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Remuneration
Understanding Remuneration in Europe and Key Jurisdictions
Remuneration in the financial sector refers to compensation frameworks for employees and executives, including fixed salaries, bonuses, incentives, and benefits. Across Germany, Austria, Switzerland, Luxembourg, and Liechtenstein, remuneration is a critical regulatory focus aimed at aligning pay structures with risk management, ethical practices, and long-term organizational goals. Effective remuneration policies strike a balance between rewarding performance and promoting responsible behavior to safeguard financial stability.
Legal and Regulatory Requirements for Remuneration
Remuneration frameworks in financial institutions must comply with stringent regulations established by European and national authorities.
European Union
- ECB: The European Central Bank emphasizes remuneration governance under its SREP Guidelines, requiring alignment of pay structures with risk appetite and long-term sustainability.
- EBA: The European Banking Authority enforces remuneration requirements under CRD V, emphasizing proportionality, deferral of bonuses, and clawback mechanisms to mitigate excessive risk-taking.
- EIOPA: The European Insurance and Occupational Pensions Authority mandates remuneration policies under the Solvency II Directive, focusing on governance, risk management, and compliance.
- ESMA: The European Securities and Markets Authority outlines remuneration requirements under MiFID II, ensuring alignment with investor protection and market integrity principles.
Germany
- BaFin and Deutsche Bundesbank: The Institutsvergütungsverordnung (IVV) outlines detailed requirements for remuneration systems, focusing on proportionality, deferral, and risk-adjusted performance metrics.
Austria
- FMA: Austria’s Financial Market Authority enforces remuneration requirements under BWG and VAG, emphasizing governance and alignment with risk management principles.
Switzerland
- FINMA: The Swiss Financial Market Supervisory Authority mandates remuneration guidelines under its Circular 2010/1, requiring institutions to align compensation with long-term risk management and sustainability.
Luxembourg
- CSSF: The Commission de Surveillance du Secteur Financier enforces remuneration regulations under CSSF Circular 10/437, focusing on proportionality and compliance with EU directives.
Liechtenstein
- FMA: Liechtenstein’s Financial Market Authority aligns remuneration requirements with European directives, ensuring governance and risk-adjusted compensation practices.
Leitner & Associates‘ Remuneration Solutions
We provide comprehensive solutions to help institutions design and implement compliant and effective remuneration frameworks:
- Audit: Detailed assessments of remuneration frameworks to identify gaps and ensure regulatory compliance.
- Consulting: Expert advice for developing, implementing, and optimizing remuneration systems.
- Training: Customized training programs to equip teams with knowledge of remuneration regulations and best practices.
- Interim Management: Providing experienced professionals to manage remuneration functions during transitions.
- Outsourcing: Full-service remuneration management to streamline processes and ensure compliance.
Products for Remuneration Framework Implementation
Whether starting from a blank slate or refining existing policies, our products cover all aspects of remuneration management:
- Commentaries: In-depth analysis of remuneration regulations and practical guidance for implementation.
- Guidelines: Comprehensive frameworks for establishing compliant remuneration systems.
- Policies: Clear documentation of remuneration governance, roles, and responsibilities.
- Procedures: Detailed processes for managing remuneration structures.
- Control Plans and Checklists: Tools to ensure compliance and mitigate risks in remuneration practices.
- Reports and Training Certificates: Documentation of remuneration efforts and validation of expertise.
Why Choose Leitner & Associates for Remuneration?
At Leitner & Associates, we specialize in creating remuneration frameworks that balance regulatory compliance with incentivizing performance. Whether starting fresh or optimizing existing systems, our tailored solutions ensure your institution aligns with both regulatory requirements and organizational goals.