Non-US Disclosures

Pentwater Capital Management Europe LLP 

MIFIDPRU 8 Disclosure

April 2024

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 Pentwater Capital Management Europe LLP (“PCME” 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

PCME 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 PCME 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 December financial year-end.

Remuneration Policy and Practices

Overview

As an SNI MIFIDPRU Investment Firm, PCME 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 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 PCME’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, PCME 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.

PCME 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 the Firm’s Remuneration Policy and Practices

Remuneration at PCME 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.

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.

Remuneration is set based on individual performance, and the performance of the individual’s business unit (where applicable), Pentwater Capital Management Europe LLP, and the Pentwater Capital Management group. During the performance year to which these disclosures relate, financial as well as non-financial criteria were considered as per the recommendations of FCA Remuneration Principle. PCME has one “business area” only, the provision of investment management services to the Pentwater Capital Management LP Funds through a sub-advisory agreement with US based Pentwater Capital Management LP.

Governance and Oversight

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

  • 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 public interest and the long-term interests of shareholders, investors, and other stakeholders in the Firm.
  • Ensures that the overall remuneration policy is consistent with the business strategy, objectives, values, and interests of the Firm and of its clients.

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

Quantitative Remuneration Disclosure

For the financial year 1 January to 31 December 2023, the total amount of remuneration awarded to all staff was £5,041,866, of which £1,067,208 comprised the fixed component of remuneration, and £3,974,658 comprised the variable component.

Shareholder Rights Directive Disclosure

Pentwater Capital Management Europe LLP

April 2024

Under Rule 2.2B.5R of the Financial Conduct Authority's (“FCA”) Conduct of Business Sourcebook, Pentwater Capital Management Europe LLP (“PCME” or the "Firm") is required to either develop and publicly disclose an engagement policy that meets the requirements of the Shareholder Rights Directive (“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.

PCME has chosen not to develop an engagement policy that complies with the requirements of the SRD II, as the Firm considers that it has an investment strategy that is not commensurate with the outcomes sought thereunder. Moreover, the Firm ensures that its clients are regularly and routinely apprised of the investment strategies employed by the Firm. As such, it is felt that the Firm’s clients would not expect the Firm to achieve compliance with the core requirements of the SRD II.