This article will only be relevant to proportionality tiers one and two firms and will not, for instance, impact on limited licence or limited activity firms. As a reminder, guidance on proportionality in respect of the Remuneration Code can be found in Appendix 2 of PS10/20 ‘Revising the Remuneration Code – Feedback on CP10/19 and final rules’ (a link can be found in Regulatory Roundup 24). Complyport clients should speak to their usual contact if they need confirmation of their proportionality tier.
The 12 Remuneration Principles are covered in SYSC 19A.3. Remuneration Principle 12 concerns remuneration structures with SYSC 19A.3.47 requiring firms to ensure that at least 50% of any variable remuneration is in shares or other non-cash instruments. Whilst the Remuneration Code came into force at the beginning of the year, a transitional provision (SYSC TP3(5)(2)) allowed affected firms until this coming 1 July to comply.
Feedback to the FSA suggests that certain firms – mutuals and non-listed – are having difficulties in meeting this deadline as they try to devise suitable ‘share-linked instruments or equivalent non-cash instruments’. It seems that this problem is also being encountered in other EU Member States.
The FSA propose to extend the deadline for non-listed firms only (whose parent undertakings are also non-listed) to 1 July 2012. However the warning is given that the FSA would expect such firms to come as close as possible to compliance with the Code’s requirements rather than simply not applying the provision in question. Changes to SYSC TP3(5)(2) can be found in Appendix 3 of the link.
