FSA Guidance consultation (GC11/9): Proposed 'Dear CEO' letters providing guidance on issues relating to remuneration
August 5, 2011
The proposed guidance relates to Remuneration Code (SYSC 19A) in the FSA Handbook.
The FSA's revised Remuneration Code came into force on 1 January 2011, implementing the rules on remuneration contained in the EU Capital Requirements Directive (CRD3). The proposed 'Dear CEO' letters set out the FSA's plans for monitoring implementation of the Code during the coming remuneration round.
In an annex to the letter, the FSA also published proposed guidance for consultation on three policy issues.
(i) Definition of 'Code staff' - how to identify staff whose remuneration falls into the 'same bracket' as senior management, control staff and risk takers and who have a material impact on the firm's risk profile.
(ii) Long-term incentive plans ("LTIPs") - to provide clarity on what the FSA would expect to see in an LTIP that is used to pay part of variable remuneration.
(iii) Structure of alternative instruments - the Code requires firms to pay part of variable remuneration in shares or equivalent instruments. For firms that cannot or do not wish to pay in shares, the FSA aims to provide clarity on what it would expect to see in those alternative instruments.
The Consultation period closes on September 2, 2011.
Cross References
Draft Dear CEO letter on remuneration for firms in proportionality Tier 1
Template for self-assessment of compliance with Remuneration Code (for firms in proportionality Tier 1)
The Remuneration Code - Code staff list for Tier 1 firms
Draft Dear CEO letter on remuneration for firms in proportionality Tiers 2, 3 and 4