EBA欧洲银行-EBA-GL-2015-22-Final-report-on-Guidelines-on-Sound-Remuneration-Policies_173页_1mb

Summary of EBA Guidelines on Sound Remuneration Policies and Disclosures

Core Content

The European Banking Authority (EBA) has issued final guidelines on sound remuneration policies and disclosures under Articles 74(3) and 75(2) of Directive 2013/36/EU (CRD) and Article 450 of Regulation (EU) No 575/2013 (CRR). These guidelines aim to ensure that remuneration policies are consistent with sound and effective risk management, do not encourage excessive risk taking, and align staff incentives with the long-term interests of the institution and its stakeholders.

The guidelines apply to all institutions and competent authorities across the EU, and they are structured to address both general remuneration policies and specific provisions for identified staff—those whose professional activities have a material impact on the institution’s risk profile. The guidelines also cover the structure of remuneration, including fixed and variable components, and provide detailed requirements for the implementation and governance of remuneration policies.

Main Points

• Scope and Applicability:
  The guidelines apply to all staff, including identified staff, and to institutions on an individual, consolidated, and sub-consolidated basis. Competent authorities are responsible for ensuring compliance at all levels.

• Remuneration Policy Requirements:

  • Remuneration policies must be consistent with the institution’s risk strategy, profile, and appetite.
  • Fixed remuneration should be permanent, predetermined, non-discretionary, and non-revocable.
  • Variable remuneration should be based on performance or other conditions, and must not be paid through vehicles that facilitate non-compliance.
  • The ratio between variable and fixed remuneration must not exceed 100% (200% with shareholder approval).

• Governance and Committees:

  • Institutions must establish a remuneration committee, which is responsible for overseeing the remuneration policy.
  • The remuneration committee must be composed of independent members and have a clear role and reporting line.
  • The process for identifying staff and the governance of this process are clearly defined.

• Risk Alignment and Incentives:

  • Variable remuneration should be aligned with the institution’s risk profile to promote prudent risk-taking.
  • The use of deferred remuneration, performance-linked instruments, and risk-sensitive performance criteria is encouraged.
  • Malus and clawback mechanisms are required to ensure that variable remuneration is not paid out in cases of excessive risk or poor performance.

• Proportionality Principle:

  • The proportionality principle ensures that remuneration requirements are applied in a manner appropriate to the size, complexity, and internal organisation of the institution.
  • The EBA has considered feedback from the public consultation and industry to refine the guidelines accordingly.

• Disclosures and Transparency:

  • Institutions must disclose remuneration policies and practices in accordance with Article 450 of the CRR.
  • Disclosures should reflect the size and complexity of the institution, with small and non-complex institutions required to provide information commensurate with their internal organisation.

• Group Context and Consolidation:

  • Remuneration policies across group entities must be consistent with the group's overall policy.
  • The consolidating institution is responsible for compliance at the consolidated level, with subsidiaries actively participating in the identification process.

• Special Cases and Components:

  • Specific remuneration components such as allowances, carried interest, retention bonuses, and discretionary pension benefits are addressed.
  • The EBA opinion on the use of allowances and the CEBS guidelines are incorporated into the final guidelines.

• Implementation and Timeline:

  • The guidelines apply from 1 January 2017.
  • Competent authorities must report compliance within two months of the guidelines’ publication in the official EU languages.

Key Information

• Legal Basis:
  The guidelines are based on Article 16 of the EBA’s founding Regulation, Articles 74 and 75 of the CRD, and Article 450 of the CRR.

• Feedback and Consultation:
  The EBA received 127 responses to the draft guidelines, with concerns mainly regarding the application of the proportionality principle. These were addressed in the feedback section, leading to the final guidelines.

• Alignment with Other Frameworks:
  The guidelines should be read in conjunction with other EBA guidelines, including those on internal governance and disclosures.

• Capital and Liquidity Impact:
  Remuneration policies must consider their impact on the institution’s capital and liquidity. Institutions with insufficient capital should adopt a conservative remuneration policy, especially regarding variable components.

• Identification of Identified Staff:
  Institutions must identify staff whose activities have a material impact on the risk profile. This identification must be done at the consolidated and sub-consolidated levels, with the consolidating institution responsible for ensuring consistency.

Conclusion

The EBA guidelines represent a comprehensive and proportionate approach to remuneration policy in the EU financial sector. They ensure that remuneration practices support sound risk management, align with institutional strategy, and promote a culture of prudence and accountability. The guidelines also enhance transparency and consistency across institutions, both within and across groups, and provide a clear framework for competent authorities to monitor and enforce compliance.