4 Proportionality

85.The proportionality principle encoded in Article 92(2) of Directive 2013/36/EU aims to match remuneration policies and practices consistently with the individual risk profile, risk appetite and strategy of an institution, so that the objectives of the remuneration requirements are effectively achieved.

86.When applying the remuneration requirements and the provision of these Guidelines in a proportionate manner, institutions and competent authorities should consider a combination of all the following criteria:

• a. the size,
• b. the internal organisation; and
• c. the nature, scope and complexity of the institution’s activities.

87.When assessing what is proportionate and in determining the required level of sophistication of the remuneration policies and risk measurement approaches, institutions and competent authorities should take into consideration the combination of qualitative and quantitative aspects of all the criteria above. For instance, a business activity may well have a small scale but could still include complex activities and risk profiles because of the nature of its activities or the complexity of its products. 88.For the above purposes, institutions and competent authorities should take into account at least the following criteria:

• a. whether the institution meets the criteria for small and non-complex institution or large institution as set out in points 145 and 146 of Article 4(1) of Regulation (EU) No 575/2013;
• b. whether the institution meets the criteria and the thresholds set out in paragraphs 3 and 4 of Article 94 of Directive 2013/36/EU with regard to the waivers of the variable remuneration pay-out process;
• c. the geographical presence of the institution and the size of the operations in each jurisdiction;
• d. the legal form and the available equity and debt instruments;
• e. the authorisation to use internal methods for the measurement of capital requirements (e.g. IRB, AMA);
• f. whether the institution is part of a group and, if so, the proportionality assessment done for the group and the characteristics of the group to which the institution belongs;
• g. the type of authorised activity and services (e.g. loans and deposits, investment banking);
• h. the underlying business strategy;
• i. the structure of the business activities and the time horizon, measurability and predictability of the risks of the business activities;
• j. the funding structure of the institution;
• k. the internal organisation of the institution, including the level of variable remuneration that can be paid to identified staff;
• l. the structure of profits and losses of the institution;
• m. the type of clients (e.g. retail, corporate, small businesses, public entity);
• n. the complexity of the products or contracts.

89.When applying remuneration requirements and the provisions set out in these Guidelines in a proportionate way, institutions are responsible for considering their risk profile, risk appetite and other characteristics and for developing and implementing remuneration policies and practices which are appropriately aligned to the business strategy, objectives, values and long-term interest of the institution. However, the obligation to have sound and effective remuneration policies and practices applies to all institutions and with respect to all staff, regardless of the institutions’ different characteristics. 90.Before remuneration requirements and the provisions set out in these Guidelines are applied in a proportionate way, the identification of staff, based on the criteria provided in Article 92(3) of Directive 2013/36/EU, the Commission Delegated Regulation mandated under Article 94(2) of Directive 2013/36/EU and additional internal criteria, should be performed²⁷ .

91.The limitation of the maximum ratio between the variable components of remuneration and the fixed components to 100% (200% with shareholders’ approval) should be applied to all identified staff in the institution.

92.When implementing specific remuneration policies for different categories of identified staff in line with sections 3 and 4 of these guidelines, the application of proportionality should take into account the impact on the institution’s risk profile of that category of identified staff.

93.Competent authorities should ensure that institutions comply with the remuneration requirements and the provisions of these guidelines in a manner that provides for a level playing field among different institutions.

Waivers of the variable remuneration pay-out process

94.Without prejudice to the implementation of Article 94(3) of Directive 2013/36/EU by Member States, institutions that are not large institutions as defined in point 146 of Article 4(1) of Regulation (EU) 575/2013 and that have total assets under the threshold defined in national law may not apply the requirements to defer variable remuneration and to pay it out in instruments as set out in points (l), (m) and second paragraph of point (o) of Article 94(1) of Directive 2013/36/EU. An institution that meets one or more of the criteria within point 146 of Article 4(1) of Regulation (EU) 575/2013 is a large institution.

• a. The assessment of whether an institution is a G-SII or O-SII is made in line with Article 131 of Directive 2013/36/EU and the Commission Delegated Regulation (EU) 2016/1608 with regard to regulatory technical standards for the specification of the methodology for the identification of global systemically important institutions and for the definition of subcategories of global systemically important institutions and the EBA guidelines on the criteria to determine the conditions of application of Article 131(3) of Directive 2013/36/EU (CRD) in relation to the assessment of other systemically important institutions.
• b. When assessing whether a consolidating institution meets the threshold in point 146(d) of Article 4(1) of Regulation (EU) 575/2013, the criteria is met if the amount on a consolidated basis²⁸ exceeds the threshold. Amounts, if necessary, should be converted into EUR, using the exchange rate published by the Commission for financial programming and the budget for the last month of the consolidating institution ’ s financial year. 95.When establishing the amount of the annual variable remuneration paid to a staff member and the ratio between the variable and fixed annual remuneration for the purposes of Article 94(3)(b), i.e. the application of waivers to the requirement to defer and pay out in instruments the variable remuneration to individual staff members, institutions should take into account the amounts specified in points (a) and (b) and apply the further conditions in points (c) to (f):
• a. the annual variable remuneration awarded for the performance period that equals the financial year for which it is determined if the waiver can be applied and all performance periods that ended in this financial year, independent of the length of the underlying performance periods that have ended in this financial year, e.g. it should include the full amount of variable remuneration based on revolving and non-revolving multi-year accrual periods and retention bonuses for periods longer than one year where the underlying period ended in the given financial year;
• b. the annual fixed remuneration awarded for the financial year for which the waiver may be applied; institutions may exclude other components of fixed remuneration as specified under paragraphs 132 and 133 for the calculation;
• c. the amounts should be based on the definition for fixed and variable remuneration within these guidelines and should be calculated based on the gross remuneration awarded;
• d. the variable remuneration should consist of all forms of variable remuneration awarded, including performance-based variable remuneration, amounts paid as guaranteed variable remuneration, retention bonuses, severance payment or discretionary pension benefits;
• e. where the amounts are determined by institutions on an individual basis, the remuneration awarded by the institution should be taken into account, when the amount is determined on a consolidated basis by the consolidating institution, all remuneration awarded by financial institutions and ancillary service undertakings within the scope of prudential consolidation should be taken into account;
• f. where the remuneration is paid in a currency other than EUR, the amounts should be converted into EUR, using the exchange rate published by the Commission for financial programming and the budget for the last month of the institution ’ s financial year.

96.When calculating the average of the value of the assets for the four-year period immediately preceding the current financial year for the purpose of point (a) of Article 94(3) of Directive 2013/36/EU, institutions should use the simple average of this value at the end of the four preceding financial years. Where the accounts are kept in a currency other than EUR, the amounts should be converted into EUR, using the exchange rate published by the Commission for financial programming and the budget for the last month of each financial year.

97.Where national law empowers competent authorities to set the thresholds under Article 94(3) and 94(4) of Directive 2013/36/EU for individual institutions, competent authorities should, when lowering or increasing the thresholds under Article 94(3) and 94(4) of Directive 2013/36/EU, take into account the institution ’ s nature, scope and complexity of its activities, its internal organisation or, if applicable, the characteristics of the group to which it belongs, and also take into account the proportionality criteria set out within this section.

²⁷ Please refer to guidelines for the identification process outlined in section 5 of these guidelines.

²⁸ Article 19 of Regulation (EU) 575/2013 with regard to entities excluded from the scope of prudential consolidation applies.

1. Översikt

1.1 Referenser

1.2 Identifierade krav

1.3 Relaterade standarder

2. Identifierade krav

3. Relaterade standarder

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