Absolute Capital Management, the troubled Aim-listed hedge fund, has agreed to give its chief investment officer and his brother an extra 6 percent of the company in order to loosen restrictions on staff pay imposed when it bought their business last year.

AbCap was blocked from paying staff in its equities funds more than 20 per cent of pre-tax profit as part of the £50.5m purchase of Argo, a credit specialist, from Andreas and Kyriakos Rialas.
It is now raising the cap for payments to staff in the equities business, the source of problems last year, to 40 per cent, after agreeing to give the Rialas brothers shares worth an extra £1.3m.
However, the brothers are still nursing a paper loss of £40m on the shares they took as part of the sale, following a 90 per cent drop in their price after Florian Homm quit as chief investment officer in September.
Andreas Rialas was already co-chief investment officer, then overseeing the credit side of the business.
An investigation by Berwin Leighton, a law firm, is under way after it was discovered following Mr. Homm's exit that five of AbCap's eight equity funds had undisclosed holdings of as much as $530m (£272m) in tiny US companies.
The five funds have since imposed tight restrictions on withdrawals and split off the hard-to-sell holdings.
Jonathan Treacher, chief executive, said on Monday: ""In order to remain competitive, it became abundantly clear that we needed to increase performance pay in line with industry standards to retain our existing fund managers as well as to attract new talent.""
AbCap had already secured agreement from investors to reset performance fee levels following the crisis to provide the company with enough revenue to pay staff.
(Source: FT.com)