The bill includes a number of amendments to Chapter 1.7 of the Financial Supervision Act (Wft) with regard to the remuneration of financial companies. This concerns (i) a statutory retention period of 5 years for, among other things, shares in fixed remuneration of directors and employees of financial companies, (ii) a legal obligation for financial companies to account for and account for the ratio of the remuneration for the social function of the company and its realization and (iii) a tightening of the possibility of deviating from the bonus ceiling for non-collective labor agreements.
i. Retention period for shares and comparable financial instruments in fixed remuneration
It is proposed to introduce a statutory retention period of 5 years for shares and other items whose value depends on the value of the company if they are part of a fixed remuneration. This obligation will apply to directors and employees of financial companies. This means that these components of a fixed remuneration must be held for a period of 5 years after acquisition and not be sold.
This measure is also in line with the guidelines of the European Banking Authority (EBA) on a controlled remuneration policy for banks and certain investment firms. These guidelines include, inter alia, that variable remuneration shares and similar financial instruments should be subject to an appropriate retention policy designed to align financial incentives with the long-term interests of the bank or investment firm.
ii. Obligation to account and account for rewards to social function
Financial companies are obliged to describe in their remuneration policy how the company takes account of the relationship between the remuneration of directors, supervisory directors and employees of the company and its social function and how this is achieved. Financial companies that are obliged under the Wft to draw up a management report must be accountable for this in public.
iii. Tightening of deviation from bonus ceiling for non-collective labor agreements
The proposed tightening makes it clear that use is only possible in exceptional cases and in any case is not possible for those who (i) perform internal control functions or (ii) directly engage in the provision of financial services to consumers. The proposed tightening also includes the introduction of an annual notification obligation regarding the use of this possibility to deviate from the bonus ceiling by the financial undertaking to the supervisory authority.
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NAZALI TAX & LEGAL |