The European Commission has adopted two non binding Recommendations setting out best practices for compensating risk taking staff (e.g., traders) in financial institutions and directors of listed companies (complementing previous Recommendations 2004/913 and 2005/162/EC). The goal of these recommendations is to give these staff and directors greater incentives to ensure medium and long term sustainability of the company.

Both Recommendations emphasise that: (i) the structure of remuneration must be linked clearly to achievement while promoting sound and effective risk-management; (ii) the process for determining remuneration needs to be transparent; and (iii) proper supervision, notably by shareholders, has to be ensured.

The Commission will examine and evaluate both Recommendations after one year.