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The guidelines seek to implement the CRD3, attempting to develop a risk based approach on remuneration to develop policies favouring the long-term interests of institutions rather than the short-term interests which contributed so heavily to the financial crisis. The incentive structures and remuneration have to be evaluated to “encourage prudent customer service on the one hand, and mitigate the risk of the recurrence of a crisis on the other.”



These guidelines attempt to address this by introducing a 40% to 60% deferral in time (3 to 5 years), associated to a 50% part paid out in performance related instruments other than cash (shares...). These rules are applied to executive pay and to “identified staff, defined as staff that has a material impact on the risk profile of the institution (traders).” UNI Europa recommended exactly this in its comments to the CRD3 and welcomes its inclusion.



The report on the implementation on the survey shows mitigated results as to the implementation in the various Member States of the EU:

• The definition of identified staff varies greatly between institutuions (and also in time within the same institution).
• The definition of non-cash instruments seems to cause problems to some members of the industry
• Transparency of variable remuneration schemes is suboptimal as disclosure of information is not made in a consistent way
• With the detailed implementation of the requirements, some banks shifter the variable pay into fixed, thus increasing already high salaries even more and reducing risk-sensitiveness of this type of personnel
• In addition, ratios between fixed and variable where still up to 313% in one member state and 139% on EU average for identified staff. The finance sector is an industry whre traders easily earn more than the top executive, and the highest reported values were 940% for traders, versus 429% for executives.

Based on this, the EBA commented that if “the potential variable remuneration is greater than the fixed one, this could incentivize staff to take too much risk in order to assure a certain minimum pay level.” UNI fully supports this assertion.



While UNI Europa Finance supports the steps to change remuneration practice, it argues that that future action should not only to address the issues identified in the survey, but also include the employee’s perspective in the guidelines and future decisions. Employees should be involved in financial regulation, supervision and risk management.



Therefore, UNI Europa recommends that employee representatives on supervisory boards and remuneration committees, and that remuneration policies be submitted to Works Councils. The current guidelines do specify that the remuneration committee should be non-executives, but does not specify that it should be employees.



UNI Europa Finance's comments sent to the EBA are attached. For more information on the survey assessment report: http://eba.europa.eu/News--Communications/Year/2012/Survey-on-the-implementation-of-the-Guidelines-on-.aspx#