QWI Investments is proposing a change to the remuneration of its investment committee.
QWI Investments Limited will ask shareholders to approve another adjustment to its investment committee’s remuneration schedule — its second in three years. The proposal will be put forward at the company’s upcoming annual general meeting (AGM) in June.
The investment committee, which manages QWI’s investment portfolio and includes chairman John Jackson, David Stephens, and Cameron Burnet, has seen its remuneration increase over the past few financial years. The three members split $25.36 million in the financial year to September 2022 (FY2022), $24.93 million in FY2023, and $33.87 million in FY2024, the latest financial year under review.
Now, QWI is proposing a new remuneration structure. This would involve a fixed annual fee of 1.00 per cent charged on QWI’s net portfolio value, to be split among the investment committee members or any corporate body authorised to manage QWI’s investment funds under its investment incentive plan (ICP).
In addition to the fixed annual fee, the investment committee could also earn an annual incentive fee. This would be 7 per cent of any investment returns that are higher than a set benchmark, known as the hurdle rate — in this case, the JSE Combined Index. This incentive would be shared among the committee members or any authorised company. However, this incentive fee would only be paid if the company’s net investment returns for the year are greater than 6 per cent of the total value of QWI’s investments at the start of that financial year. Furthermore, if QWI experiences negative investment returns in any year, the incentive fee would not be paid in the following years until those losses are recovered. Overall, the total of the fixed annual fee and the annual incentive fee cannot be more than 3.5 per cent of QWI’s total investment value at the beginning of any financial year. These proposed changes would take effect on October 1, 2025.
The current remuneration of the investment committee was approved at its June 2022 AGM. Each committee member currently receives a fixed annual retainer of $2.50 million. A fixed annual fee of 0.20 per cent on QWI’s net portfolio value and an annual incentive fee of seven per cent per cent of the net investment returns above the hurdle rate (JSE Combined Index) is currently split amongst the investment committee members. There is no condition attached regarding negative investment returns of prior years, but the annual retainer, fixed annual fee and annual incentive fee should not exceed 3.0 per cent of the company’s net asset value in any one financial year. Although approved at the June 2022 AGM, the new fee structure was retroactively implemented as of October 2021.
This proposal comes as QWI marks its fifth year since formation in December 2018 as the investment vehicle for Jamaican Teas and its subsidiary, KIW International Limited. Over these five years, QWI’s net asset value (NAV), its main financial measure, has seen fluctuations. After moving from $1.015 in March 2019 to $1.37 in September 2019 (a 36 per cent return) and peaking at $1.52 in July 2019, QWI’s NAV stood at $1.33 at the end of September 2024. This is a slight decrease from the $1.34 recorded in September 2021.
QWI raised $1.19 billion during its initial public offering in September 2019, boosting its asset base to $2.56 billion with a NAV of $1.37. However, its asset base dipped to $1.69 billion in 2020 during the COVID-19 pandemic, with a NAV of $1.08. By the end of September 2024, the asset base had recovered to $2.24 billion, with investments of $2.22 billion and a NAV of $1.33. The investment portfolio at that time comprised 64 per cent Jamaican equities, 33 per cent United States equities, and 3 per cent Trinidad & Tobago equities. Notably, the US portfolio, despite being a third of the total, accounted for over 70 per cent of the $244.59 million gains in FY2024.
Despite these gains, QWI’s stock price, which listed at $1.35, currently trades at $0.78. While the annual report highlighted a 38 per cent surge in the stock price to $0.84 for FY2024, this remains below both the listing price and the NAV. Additionally, QWI has only paid $0.05 in capital distributions/dividends since listing.
More recently, QWI reported a $130.71 million net loss for the second quarter (January to March), a significant downturn compared to the $52.34 million net profit in the same period last year. This loss was largely attributed to unrealised net losses in both its Jamaican and overseas portfolios due to specific company factors locally and external factors affecting its US investments. For the overall six months, the net loss stood at $137.64 million, against a net profit of $70.33 million in the prior period. As of the latest six-month report, the company’s asset base was $2.05 billion with a NAV of $1.20 per share.
In addition to the proposed changes to the investment committee’s remuneration, QWI’s AGM will also address other resolutions. These include granting the board of directors the power to amend future remuneration agreements and authorising 72 million shares for a stock option plan for directors, which could be exercised between June 2025 and June 2029 at $1.50 per share. A previous stock option plan expired in March 2024 without being exercised.
The QWI AGM will be held at 10:00 on June 12 at the Jamaica Pegasus hotel, where shareholders will consider these proposals.
