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    EBA Proposes Guidelines on Remuneration Benchmarking, High Earner Data

    January 21, 2022

    The European Banking Authority (EBA) proposed to update the guidelines on the data collection exercise on high earners and the remuneration benchmarking exercise under the Capital Requirements Directive (CRD). A separate and specific set of new guidelines has been provided for investment firms under the Investment Firms Directive (IFD). The additional revisions to the guidelines for institutions and the new guidelines for investment firms reflect the changes made to remuneration and disclosure requirements as well as the new remuneration framework for investment firms. The feedback period for the proposed sets of guidelines ends on March 21, 2022.

    The proposed guidelines on remuneration benchmarking exercise integrate additional requirements introduced by CRD5 regarding the application of derogations to the requirement to pay out a part of variable remuneration in instruments and under deferral arrangements and the benchmarking of the gender pay gap. The proposal also includes guidance on how to harmonize the benchmarking of approvals granted by shareholders, to use higher ratios than 100% between the variable and fixed remuneration. The approach taken in the draft guidelines for investment firms is consistent with the corresponding guidelines for banks. The templates for the data collection have been revised, also taking into account the European Commission’s Implementing Regulation on disclosures. Additional information is collected on the application of the derogations to the application of the requirements to pay out parts of the variable remuneration in instruments and under deferral arrangements. The benchmarking of the gender pay gap will allow competent authorities to monitor the implementation of such measures and their development at different levels of pay. The guidelines aim to ensure that the benchmarking of the gender pay gap covers a representative sample of institutions. Specific templates for the benchmarking of the gender pay gap have also been introduced.

    The proposed guidelines on the data collection exercise on high earners reflect the amended remuneration framework laid down in CRD5, including the introduction of derogations to pay out a part of the variable remuneration in instruments and under deferral arrangements. In addition, the need to update these guidelines stems from the specific remuneration regime that has been introduced for investment firms and is laid down in the Investment Firms Directive (IFD) and Investment Firms Regulation (IFR). The CRD and the IFD require competent authorities to collect information on the number of natural persons, per institution and investment firm respectively, who are remunerated EUR 1 million or more per financial year, in pay brackets of EUR 1 million. The information should also include details on their job responsibilities, the business area, and the main elements of the salary, bonus, long-term award, and pension contribution. The new reporting format included in the revised guidelines will be used for the annual collection of data regarding high earners, starting for the financial year that ends in 2022. For the financial year 2021, the high earners data collection exercise will be conducted under the existing guidelines for both institutions and investment firms, unless the latter are small and non-interconnected.


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    Keywords: Europe, EU, Banking, Basel, Governance, Operational Risk, Guidelines, CRD, IFD, IFR, Investment Firms, Disclosures, Benchmarking Exercise, Reporting, Remuneration Benchmarking, High Earners Data, EBA

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