2014年-FSB全球金融稳定委员会_Adequacy_of_Loss_6页_263kb

FSB 2014 Workshop on Compensation Practices Summary

Core Content

The FSB 2014 Workshop on Compensation Practices, held in Paris on 1 April 2014, aimed to discuss the implementation of the FSB Principles and Standards for Sound Compensation Practices (P&S) by financial institutions. The event brought together officials from the FSB Compensation Monitoring Contact Group and nineteen senior executives from global systemically important banks to share experiences and lessons learned. The workshop focused on three key areas: the identification and treatment of material risk takers (MRTs), the use of malus and clawback clauses, and the governance frameworks supporting sound risk and compliance cultures.

Main Viewpoints and Key Information

1. Progress in Embedding Risk Management in Compensation Practices

• Positive Developments: Firms have made progress in integrating risk and control functions into compensation decision-making. Boards and remuneration committees are more engaged, and there is greater involvement of the risk function in setting performance objectives and award decisions.
• Challenges Remain: Despite these improvements, operational challenges persist, including the selection of risk-aligned performance metrics, educating board members about compensation-related risks, and determining the appropriate level of discretion in implementing compensation policies.
• Need for Continued Efforts: Firms emphasized the importance of ongoing efforts to ensure that compensation practices support a sound risk culture and align with prudent risk-taking behavior.

2. Regulatory Complexity and Its Impact

• Regulatory Adaptation: Firms face significant challenges adapting to different regulatory approaches, particularly in the European Union (EU) due to the implementation of CRD IV/CRR and related Regulatory Technical Standards (RTS).
• Impact on Pay Structures: The introduction of a maximum ratio between fixed and variable compensation in the EU has raised concerns about the potential adverse effects on aligning pay with risk-adjusted performance.
• Competitive Pressures: The regulatory environment has made banking less attractive to talent, with some firms noting that this is "self-inflicted" due to the complexity of compensation structures and others attributing it to increased regulation.
• Need for Cross-Border Coordination: There is a call for better cross-border coordination to ensure consistency in compensation practices across jurisdictions with different regulatory frameworks.

3. Identification of Material Risk Takers (MRTs)

• Evolution of Identification Processes: Banks have moved from a broad approach to more refined and articulated methods for identifying MRTs, with better understanding among employees and managers.
• Role of Pay Level: Pay level is considered a key criterion in identifying MRTs, though its relevance depends on the institution’s business model and risk culture.
• Challenges: Firms face difficulties in maintaining consistent MRT identification across global operations due to varying legal frameworks. The EU’s RTS has been described as a "game changer" due to its detailed and binding definition of MRTs.
• Need for Transparency and Communication: There is a need for improved communication with MRTs to ensure they understand the identification process and the rationale behind it. Also, there is a lack of publicly available and internationally comparable data on MRTs across institutions.

4. Use of Malus and Clawback Clauses

• Progress and Usage: There has been progress in the use of malus and clawback mechanisms, though clawbacks are used less frequently. Malus is more commonly applied.
• Legal and Practical Challenges: Legal obstacles in some jurisdictions and the costs associated with employee challenges can affect the enforceability of these clauses.
• Best Practices: Success factors include clear communication, ownership by business lines, independent oversight, and explicit contractual clauses. These mechanisms are seen as essential tools for aligning compensation with risk-taking behavior.
• Technical Challenges: Firms also raised technical issues related to tax and accounting conventions, such as the recoupment of gross versus net amounts and the valuation of non-cash compensation.

5. Governance of Compensation Arrangements

• Improved Governance: Governance has seen the most tangible improvements, with greater board involvement, more frequent remuneration committee meetings, and increased interaction between risk, audit, and remuneration committees.
• Role of Independent Reviews: Independent risk reviews are considered a key lever for cultural change. They provide an analytical and transparent overlay to compensation decisions.
• Qualitative Metrics: Banks use qualitative metrics to assess risk alignment, which require some level of discretion in interpretation.
• Ongoing Challenges: The effectiveness of compensation policies in influencing behavior and risk-taking remains difficult to assess, with variations across business segments.

Conclusion

The workshop highlighted the ongoing efforts of financial institutions to align compensation with risk-taking and performance while navigating a complex and evolving regulatory landscape. It also emphasized the importance of communication, transparency, and independent oversight in achieving this alignment. The findings will be incorporated into the next progress report on compensation practices, which will be prepared ahead of the G20 Summit in November 2014.