What are the compensation rules for alternatives managers?

William Yonge, partner at Morgan Lewis & Bockius, examines the regulatory and compensation issues relating to ESMA's consultation on new guidelines for how alternative investment fund managers should be compensated.

On 28 June 2012, the European Securities and Markets Authority ("ESMA") published a consultation paper on their proposed guidelines on the remuneration requirements under the EU Alternative Investment Fund Managers Directive ("AIFMD").  These requirements will be entirely novel for some AIFMs, in particular many private equity and real estate fund managers. AIFMs are required to establish and design remuneration policies and practices for certain senior staff, to promote sound and effective risk management and not to encourage risk taking which is inconsistent with their risk profiles, r...