13.1 Fully flexible policy on variable remuneration

Investment firms must have a fully flexible policy on variable remuneration for its staff, including identified staff, in accordance with Article 30(1)(k) of Directive (EU) 2019/2034. The amount of variable remuneration awarded should appropriately react to changes of the performance of the staff member, the business unit and the investment firm. The investment firm should specify how the variable remuneration reacts to performance changes and the performance levels. This should include performance levels where variable remuneration decreases down to zero. Unethical or non-compliant behaviour should lead to a significant reduction of the staff member’s variable remuneration.

The amount of fixed remuneration must be sufficiently high in order to ensure that the reduction of the variable remuneration down to zero would be possible. Staff should not be dependent on the award of variable remuneration as this might otherwise create incentives for short-term-oriented excessive risk taking, including the mis-selling of products, where without such short-term risk taking the performance of the investment firm or staff would not allow for the award of variable remuneration.

The pay-out of fixed remuneration in instruments, if any, should not impair the ability of the investment firm to apply a fully flexible policy on variable remuneration.