MIFIDPRU 8.6 Remuneration policy and practices

1The rules in this section apply to all MIFIDPRU investment firms, unless otherwise specified.

1A MIFIDPRU investment firm must disclose a summary of:

1. (1)

   its approach to remuneration for all staff (“staff” interpreted according to SYSC 19G.1.24G);

2. (2)

   the objectives of its financial incentives;

3. (3)

   the decision-making procedures and governance surrounding the development of the remuneration policies and practices the firm is required to adopt in accordance with the MIFIDPRU Remuneration Code, to include, where applicable:

   1. (a)

      the composition of and mandate given to the remuneration committee; and

   2. (b)

      details of any external consultants used in the development of the remuneration policies and practices.

1A non-SNI MIFIDPRU investment firm must disclose the types of staff it has identified as material risk takers under SYSC 19G.5, including any criteria in addition to those in SYSC 19G.5.3R that the firm has used to identify material risk takers

1A MIFIDPRU investment firm must disclose the key characteristics of its remuneration policies and practices in sufficient detail to provide the reader with:

1. (1)

   an understanding of the risk profile of the firm and/or the assets it manages; and

2. (2)

   an overview of the incentives created by the remuneration policies and practices.

1For the purpose of MIFIDPRU 8.6.5R, a firm must disclose at least the following information:

1. (1)

   the different components of remuneration, together with the categorisation of those remuneration components as fixed or variable;

2. (2)

   a summary of the financial and non-financial performance criteria used across the firm, broken down into the criteria for the assessment of the performance of:

   1. (a)

      the firm;

   2. (b)

      business units; and

   3. (c)

      individuals.

3. (3)

   for a non-SNI MIFIDRU investment firm:

   1. (a)

      the framework and criteria used for ex-ante and ex-post risk adjustment of remuneration, including a summary of:

      1. (i)

         current and future risks identified by the firm;

      2. (ii)

         how the firm takes into account current and future risks when adjusting remuneration; and

      3. (iii)

         how malus (where relevant) and clawback are applied;

   2. (b)

      the policies and criteria applied for the award of guaranteed variable remuneration; and

   3. (c)

      the policies and criteria applied for the award of severance pay.

4. (4)

   for a non-SNI MIFIDPRU investment firm not falling within SYSC 19G.1.1R(2):

   1. (a)

      details of the firm’s deferral and vesting policy, including as a minimum:

      1. (i)

         the proportion of variable remuneration that is deferred;

      2. (ii)

         the deferral period;

      3. (iii)

         the retention period;

      4. (iv)

         the vesting schedule; and

      5. (v)

         an explanation of the rationale behind each of the policies referred to in (i) to (iv).

      Where the firm’s deferral and vesting policy differs for different categories of material risk takers, the information should be presented and sub-divided accordingly.

   2. (b)

      a description of the different forms in which fixed and variable remuneration are paid, for example, whether paid in:

      1. (i)

         cash;

      2. (ii)

         share-linked instruments;

      3. (iii)

         equivalent non-cash instruments;

      4. (iv)

         options; or

      5. (v)

         short or long-term incentive plans.

1. (1)

   1Subject to (7), a MIFIDPRU investment firm must disclose the quantitative information required by (2) to (6) for the financial year to which the disclosure relates.

2. (2)

   An SNI-MIFIDPRU investment firm must disclose the total amount of remuneration awarded to all staff, split into:

   1. (a)

      fixed remuneration; and

   2. (b)

      variable remuneration.

3. (3)

   A non-SNI MIFIDPRU investment firm must disclose the total number of material risk takers identified by the firm under SYSC 19G.5.

4. (4)

   A non-SNI MIFIDPRU investment firm must disclose the following information, split into categories for senior management, other material risk takers, and other staff:

   1. (a)

      the total amount of remuneration awarded;

   2. (b)

      the fixed remuneration awarded; and

   3. (c)

      the variable remuneration awarded.

5. (5)

   A non-SNI MIFIDPRU investment firm must disclose the following information, split into categories for senior management and other material risk takers:

   1. (a)

      the total amount of guaranteed variable remuneration awards made during the financial year and the number of material risk takers receiving those awards;

   2. (b)

      the total amount of the severance payments awarded during the financial year and the number of material risk takers receiving those payments; and

   3. (c)

      the amount of the highest severance payment awarded to an individual material risk taker.

6. (6)

   A non-SNI MIFIDPRU investment firm not meeting the conditions in SYSC 19G.1.1R(2) must disclose the following information, split into categories for senior management, and other material risk takers:

   1. (a)

      the amount and form of awarded variable remuneration, split into cash, shares, share-linked instruments and other forms of remuneration, with each form of remuneration also split into deferred and non-deferred;

   2. (b)

      the amounts of deferred remuneration awarded for previous performance periods, split into the amount due to vest in the financial year in which the disclosure is made, and the amount due to vest in subsequent years;

   3. (c)

      the amount of deferred remuneration due to vest in the financial year in respect of which the disclosure is made, split into that which is or will be paid out, and any amounts that were due to vest but have been withheld as a result of performance adjustment;

   4. (d)

      information on whether the firm uses the exemption for individual material risk takers set out in SYSC 19G.5.9R, together with details of:

      1. (i)

         the provisions in SYSC 19G.5.9R(2) in respect of which the firm relies on the exemption;

      2. (ii)

         the total number of material risk takers who benefit from an exemption from each provision referred to in (i); and

      3. (iii)

         the total remuneration of those material risk takers who benefit from an exemption, split into fixed and variable remuneration.

7. (7)
   1. (a)

      For the purposes of (4), (5)(a), (5)(b) and (6), a non-SNI MIFIDPRU investment firm must aggregate the information to be disclosed for senior management and other material risk takers, where splitting the information between those two categories would lead to the disclosure of information about one or two people.

   2. (b)

      Where aggregation in accordance with (a) would still lead to the disclosure of information about one or two people, a non-SNI MIFIDPRU investment firm is not required to comply with the obligation in (4), (5)(a), (5)(b) or (6).

1A non-SNI MIFIDPRU investment firm that relies on MIFIDPRU 8.6.8R(7) must include a statement in the main body of its remuneration disclosure that:

1. (1)

   explains the obligations in relation to which it has relied on the exemption; and

2. (2)

   confirms that the exemption is relied on to prevent individual identification of a material risk taker.