fees, invoiced in arrears, based on the value of assets managed on behalf of clients. The Firm has a low risk appetite which is evidenced by operating a single investment process investing in highly capitalised and highly liquid global equities and by not holding client money or assets.

The objective of Blue Whale’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, Blue Whale 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. 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.

Blue Whale is committed to excellence, inclusion, teamwork (the investment process is highly collaborative), 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.

Remuneration Practices

Remuneration at Blue Whale 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 the Firm’s success. All staff members are eligible to receive variable remuneration. All variable remuneration is delivered in cash and performance adjustment is not applied.

The variable bonus pool is determined by reference to the Firm’s profitability. 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 not paying any variable remuneration in any performance period. The Firm would follow this course of action in the case for example that the Firm’s profitability suffered a significant downturn, or where there is a risk that the Firm may not be able to meet its regulatory capital or liquidity requirements.

 

Governance and Oversight

The Firm’s Management Committee is responsible for setting and overseeing the implementation of Blue Whale’s remuneration policy and practices.

In order to fulfil its responsibilities, the Management 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 the Firm, ensures that the Firm’s remuneration policy and practices take into account the long-term interests of investors, owners and other stakeholders in the Firm. It also ensures that the overall remuneration policy is consistent with the business strategy, objectives, values, and interests of the Firm and of its clients.

Quantitative Information

For the financial year to 31st March 2023, the total amount of remuneration awarded to all staff was £1.66mln, of which £883k comprised the fixed component of remuneration, and £777k comprised the variable component. For these purposes, ‘staff’ is defined broadly, and includes members of the LLP, senior manager function holders and employees of the Firm.

 

December 2023