10.2 Circumvention

183.Institutions should ensure that variable remuneration is not paid through vehicles or methods which aim at or effectively lead to non-compliance with remuneration requirements and the provisions of these Guidelines for identified staff or, where such requirements are applied to all staff, with remuneration requirements for all staff. This includes arrangements between the institution and third parties in which the staff member has a financial or personal interest.

184. ‘Circumvention’ is non -compliance with remuneration requirements and takes place if an institution is actually not meeting the objective and purpose of requirements when considered together, while formally the institution complies with the wording of the individual remuneration requirements.

185.Circumvention takes place in the following circumstances, among others:

• a. where variable remuneration is considered as fixed remuneration in line with the wording of these guidelines, but not with its objectives;
• b. where variable remuneration other than guaranteed variable remuneration is awarded or vests although, effectively:
• i. there has been no positive performance measured in line with Title IV of these guidelines by the staff member, business unit or institution;
• ii. there is no effective risk alignment (i.e. ex ante or ex post risk adjustment); or
• iii. the variable remuneration is not sustainable according to the institution´s financial situation;
• c. where staff receive payments from the institution or an entity within the scope of consolidation which do not fall under the definition of remuneration, but are vehicles or methods of pay that contain an incentive for risk assumption or provide disproportionate returns on investments on instruments of the firm that are significantly different from conditions for other investors who would invest in such a vehicle;
• d. where staff receive payments from the institution or an entity within the scope of consolidation which do not fall under the definition of remuneration, but are vehicles or methods to circumvent the remuneration requirements (e.g. non-redeemable loan);
• e. where fixed remuneration components are awarded as a fixed number of instruments and not as a fixed amount;
• f. where staff are awarded remuneration in instruments or are able to buy instruments which are not priced at the market value or the fair value in the case of non-listed instruments and the additional value received is not taken into account in the variable remuneration;
• g. where adjustments to fixed remuneration components are frequently negotiated and adjustments are in fact made to align the remuneration with the performance of staff;
• h. where allowances are awarded at an excessive amount that is not justified for the underlying circumstances;
• i. where remuneration is labelled as payment for early retirement and not taken into account as variable remuneration, where in fact the payment has the character of a severance payment, as it is made in the context of the early termination of the contract, or where in fact the staff member does not retire after such award is made or where the payments are not granted on a monthly basis;
• j. any measures that would lead to a situation where in fact the remuneration policy would no longer be gender neutral. 186.Institutions should ensure that the method for measuring the performance has appropriate controls to ensure that the award criteria cannot be manipulated. Where such controls are not in place, the variable remuneration is not appropriately linked to performance and the remuneration policy is not appropriately implemented and any payment of variable remuneration can lead to a violation of regulatory requirements. Possible manipulations include, for instance, courtesy decisions in the bilateral performance measurement process, e.g. where no objective standards exist for the decision-making pr ocess regarding staff members’ goal attainment.

187.Institutions should not provide compensation for any reduction or restructuring of variable remuneration, e.g. made in the context of recovery and resolution measures or other exceptional government intervention, in later years or by other payments, vehicles or methods.

188.Institutions should not create group structures or offshore entities or contracts with persons that act on behalf of the institution in order to manipulate the outcome of the identification process (e.g. because one Member State applies the derogation within Article 109(6) of Directive 2013/36/EU) and to circumvent the application of the remuneration requirements and the provisions of these Guidelines to staff to which these requirements and provisions should otherwise apply.

189.Where short-term contracts (e.g. one year) are used and renewed on a regular basis by institutions, competent authorities should review if such contracts form a vehicle or method of circumvention of the remuneration requirements of Directive 2013/36/EU, e.g. as they would in fact create variable remuneration, and take appropriate measures to ensure that institutions comply with the requirements of Articles 92 and 94 of Directive 2013/36/EU.

190.Where remuneration is fixed remuneration according to the guidelines in section 7, but is paid out in instruments, institutions and competent authorities should consider if the instruments used turn the fixed component of remuneration into a variable component of remuneration as a link to the performance of the institution is established. Institutions should not use financial instruments as part of the fixed remuneration to circumvent variable remuneration requirements and the instruments used should not provide incentives for excessive risk taking.

1. Forbhreathnú

1.1 Tagairtí

1.2 Ceanglais aitheanta

1.3 Caighdeáin ghaolmhara

2. Ceanglais aitheanta

3. Caighdeáin ghaolmhara

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