SYSC TP 3 Remuneration code

11

R

[deleted]2

2

R

[deleted]2

3

R

2[deleted]2

4

G

[deleted]2

25

G

3[deleted]3

26

R

Until 1 January 2012, SYSC 19A.3.54 R and SYSC 19A Annex 1 (on voiding and recovery) apply only in relation to a firm that was subject to the version of the Remuneration Code that applied before 1 January 2011.4

46A

R

(1)

Paragraph (2) applies in relation to a firm that was not subject to the version of the Remuneration Code that applied before 1 January 2011 but satisfies at least one of the conditions set out in SYSC 19A.3.54 R (1B) to SYSC 19A.3.54 R (1D).

(2)

Where this paragraph applies, a contravening provision that is contained in an agreement made before 3 November 2011 is not rendered void by SYSC 19A Annex 1.1R unless it is subsequently amended so as to contravene a rule to which SYSC 19A Annex 1.1R applies.

46B

G

The effect of 6R is to limit the provisions on voiding and recovery to firms which were subject to the version of the Remuneration Code which applied before 1 January 2011. That transitional provision comes to an end on 1 January 2012. A new limit providing for voiding to apply only in relation to certain types of firm is provided in SYSC 19A.3.54 R (1B) to SYSC 19A.3.54 R (1D). Paragraph 6AR applies to firms which become subject to the provisions on voiding after the transitional provision in 6R comes to an end. It prevents certain contravening provisions which predate the making of the new rules limiting the application of voiding from becoming void.

37

G

(1)

This guidance applies to a firm to which the Remuneration Code applies, where both of the following conditions are satisfied:

(a)

condition 1 is that the firm is a non-listed firm; and

(b)

condition 2 is that any parent undertaking of the firm is a non-listed undertaking.

(2)

The FSA considers that, where each of the conditions set out below is satisfied, a firm to which this guidance applies might (but will not necessarily) be able to rely on the proportionality provisions of SYSC 4.1.2 R and the remuneration principles proportionality rule (of SYSC 19A.3.3 R) to justify not complying with the requirement to pay at least 50% of variable remuneration in shares or other non-cash instruments (SYSC 19A.3.47 R).

(a)

Condition 1 is that the firm is taking the necessary steps to comply with the requirement as soon as reasonably possible and, in any event, by 1 July 2012.

(b)

Condition 2 relates to the proportion of cash that would have been issued in shares or other non-cash instruments had SYSC 19A.3.47 R been complied with ("relevant cash"). The relevant cash should not be paid at the point in time that the shares or other non-cash instruments would have vested. This is because shares or other non-cash instruments continue to have risk-alignment features following vesting due to the requirement for the firm to apply an appropriate retention policy (SYSC 19A.3.47 R (2)). Instead, the firm should pay the relevant cash following a period of deferral, the length of which should mirror the retention policy that would have been applied had SYSC 19A.3.47 R been complied with. Where the relevant cash is already subject to deferral in accordance with SYSC 19A.3.49 R, this period of deferral should be added to the period determined under SYSC 19A.3.49 R. The relevant cash should be subject to performance adjustment in accordance with Remuneration Principle 12(h) (SYSC 19A.3.51 R to SYSC 19A.3.53 G) until it vests.

(c)

Condition 3 is that the firm has adopted and is maintaining specific and effective arrangements, processes and mechanisms to manage the risks raised by its non-compliance with SYSC 19A.3.47 R.

(3)

The guidance in (1) to (2) ceases to have effect on 1 July 2012. As a result this guidance does not apply to remuneration which vests on or after 1 July 2012 (including remuneration awarded before 1 July 2012, but where deferral under SYSC 19A.3.49 R leads to it vesting on or after 1 July 2012).