8.4 Retention bonuses

143.Institutions should be able to substantiate their legitimate interest in awarding retention bonuses to retain an identified staff member. For example, retention bonuses may be used under restructurings, in wind-down, after a change of control or to ensure the finalisation of major projects. Institutions should document the event or justification that made it necessary to award a retention bonus and the time period, including the start and the end date, for which the reason is assumed to exist. Institutions should define the retention conditions and applicable performance conditions (see also paragraph 147). Institutions should specify a retention period and a date or event after which it determines whether the retention and performance conditions have been met.

144.As a general principle, institutions should not award multiple retention bonuses to a staff member; in exceptional cases and where duly justified, more than one retention bonus may be paid to a staff member, but at different moments in time and under the conditions specified in this section with regard to each retention bonus. The retention bonuses should only be awarded after the retention conditions and applicable performance conditions have been met. Moreover, the retention bonus should only be awarded if no reasons exist that lead to a situation where the retention bonus should not be awarded, e.g. material compliance breaches, misconduct or other failures of that staff member.

145.A retention bonus should be in accordance with the requirements under Articles 93, 141 and 141b and the respective supervisory powers under Article 104(1)(g) of Directive 2013/36/EU, which could lead to a situation where the retention bonus might need to be reduced, possibly even down to zero, depending on the maximum distributable amount (MDA) or other restrictions imposed by competent authorities.

146.When assessing and considering whether the award of a retention bonus to identified staff is appropriate, institutions and competent authorities may take into account at least the following:

• a. the concerns that lead to the risk that certain staff may choose to leave the institution;
• b. the reasons why the retention of that staff member is crucial for the institution;
• c. the consequence if the staff member concerned leaves the institution; and
• d. whether the amount of the awarded retention bonus is necessary and proportionate to retain the targeted staff member.

147.A retention bonus should be based on specific conditions that differ from the performance conditions applied to other parts of the variable remuneration and include a retention condition and specific performance conditions. The specific conditions for a retention bonus should lead to the retention objective (i.e., retention of staff in the institution for a predefined period of time or until a certain event). The specific performance conditions should include conditions that are related to the legitimate interest for which the staff member should be retained and to the conduct of staff and should be compatible with the provisions in paragraph 145. Retention bonuses should not lead to a situation where the total variable remuneration, consisting of performance-related variable remuneration and retention bonus, of the staff member is no longer linked to the performance of the individual, the business unit concerned and the overall results of the institution as required under Articles 92(2)(g)(ii) and 94(1)(a).

148.Retention bonuses should not be awarded to merely compensate for performance-related remuneration not paid due to insufficient performance or the institution’s financial situation.

149.Retention bonuses are variable remuneration and therefore, if awarded to identified staff, must comply with the requirements on variable remuneration under Article 94 of Directive 2013/36/EU, including the maximum ratio between the variable and fixed remuneration, ex post risk alignment, payment in instruments, deferral, retention, malus and clawback.

150.A retention bonus must be taken into account in the calculation of the ratio between the variable and fixed remuneration as variable remuneration. Independent of the fact that the retention bonus will be awarded only after the end of the retention period, the retention bonus should be taken into account in the calculation of the ratio between the variable and fixed components of remuneration following one of the methods specified below:

• a. The retention bonus is split into annual amounts for each year of the retention period calculated on a linear pro rata basis. Where the exact length of the retention period is not known upfront, the institution should set and duly document a period considering the situation and measures taken that justify the payment of a retention bonus. The calculation of the ratio should be based on the period set; or
• b. The full amount of the retention bonus is considered in the year when the retention condition is met.

1. Ülevaade

1.1 Viited

1.2 Tuvastatud nõuded

1.3 Seotud standardid

2. Tuvastatud nõuded

3. Seotud standardid

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