When the Remuneration Code was revised in December 2010, the FSA said that it would be taking some outstanding issues forward in 2011.
In May, it published consultation papers on a number of issues including retention periods, guaranteed bonuses and the proposed remuneration policy statement templates for firms in proportionality tiers 2, 3 and 4. Final versions of the guidance on these issues have been published on the FSA’s website and is available here.
The FSA has also published further consultation on guidance to be provided on the implementation of the Remuneration Code. This takes the form of two draft "Dear CEO" letters - one for tier 1 firms and one for firms in tiers 2, 3 and 4.
The issues addressed by the draft “Dear CEO” letters include:
- For tier 1 firms: consultation on the detailed approach to be taken in monitoring their implementation of the Remuneration Code and on the proposed templates for the remuneration policy statements which tier 1 firms are required to submit;
- For tier 2, 3 and 4 firms: consultation on the approach to be taken in monitoring their implementation of the Remuneration Code, although the approach will be less onerous than for tier 1 firms. The FSA has stated that for a small number of tier 2 firms, supervisors are likely to tailor the assessment approach more closely to the firm, taking into account its business model and risk profile;
- Consultation on guidance about how firms should identify “Code Staff”, in particular how to identify staff whose total remuneration falls within the “same bracket” as senior management, control staff and risk takers and who have a material impact on the firm’s risk profile;
- Consultation on what the FSA would expect to see in a long-term incentive plan (“LTIP”) that is used to pay part of variable remuneration; and
- Consultation on the nature of the alternative instruments which may be used by firms, instead of shares, to pay at least 50% of variable remuneration.
The consultation period ends on 2 September 2011.
Click here for a link to the relevant FSA webpage with further links to the relevant consultation pages etc.
For a copy of our earlier Law-Now on the May 2011 consultation, please click here.