EBA欧洲银行-Presentation-public-hearing-29-10-2010_40页_1mb

CEBS Guidelines on Remuneration Policies and Practices Summary

Core Content

The CEBS (Committee of European Banking Supervisors) Guidelines on remuneration policies and practices were developed in response to the broader international framework, particularly the FSB (Financial Stability Board) Principles and the Basel Committee's reports, as well as the EU's CRD III (Capital Requirements Directive III). These guidelines aim to ensure that remuneration policies and practices are aligned with prudent risk-taking, promote sound governance, and enhance transparency across credit institutions and investment firms in the European Economic Area (EEA).

Main Points

1. Broader International Framework

• The CEBS Guidelines are based on the FSB Principles, CEBS High Level Principles, and the EU's EC Recommendation.
• They are aligned with the CRD III, which includes remuneration provisions in Annex V and transparency in Annex XII.
• The FSB's Range of Methodologies Report provides a basis for the CEBS guidelines, focusing on risk alignment.

2. Structure of the Guidelines

• The guidelines are structured into three blocks: Governance, Risk Alignment, and Transparency.
• Each block addresses different aspects of remuneration policy and its implications on risk management and corporate governance.

3. Scope of Application

• Applies to credit institutions and investment firms, including those in offshore financial centers.
• Covers all forms of remuneration, including monetary and non-monetary benefits.
• The Identified Staff includes those with material impact on the risk profile, such as senior management, risk takers, and employees whose remuneration is in the same bracket as senior management.

4. Proportionality

• Proportionality applies to all remuneration provisions and allows for flexibility across different institutions and staff categories.
• It can lead to the neutralization of certain requirements, such as the establishment of a Remuneration Committee, if deemed appropriate.

5. Group Context

• Remuneration policies apply to all subsidiaries and branches, including non-EEA entities.
• The objective is to ensure consistent application across the group to prevent arbitrage and distortions.

Key Information

Block 1: Governance

• The management body is responsible for adopting and reviewing remuneration policies.
• Conflict of interest must be avoided, with remuneration decisions for management body members made by the supervisory function.
• Remuneration Committee (RemCo) is composed of non-executive directors, with a majority being independent.
• RemCo advises on remuneration and assesses risk alignment.
• The obligation to establish RemCo can be neutralized in certain cases.
• Control functions must be independent from the business units they oversee.
• Senior officers of risk management and compliance functions are directly overseen by RemCo.

Block 2: Risk Alignment

• Basic Principle: Remuneration policies must be in line with prudent risk-taking.
• No encouragement of excessive risk-taking.
• Consistency with sound risk management.
• Long-term interests and values must be considered.
• Remuneration is part of capital and liquidity planning.

Specific Measures:

• Variable vs. Fixed Remuneration: Institutions must set and document explicit maximum ratios of variable to fixed remuneration.
• Risk-based objectives are set for performance and risk measurement, with evaluation based on both qualitative and quantitative measures.
• Bonus pools should be risk-adjusted, with profit-based pools as a minimum.
• Deferral: At least 40% to 60% of variable remuneration must be deferred for a period of three to five years.
• Retention periods: Must be set and documented by the institution, with upfront and deferred parts having different retention periods.
• Instruments: At least 50% of variable remuneration should be in the form of instruments (e.g., shares, hybrid instruments), with point (o) being EU-specific.
• Roll-over effect of long-term deferral and retention periods is considered in the calculation of variable remuneration levels over time.

Block 3: Transparency

• Part of Pillar III disclosure, outlined in Annex XII of CRD III.
• May be presented as a separate report or integrated into the annual report.
• Main focus is on Identified Staff, including senior management and risk takers.
• Provides aggregate quantitative information by business area, and by senior management and risk takers.
• Includes split of remuneration into fixed and variable components, form of variable remuneration, and outstanding deferred remuneration.
• For significant institutions, information is also provided at the director level.

Implementation Timeline

• Consultation period: Until 8 November 2010.
• CEBS decision: Expected on 9–10 December 2010.
• Implementation date: 1 January 2011.

Objectives

• Create a level playing field within the EU.
• Ensure consistency in remuneration policies across the group.
• Prevent distortions and arbitrage.
• Promote sound governance, risk alignment, and transparency.

Conclusion

The CEBS Guidelines aim to align remuneration practices with the principles of prudent risk-taking and sound governance, while ensuring transparency and flexibility. They are an essential part of the CRD III framework and are designed to be implemented by 2011.