AFTER years of outperforming the stock market but watching its share price lag, QWI Investments Limited has finally redrawn the rules on how it will reward its investment committee, tying performance bonuses to real shareholder gains and not just technical wins on paper.

At the company’s annual general meeting on Tuesday, shareholders signed off on a new compensation structure designed to forge stronger alignment between its fund managers and shareholders. Effective October 1, 2025, investment committee members will only qualify for incentive fees if the investment company delivers a return of at least six per cent in any given year. Importantly, if the portfolio incurs a loss in one year, the committee won’t be eligible for performance fees until those losses are fully recovered.

The shift comes after growing frustration from shareholders who, despite solid portfolio performance, have seen the value of their QWI stock fall by more than 40 per cent since the 2019 IPO. QWI’s core business involves holding tradable securities in local and overseas markets. It was incorporated in December 2018 by Jamaican Teas Limited.

“We’ve delivered better results than the overall market, but that hasn’t translated into gains for our shareholders,” said director John Mahfood, who presented the changes at the meeting held at the Jamaica Pegasus hotel. “Shareholders are saying, ‘Well, you’re paying out fees to the investment committee, but we are not seeing the benefit in our stock price’… We’ve heard that comment over the years and we’re making some changes.”

The new rules mark a clear break from the previous structure, which allowed the investment committee to collect bonuses simply for outperforming the Jamaica Stock Exchange Combined Index — even in years when QWI posted overall losses.

QWI was created as a pooled investment vehicle for shareholders who wanted expert management of their money. Instead of individuals buying stocks on their own, the company invests in local and overseas shares on behalf of its investors and sets the high bar of outperforming the Jamaica Stock Exchange Combined Index, which serves as a benchmark for the broader market.

Since listing in 2019, QWI has done just that. Its net asset value per share has held steady at $1.33, even as the JSE has declined by more than 40 per cent over the same period. At the close of trading Tuesday, QWI shares were trading at 74 cent, down 5.13 per cent on the day and standing 44.4 per cent below the company’s net asset value of $1.33. Meanwhile, QWI’s portfolio continues to hover around $2 billion, split between local blue-chip stocks, and major US tech, and infrastructure plays.

In the 2024 financial year, the fund delivered a 14.6 per cent return. However, momentum faltered in the March quarter when the company posted a $138 million loss on the back of falling valuations in both markets. Net asset value slipped to $1.20, dragged down by unrealised losses and the December dividend payout.

Despite the rocky start to 2025, Mahfood said the new fee structure sends the right signal to the market.

“When the company does better, the investment committee does better. If the company beats the stock market index but doesn’t provide a positive return, then the investment committee doesn’t get that incentive,” he said.

In exchange for the tougher hurdle, QWI has increased the committee’s fixed annual fee to one per cent of net asset value, or about $18 million. That replaces the previous base of $9 million plus a variable component, which had added up to around $13 million a year. The board said it brought in one of the island’s top accounting firms to vet the new model, which Mahfood framed as a fairer deal for everyone.

“I think that is more in line with fairness to the stock market, to the investors themselves, as well as to the investment committee,” he explained.

But the conversation turned more uneasy when it came time to vote on a resolution to give directors the authority to amend the compensation terms in the future without seeking shareholder approval. The measure was eventually passed, but not without a few uneasy glances around the room and a clarifying exchange over governance practices.

One shareholder asked whether it was appropriate for directors — some of whom sit on the investment committee — to be granted such power. Mahfood said members of the committee do not vote on matters relating to their own pay and that recusal policies are in place.

“When it comes to investment committee fees, they do not vote on that. And that would be clearly documented in policy.” Mahfood explained.

Still, the vote lacked the clear consensus of the earlier resolution.