Title I - Subject matter and definitions

Article 94(1)(g) of Directive 2013/36/EU³ requires institutions to set appropriate ratios between the fixed and the variable component of total remuneration for the categories of staff whose professional activities have a material impact on the risk profile of the institution (identified staff⁴ ) . The maximum ratio between the variable and the fixed part of the total remuneration is limited to 100%. Member States may allow the ratio to be increased to a maximum of 200%.

³ Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directive 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338). 4 Staff should be identified by applying the regulatory technical standards on criteria for the identification of staff whose professional activities have a material impact on the institution’s risk profile.

These guidelines set out the calculation and application of the discount rate referred to in Article 94(1)(g)(iii) of Directive 2013/36/EU. Member States may allow institutions to apply the discount rate for the purposes of calculating the ratio between variable and fixed components of remuneration to a maximum of 25% of total variable remuneration, provided it is paid in instruments that are deferred for a period of not less than five years.

The guidelines apply to institutions which make use of the option to apply the discount rate for the purpose of calculating the ratio between the variable and fixed components of remuneration, and to competent authorities in Member States which have implemented the option of applying the discount rate.

For the purpose of these guidelines the discount rate is the value by which a nominal amount of awarded variable remuneration which vests in the future is multiplied in order to obtain its discounted value. The discounted value is then used for the calculation of the ratio between the fixed and the variable components of total remuneration for identified staff.