EBA has published its guidance on the governance process for sound remuneration policies. The guidelines clarify the process for identifying those categories of staff to whom the specific remuneration provisions of CRD4 apply, including the bonus cap. The guidelines set out specific criteria for mapping all remuneration components into either fixed or variable pay and detailing how specific remuneration elements should be recognised over time. There is also guidance on the application of deferral arrangements and pay-out instruments so variable remuneration is aligned with the institution’s risk profile in the long-term and ex-post risk adjustments can be applied as appropriate. EBA has also published its opinion on proportionality, recommending exemptions from the remuneration principle under CRD4. EBA recommends there should be EU legislation to ensure consistent application of the remuneration requirements. EBA believes there should be an exemption from the provisions on application of deferral arrangements and pay out of instruments for small and non-complex institutions and for staff that receive only a small amount of variable remuneration. However, the Opinion clarifies that there should be no exemption from application of the bonus cap. The guidelines will apply from 1 January 2017. FCA noted the Guidelines, explaining the key changes since the consultation version. It also told firms that as the rules will first apply to the 2017 performance year, firms will not need to change their existing pay practices for the 2016 performance year. (Source: EBA Publishes Remuneration Policy Guidelines and FCA Notes EBA Remuneration Guidelines)
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EBA publishes remuneration policy guidelines
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