14.2 Award process

Investment firms should set a bonus pool. When determining bonus pools or individual awards, investment firms should consider all current risks, expected losses, estimated unexpected losses and stressed conditions associated with the investment firm’s activities.

Variable remuneration should be awarded after the end of the accrual period. The accrual period should be at least one year. Where longer periods are used, different accrual periods may overlap, for example if a year, a new multi-year period starts each year.

After the accrual period, the investment firm should determine the individual identified staff members’ variable remuneration by translating the performance criteria and risk adjustments into actual remuneration awards. During this award process, the investment firm should adjust remuneration for potential adverse developments in the future (‘ex ante risk adjustment‘).