8.1 Allowances

The variable and fixed remuneration of investment firms may consist of different components, including additional or ancillary payments or benefits. Investment firms should analyse allowances²⁰ and allocate them to the variable or fixed component of remuneration. The allocation should be based on the criteria in section 7.

²⁰ The label may differ according to the investment firm: ‘role-based pay, staff allowance, adjustable role allowance, fixed pay allowance’, etc.

In particular where allowances are considered as fixed remuneration, but show any of the following features, the investment firm should duly document the results of the assessments made under section 7:

• a. they are paid only to identified staff members²¹ ;
• b. they are limited to cases where the ratio between the variable and the fixed components of remuneration would otherwise exceed the ratio set within the remuneration policy;
• c. the allowances are linked to indicators that could possibly be understood as proxies for performance. In that case the investment firm should be able to demonstrate that these indicators are not linked to the performance of the investment firm, e.g. by analysing the correlation with the performance indicators used.

²¹ Being an identified staff member should not be considered as a role or function.

Where allowances are based on the role, function or organisational responsibility of staff, in order to be correctly mapped to the fixed component of remuneration, they should meet the criteria set out in paragraph 128 taking into account all of the following particulars:

• a. the allowance is tied to a role or organisational responsibility and awarded as long as no material changes happen regarding the responsibilities and authorities of the role so that in fact the staff would have a different role or organisational responsibility;
• b. the amount does not depend on any factors other than fulfilling a certain role or having a certain organisational responsibility and the criteria in paragraph 14;
• c. any other staff member fulfilling the same role or having the same organisational responsibility and who is in a comparable situation would be entitled to a comparable allowance.

Competent authorities should ensure that allowances are not a vehicle or method that facilitates the non-compliance of investment firms with Directive (EU) 2019/2034.