As from 31 August 2011, financial institutions that are significant in terms of their size, internal organisation and the nature, the scope and the complexity of their activities are required to establish a remuneration committee as an integral part of their governance structure and organization.
Pursuant to the law dated 28 July 2011 aimd at implementing various directives relating to the control of the financial sector, credit institutions and investment firms that are significant in terms of their size, internal organization and the nature, scope and complexity of their activities have to establish a remuneration committee.
The remuneration committee shall be constituted in such a way as to enable it to exercise competent and independent judgement on remuneration policies and practices and the incentives created for managing risk, capital and liquidity. Pursuant to the new legal provisions, the members of the remuneration committee shall be members of the management body who do not perform any executive functions in the financial institution concerned, and shall include at least an independent director.
The remuneration committee shall be responsible for the preparation of decisions regarding remuneration, including those which have implications for the risk and risk management of the financial institution concerned and which are to be taken by the management body in its supervisory function. When preparing such decisions, the remuneration committee shall take into account the long-term interests of shareholders, investors and other stakeholders in the credit institution.
Credit institutions and investment firms that are not significant in terms of their size, internal organization and the nature, scope and complexity of their activities, and that fulfill at least two of the following three criteria:
- average number of employees fewer than 205 persons;
- balance sheet total less than or equal to 43,000,000 euros;
- net yearly turnover less than or equal to 50,000,000 euros;
are not obliged to establish a remuneration committee, but the functions of the remuneration committee have to be carried out by the board of directors in its entirety.