+Example 1
---+Factor for inflation (i)
---+Factor for EU government bonds (g)
---+Incentive factor long term deferral (id)
---+Length of the vesting period (n)
---+Amount of EUR 20 000 deferred for five years:
---+Amount of EUR 10 000 deferred for 6 years:
---+remuneration are calculated as follows:

Example 1

Assume for this example that the Member State in question has allowed institutions to apply a discount rate to a maximum of 25% of total variable remuneration. Assume also that the institution's shareholders have not approved a higher maximum ratio than the one provided for in Directive 2013/36/EU.

The institution would like to award a staff member total remuneration of EUR 285 000, of which EUR 135 000 is to be fixed remuneration and a potential amount of EUR 150 000 is to be variable remuneration. The staff member in question is identified staff and we are considering remuneration awarded for the performance year 2014. The ratio of variable/fixed remuneration based on nominal amounts would in this case be above the admissible 1:1 ratio. However, after application of the discount rate to the portion of variable remuneration paid in instruments deferred for a period of at least five years, the ratio is compatible with Article 94(1)(g) of Directive 2013/36/EU as shown below.

The structure of the variable remuneration would in this example be as follows:

  •  EUR 20 000 of the variable remuneration would be paid in instruments deferred for five years;
  •  EUR 10 000 would be paid in instruments deferred for six years;
  •  the remainder of the total variable remuneration would be paid up-front, not in instruments or would be deferred for a shorter period of time than five years.

Directive 2013/36/EU requires that at least 40% of the variable remuneration is deferred over a period which is not less than three to five years. In the case of a particular high variable remuneration component at least 60% needs to be deferred. At least 50% of the variable remuneration has to be paid in instruments. All these ratios apply to the amounts of variable remuneration awarded to the individual staff member before the discount rate is applied.

In this example, no pro rata vesting is considered. The amounts of EUR 20 000 and EUR 10 000 paid in instruments vest in full after five and six years, respectively.

Based on variable remuneration of EUR 150 000, a maximum amount of EUR 37 500 could have been discounted (which represents 25% of the total variable remuneration of EUR 150 000), if it were to be paid in instruments deferred for more than five years. However, in this example, only EUR 30 000 fulfil both these conditions and only these amounts can be discounted.

1. Forbhreathnú

,
Factor for inflation (i)

Assume the last available HICP rate for this Member State is 2%.
Factor for EU government bonds (g)

Assume the last available average rate for long-term EU government bonds as published by Eurostat is 2.73%.
Incentive factor long term deferral (id)

For the EUR 20 000 deferred for five years the incentive factor is 10%.

For the EUR 10 000 deferred for six years the incentive factor is 14% (10% + 4% for each additional full year).
Length of the vesting period (n)

For EUR 20 000 the vesting period is five years.

For EUR 10 000 the vesting period is six years.

The discounted variable remuneration for the above example 1 is calculated as follows:
Amount of EUR 20 000 deferred for five years:

= 10 061.09 ( )
Amount of EUR 10 000 deferred for 6 years:

= 3 569.75 ( )

The sum of the discounted variable remuneration = EUR 13 630.84 The total variable remuneration for the purpose of calculating the ratio between the variable and fixed component of remuneration and the ratio between variable and fixed components of
remuneration are calculated as follows:

The amount of variable remuneration that can be discounted because it is paid in instruments deferred for at least a period of five years is EUR 30 000. However, different discount factors have been used because the vesting period applied to the amount of EUR 20 000 is five years, while the vesting period applied to EUR 10 000 is six years. These two amounts vest in full at the end of the deferral period, hence the vesting period equals the deferral period. There is no pro rata vesting in this example. The total amount of the discounted part of variable remuneration equals EUR 13 630.84, resulting in a total amount of variable remuneration for the purpose of calculating the ratio between variable and fixed remuneration of EUR 133 630.84; that is (150 000 - 30 000 + 13 630.84). The ratio between variable and fixed components of total remuneration in this example is (133 630.84/135 000)*100 = 98.99 %.

To sum up, under the assumptions and the conditions set out above, the institution will be able to award a staff member EUR 285 000 total remuneration, consisting of EUR 135 000 in fixed remuneration and EUR 150 000 variable remuneration within the 1:1 ratio for variable and fixed remuneration.

Of the EUR 150 000 variable remuneration, at least 40 % (EUR 60 000) needs to be deferred. If, depending on the jurisdiction, this is considered to be a particular high amount at least 60 % (EUR 90 000) needs to be deferred. In any case at least EUR 75 000 needs to be awarded in instruments.

1.1 Tagairtí

1.2 Ceanglais aitheanta

1.3 Caighdeáin ghaolmhara

2. Ceanglais aitheanta

Ceanglais

3. Caighdeáin ghaolmhara

Caighdeáin
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