Remuneration Policy —

For effective and motivated employees

VPFSLI's remuneration policy and practices are simple, transparent and geared to sustainability, which include environmental, social and governance aspects. They are in line with the business strategy, objectives and values and interests of the VPFSLI and the funds it manages or the investors in such funds, as well as its long-term overall earnings and they take account of VPFSLI's equity capital resources.

VPFSLI has adopted a remuneration policy which is compatible with its business and risk policy. In particular, no incentives to take on excessive levels of risk are created. When calculating the variable remuneration component, account is taken of the VPFSLI's overall results and the group of companies with which it is associated, and of the performance of the individual employee and his/her department/team. With regard to the achievement of objectives set in personal performance appraisals, particular emphasis is placed on sustainable business development and protecting the company against excessive risks. The variable remuneration components are not linked to the performance of the funds managed by VPFSLI. Voluntary employer fringe benefits or benefits in kind are permissible.

By setting ranges for the total remuneration, it is also ensured that there is no significant dependence on the variable remuneration and that there is an appropriate ratio of variable to fixed remuneration. The amount of the fixed salary component is designed in such a way that an employee can cover his or her living expenses with the fixed salary component in the case of a 100% employment (taking into account salaries in line with the market). The allocation of the total amount of the variable remuneration of the VPFSLI and the remuneration of the members of the Management Board and the employees with control functions is within the competence of the Board of Directors. The Board of Directors is responsible for reviewing the remuneration principles and practices.

Special rules apply to so-called Identified Employees. The category of Identified Staff includes senior management, risk takers (such as heads of portfolio management), control functions and all staff at the same remuneration level as senior management and risk takers whose professional activities have a material impact on the risk profile of the VPFSLI or the risk profiles of the funds it manages.

For these risk-relevant employees, the variable remuneration is paid in arrears over several years. Thereby, a share of at least 40% of the variable remuneration is deferred over a period of at least five years. The deferred portion of the remuneration is risk-dependent during this period. The variable compensation, including the deferred portion, is only paid out or earned if it is sustainable in view of the financial situation of the VPFSLI as a whole and justified on the basis of the performance of the relevant department/team and the individual concerned. A weak or negative financial performance of the VPFSLI will generally result in a significant reduction in the total variable remuneration, taking into account both ongoing compensation and reductions in payouts of previously earned amounts.

Remuneration components

The amounts of fixed and variable compensation reflect both the complexity and size of our management company. To determine the amount of the variable compensation pool, we are guided by a sustainable and risk-adjusted approach. We are committed to address the conservative risk culture of VPFLU in the payment system and we offer our employees an attractive but relatively moderate variable compensation. In view of the overall package we pay a fixed income and fringe benefits in line with Luxembourg market practices. It is our declared goal to define the remuneration packages of VPFLU’s Staff Members in such a way that the fixed component is sufficient to allow them a decent life even without variable remuneration.

Remuneration Policy applicable to Identified Staff

VPFLU defines identified staff as categories of staff, including senior management, risk takers, control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on VPLFU’s risk profile or the risk profile of the Fund that it manages. Qualitative and quantitative criteria are thus used to assess individual performance as basis for variable remuneration. The balance between both depends on the task and responsibilities of each Identified Staff.

Remuneration of control functions

The remuneration of the Control Functions is independent from the performance of the business areas they control. The variable remuneration of Control Functions takes into account the achievement of quantitative as well as qualitative objectives which reflect their management skill, the quality of control done and the respect of internal rules and processes.

The remuneration of the Control Functions is under the direct supervision of and will be approved by the Board of Directors, upon recommendation of the Senior Management of VPFLU.

Remuneration in the case of Delegation

VPFLU ensures that the entities to which portfolio management or risk management activities have been delegated are subject to regulatory requirements on remuneration that are:

• Equally as effective as those under the AIFM Law and the UCITS Law, or
• That appropriate contractual arrangements are entered into to ensure there is no circumvention of the remuneration rules with respect to payments to identified staff within the delegate.

Governance

The Board of Directors of VPFLU will monitor compliance with the remuneration policy on an annual basis. This will include alignment with the business strategy, objectives, values and interest of VPFLU and the Funds it manages as well as measures to avoid conflicts of interest. Furthermore, at the beginning of each compensation period, the Board shall define clear and measurable objectives that will be the basis of the annual assessment.

Disclosure and Communication

All relevant employees of VPFLU will be informed of this Remuneration policy and any change thereto. VPFLU shall ensure common, uniform and consistent application of remuneration principles set out in this policy and will provide periodic disclosure on remuneration in the annual report of the Funds in accordance with the requirements of the AIFMD and UCITS V Directive.

Investors may request free of charge additional information as well as a paper copy of the remuneration policy by writing to VPFLU.