EUROPE – INREV has welcomed the certainty created by European Securities and Markets Authority (ESMA) AIFMD remuneration guidelines despite "strict" requirements on delegates and remuneration committees.

INREV public affairs director Jeff Rupp said: "It's stricter than we might have hoped for in some respects, but there were no huge surprises, and it includes nothing that is completely unworkable."

Although INREV had initially opposed the inclusion of delegates among those required to comply with the guidelines, Rupp acknowledged this week that fund managers would otherwise have been able to get around the legislation by outsourcing key functions.

"It was an open question whether the remuneration requirement would be applied to delegates," he said.

"Any fair-minded person would say applying it to portfolio and risk management – the fundamental activities of the fund manager – makes sense."

He also welcomed ESMA's setting of a €1.25bn and 50-employee threshold for compliance with the requirement that fund managers set up a remuneration committee.

"The certainty is helpful almost regardless of what the de minimis threshold is," he said. "It draws a line."

Although nothing in the guidelines is likely to impact real estate more than other asset classes, the advice on carried interest, which – although it did not feature as a theme in INREV's submission – "accomplishes alignment in a practical sense" by including hurdle rates and the potential clawbacks, he said.

An outstanding issue remains the potentially conflicting remuneration codes when the Alternative Investment Fund Managers Directive's MIFID and CRD counterparts come into force.

Rupp said he was "slightly disappointed" by ESMA's failure to insist on a single code.

"They've made some accommodations," he said, pointing to agreement on group-wide remuneration committees where the alternative would be set up a separate committee to comply with each piece of legislation. 

"That helps – but we'd still like to see a unified code," Rupp said.