1. Remuneration policies for all staff

In accordance with Article 26 of Directive (EU) 2019/2034, investment firms are required to have in place a remuneration policy for all staff, taking into account the criteria within Articles 28 to 33 of this Directive and these guidelines. The remuneration policy for all staff should be gender neutral, i.e. staff, independent of their gender, should be equally remunerated for equal work or work of equal value in line with point 12 of Article 3(1) of Directive (EU) 2019/2034 and Article 157 TFEU. There should also be a gender neutral approach to pay increases and career progression.

The remuneration policy should specify all components of remuneration and include also the pension policy, including, where relevant, the framework for early retirements. The remuneration policy should also set a framework for other persons acting on behalf of the investment firm (e.g. tied agents), ensuring that the payments made are providing incentives for prudent risk taking and do not provide for any incentive for excessive risk taking or the mis-selling of products.

The fixed remuneration of staff should reflect their professional experience and organisational responsibility taking into account the level of education, the degree of seniority, the level of expertise and skills, the constraints (e.g. social, economic, cultural or other relevant factors) and job experience, the relevant business activity and remuneration level of the geographical location. The fixed remuneration should be gender neutral in the same way as the variable remuneration.

Where an investment firm benefits from extraordinary public financial support, the investment firm should ensure that the remuneration policy for all staff is consistent with the requirements under Article 31 of Directive (EU) 2019/2034.

The investment firm’s remuneration policy for all staff should be consistent with the objectives of the investment firm’s business and risk strategy, including environmental, social and governance (ESG⁶ ) risk-related objectives, corporate culture and values, risk culture, including with regard to environmental, social and governance (ESG) risk factors, long-term interests of the investment firm, and the measures used to avoid conflicts of interest, encourage prudent risk taking and responsible business conduct. Changes of such objectives and measures should be taken into account when updating the remuneration policy. Investment firms should ensure that remuneration practices are aligned with their overall risk appetite, taking into account all risks, including reputational risks and operational risks resulting from the mis-selling of products. Investment firms should also take into account the long-term interests of shareholders or owners, depending on the legal form of the investment firm.

⁶ See also Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability ‐ related disclosures in the financial services sector

Investment firms should be able to demonstrate to the competent authorities that the remuneration policy and practices are consistent with and promote sound and effective risk management.

Where variable remuneration is awarded, such awards should be based on the investment firms’, staff’s and, where applicable, business units’ performance and take into account the risks taken. The remuneration policy should make a clear distinction with regard to the variable remuneration and the performance assessment between the operating business, corporate and control functions. Investment firms should consider which elements of the remuneration policy on the variable remuneration of identified staff under Article 32 of IFD should be included in the remuneration policy for all staff.

The remuneration policy should be consistent with the requirement for an investment firm to have a sound capital base. The remuneration policy should also take into account possible restrictions on distributions under Article 39 of Directive (EU) 2019/2034.

The remuneration policy should contain:

• a. the performance objectives for the investment firm, business areas and staff;
• b. the methods for the measurement of performance, including the performance criteria;
• c. the structure of variable remuneration, including where applicable the instruments in which parts of the variable remuneration are awarded;
• d. the ex ante and ex post risk adjustment measures of the variable remuneration⁷ .

⁷ Specific requirements for the remuneration of identified staff and its risk alignment are contained in Titles III and IV of these guidelines.

Investment firms should ensure that potential conflicts of interest caused by the pay-out of instruments as part of the variable or fixed remuneration are identified and managed. This includes ensuring that insider trading rules are complied with and that no measures are taken that can have a short-term impact on the share or instruments price.

Where remuneration policies or group remuneration policies are implemented in investment firms, including in their subsidiaries, and the staff of the investment firm are also the majority owners of the investment firm or the subsidiary, the remuneration policy should be adjusted to the specific situation of these investment firms or subsidiaries. For identified staff, the investment firm should ensure that the remuneration policy complies with the relevant requirements within Articles 30 and 32 of Directive (EU) 2019/2034 and these guidelines on an individual and where applicable consolidated level.

Without prejudice to any measures adopted by Member States⁸ to prevent or compensate for disadvantages in professional careers of the underrepresented sex⁹ , the remuneration policy and all related employment conditions that have an impact on the pay per unit of measurement or time rate should be gender neutral, i.e. there should be no differentiation between staff of the male, female or diverse genders.

⁸ E.g. when implementing Directive 2006/54/EC

⁹ While Article 157 TFEU uses the term ‘underrepresented sex’, these guidelines, in line with the terminology of the CRD, use also the term ‘underrepresented gender’, both terms have the same meaning for the purpose of this guideline.

A gender neutral remuneration policy should ensure that all aspects of the remuneration policy are gender neutral, including the award and pay-out conditions for remuneration. Investment firms should be able to demonstrate that the remuneration policy is gender neutral.

When determining the pay per unit of measurement or time, investment firms should duly consider the remuneration awarded, working time arrangements, annual leave periods and other financial and non-financial benefits. Investment firms may use as a unit of measurement the annual gross remuneration of staff calculated on a full-time equivalent basis.

In order to monitor the application of gender neutral remuneration policies, investment firms should document appropriately the value of the position, e.g. by documenting job descriptions or defining wage categories, for all staff members or categories of staff and determine which positions are considered as having an equal value, e.g. by implementing a job classification system, taking into account at least the type of activities, tasks and duties assigned to the position or staff member. Where a job classification system is used for determining pay, it should be based on the same criteria for men, women and staff of diverse genders and so drawn up as to exclude any discrimination, including on grounds of gender.

Investment firms may consider in a gender neutral manner additional aspects when determining the remuneration of staff. Such aspects may include:

• a. educational, professional and training requirements, skills, effort and responsibility, work undertaken and the nature of tasks involved¹⁰ ;
• b. the place of employment and its costs of living;
• c. the hierarchical level of the staff and if staff has managerial responsibilities;
• d. the level of formal education of staff;
• e. the scarcity of staff available in the labour market for specialised positions;
• f. the nature of the employment contract, including if it is temporary or a contract with an indefinite period;
• g. the length of professional experience of staff;
• h. professional certifications of staff;
• i. appropriate benefits, including the payment of additional household and child allowances to staff with spouses and dependent family members.

¹⁰ See also Commission recommendation of 7.3.2014 on strengthening the principle of equal pay between men and women through transparency