88. When establishing the amount of the annual variable remuneration paid to a staff member and the …

When establishing the amount of the annual variable remuneration paid to a staff member and the effective ratio between the variable and fixed annual remuneration for the purposes of point (b) of Article 32(4) of Directive (EU) 2019/2034, i.e. the application of waivers to the requirement to defer and pay out in instruments the variable remuneration to individual staff members, investment firms should take into account the amounts specified in point (a) and (b) and apply the further conditions in points (c) to (h):

• a. the annual variable remuneration awarded for the performance period that equals the financial year for which it is determined if the waiver can be applied and all performance periods that ended in this financial year, independent of the length of the underlying performance periods that have ended in this financial year, e.g. it should include the full amount of variable remuneration based on revolving and non-revolving multi-year accrual periods and retention bonuses for periods longer than one year where the underlying period ended in the given financial year;
• b. the annual fixed remuneration awarded for the preceding performance year; investment firms may not take into account other awards that are considered fixed remuneration under paragraphs 127 and 128;
• c. the variable remuneration awarded for the preceding performance year, independent on how the remuneration is paid, i.e. cash, instruments or other forms of variable remuneration;
• d. the variable remuneration should consist of all forms of variable remuneration awarded, including performance-based variable remuneration, amounts paid as guaranteed variable remuneration, retention bonuses, severance payments or discretionary pension benefits;
• e. the amount of variable remuneration awarded for performance periods that are longer than one year, e.g. based on long-term incentive plans or multi-year accrual periods, taking into account the full amount for the performance year in which the performance periods end;
• f. the full amount of variable remuneration awarded within the performance year as guaranteed variable remuneration, retention bonuses, severance payments and discretionary pension benefits;
• g. the amounts should be based on the definition for fixed and variable remuneration within these guidelines and should be calculated based on the gross remuneration awarded;
• h. where the amount is determined on an individual basis, the remuneration awarded by the investment firm should be taken into account; where the amount is determined on a consolidated basis, all remuneration awarded within the scope of prudential consolidation should be taken into account; and
• i. where the remuneration is paid in a currency other than EUR, the amounts should be converted into EUR using the exchange rate published by the Commission for financial programming and the budget for the last month of the investment firm’s financial year.¹⁸

¹⁸ The exchange rates can be found on the website of the European Commission under: http://ec.europa.eu/budget/contracts_grants/info_contracts/inforeuro/inforeuro_en.cfm

1. Overview

1.1 References

• Article 32 4.

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/