Institutsvergütungsverordnung
| Basic data | |
|---|---|
| Title: | Ordinance on the regulatory requirements for remuneration systems of institutions |
| Short title: | Institutsvergütungsverordnung |
| Abbreviation: | InstitutsVergV |
| Type: | Federal Ordinance |
| Scope: | Federal Republic of Germany |
| Issued on the basis of: | Section 25a (6) KWG |
| Legal matter: | Banking law |
| References : | 7610-2-43 |
| Original version from: | October 6, 2010 ( BGBl. I p. 1374 ) |
| Entry into force on: | October 13, 2010 |
| Last revision from: | December 16, 2013 ( BGBl. I p. 4270 ) |
| Entry into force of the new version on: |
1st of January 2014 |
| Last change by: |
Art. 1 VO of April 15, 2019 ( Federal Law Gazette I p. 486 ) |
| Effective date of the last change: |
April 26, 2019 (Art. 2 of April 15, 2019) |
| Please note the note on the applicable legal version. | |
The ordinance on the regulatory requirements for remuneration systems of institutions (Institutsvergütungsverordnung) contains minimum banking supervisory requirements for the remuneration systems of German financial institutions, which are intended to prevent harmful incentives to take disproportionately high risks. These are regulations to ensure bank stability and thus also to ensure financial market stability.
Relevant international and national regulatory initiatives
In addition to the supervisors, the Institute of International Finance , the lobby organization of the international financial industry, recognized misleading remuneration systems in banks as the cause of the latest financial crisis . For this reason, the Council developed for financial stability ( English Financial Stability Board , FSB) Principles for Sound Compensation Practices of 2 April 2009 and based on them concrete standards of 25 September 2009 were the aforementioned requirements of the FSB of the Group of Twenty major industrialized and emerging economies ( G-20 ) endorsed at the Pittsburgh Summit in September 2009.
Compensation requirements have also been developed at European level, which meanwhile go beyond the FSB requirements. Of particular importance in this context was Directive 2010/76 / EU […] amending Directives 2006/48 / EC and 2006/49 / EC with regard to the capital requirements for the trading book and further securitisations and with regard to the supervisory review of the Remuneration policy of December 14, 2010 (Capital Requirements Directive III - CRD III). The CRD III commissioned the Committee of the European Banking Supervisory Authorities (CEBS) to develop further remuneration guidelines, which were already published in parallel to the publication of CRD III on December 10, 2010.
The requirements from Basel III were implemented at European level on the one hand by the equity capital directive (English abbreviation CRD IV ), which replaced CRD III and was to be implemented as a directive in the national legal systems. In this context, the remuneration requirements have also been transferred to the Equity Directive. On the other hand, the Capital Adequacy Ordinance (English abbreviation CRR) was issued. Most of the remuneration requirements remain in the guideline part, so that the InstitutsVergV will also exist after the capital adequacy guideline comes into force.
The Capital Requirements Directive also takes into account the knowledge that the EBA has gained through a so-called Implementation Survey ( Survey on the implementation of the CEBS Guidelines on Remuneration Policies and Practices of April 12, 2012) on the implementation of European remuneration requirements in national legal systems and institutions. Here, implementation deficits in the industry, including the identification of so-called risk takers and the use of risk-adjusted remuneration parameters at various company levels, became clear. In addition, a very high ratio of variable to fixed remuneration was found in places. Based on these findings, the Equity Directive provides for a Regulatory Technical Standard (RTS) on qualitative and quantitative criteria for risk taker identification. As a Binding Technical Standard (BTS), this RTS has direct effect as a delegated regulation of the European Commission in the national legal systems. The EBA has published an RTS on the qualitative and quantitative criteria for risk taker identification after having previously consulted a draft of this RTS.
Even CRD III and thus the InstitutsVergV required appropriate proportions between variable and fixed remuneration. The capital adequacy guideline now provides for a maximum ratio of variable to fixed remuneration. In principle, the variable remuneration may not exceed 100 percent of the fixed remuneration. However, up to 25 percent of the variable remuneration can be disregarded when calculating this ratio. The up to 25 percent is due to the fact that the parts of the variable remuneration that are paid out in instruments such as shares can be applied with their discounted value, whereby only a realistic discount factor can be tolerated here. The maximum portion of the variable remuneration can be increased to up to 200 percent of the fixed remuneration by resolution of the owners of the institute. However, this requires a detailed recommendation for a resolution, which explains the reasons for the increase in the ratio and the effects on adequate capital adequacy, and a notification of all owners that such an increase in the maximum ratio is planned. The resolution requires a majority of at least 66 percent of the owner shares represented and entitled to vote, provided that at least 50 percent of the owner shares entitled to vote are represented in the vote, or at least 75 percent of the owner shares represented and entitled to vote. Ownership shares of affected employees are not entitled to vote.
The maximum ratio of variable to fixed remuneration is not of overriding importance for effective regulation of remuneration systems, because it does not solve one of the current main problems in the regulation of remuneration systems. The regulations on a maximum ratio of variable to fixed remuneration, as well as the requirements for risk adjustment of the variable remuneration, malus systems, etc., will not apply to all employees, but only to the risk takers. The sometimes very low number of risk takers identified by the institutes suggests that the institute's methodology for identifying risk takers is aimed at not identifying as many employees as possible as risk takers so that they are not subject to regulatory requirements. In order to counteract this, it was achieved that the equity guidelines provide for the creation of an above-mentioned RTS on qualitative and quantitative criteria for risk taker identification.
In the meantime, on March 4, 2014, the European Commission published the Delegated Regulation (EU) No. 604/2014 with regard to qualitative and appropriate quantitative criteria for determining the risk carriers. This came into force on June 26, 2014 and was canceled due to an error in Art. 4 Para. 1 lit. c) in the meantime corrected to a small extent by the Delegated Regulation 2016/861 of February 18, 2016.
The EBA has also published guidelines for a sound remuneration policy (EBA / GL / 2015/22), which replace the previously applicable CEBS guidelines.
In Germany , the aforementioned international remuneration requirements were amended with the law on the regulatory requirements for remuneration systems of institutions and insurance companies of July 21, 2010 ( Federal Law Gazette I p. 950 ), in conjunction with the Institute Remuneration Ordinance of October 6, 2010 ( Federal Law Gazette I p . 1374 ), implemented. Explanations of the InstitutsVergV can be found in the corresponding explanatory memorandum. In the meantime, the Capital Adequacy Directive has been replaced by the Act to implement Directive 2013/36 / EU on access to the activities of credit institutions and the supervision of credit institutions and investment firms and to adapt supervisory law to Regulation (EU) No. 575/2013 on supervisory requirements for credit institutions and investment firms (CRD IV Implementation Act) of August 28, 2013 ( Federal Law Gazette I p. 3395 ) implemented into German law. As a result, as of January 1, 2014, all relevant statutory ordinances were adjusted, including: a. also the institute remuneration ordinance.
Amendment of the Institute Remuneration Ordinance in 2014
After the compromise found on the remuneration regulations in the Equity Capital Directive, the amended Institute Remuneration Ordinance was published on December 19, 2013 ( Federal Law Gazette I p. 4270 ), for which there is also a reason for the ordinance. The regulation came into force on January 1, 2014. It was developed in parallel to the CRD IV Implementation Act, for which the Finance Committee of the German Bundestag issued a recommendation for a resolution on May 15, 2013. Not only were the regulations on the ratio of variable to fixed remuneration adopted into German law. Other existing regulations were also detailed that had not been implemented satisfactorily in practice. This concerned z. B. the classification as a significant institute within the meaning of § 1 Paragraph 2 InstitutsVergV a. F. ( § 17 InstitutsVergV new version), the remuneration committee or remuneration control committee and the group-wide application of the remuneration regulations. The regulations for determining the total amount of the variable remuneration (total bonus pool) in § 4 InstitutsVergV a. F. ( Section 7 InstitutsVergV new version ) which - also in conjunction with Section 45 (2) Sentence 1 No. 5a and 6 KWG and Section 10i KWG - makes variable remuneration at the expense of the company's substance more difficult.
In this context, it is noteworthy that, according to the recommendation for a resolution by the Bundestag Finance Committee on Section 25a (6) No. 3 KWG, a remuneration control committee is to be set up. According to the report of the Finance Committee of the Bundestag dated May 15, 2013, p. 24, the Remuneration Control Committee is to take over the tasks of the previous Remuneration Committee. However, the remuneration control committee is a committee of the supervisory body in accordance with Section 25d (12) KWG new version . This means that the supervisory body is to be involved in the development and further development of the remuneration systems for employees via the remuneration control committee. Numerous questions arose from this. In particular, it had to be clarified whether the conceptual monitoring support by the Compensation Control Committee can be provided by employees of the company, as was previously the case with the Compensation Committee. The problem with this question was that it is not the supervisory body but the management board that has the authority to discipline employees and that there would be a conflict of interests. Logically, the amended InstitutsVergV provides for the introduction of a remuneration officer ( §§ 23 ff. InstitutsVergV new version ), comparable to a compliance officer. As a result of a more autonomous position in the company, the remuneration officer can carry out this ongoing monitoring and a conflict of interest can be reduced.
In addition, BaFin has published an interpretation guide for the Institute Remuneration Ordinance, which can be adapted to the respective supervisory standards for the individual remuneration requirements and thus creates a high degree of transparency of the supervisory requirements for the institutions concerned.
Revision of the Institute Remuneration Ordinance in 2017
Since the EBA published EBA guidelines for a solid remuneration policy following the amendment of the Institute Remuneration Ordinance, a revision of the ordinance and the BaFin interpretation aid became necessary. After the consultation phase, the ordinance amending the institute remuneration ordinance was announced in the Federal Law Gazette on August 3, 2017 and entered into force on August 4. The regulator is the BaFin. On February 16, 2018, BaFin also published an interpretation guide for the amended Institutional Remuneration Ordinance (as of February 15, 2018). This replaces the interpretation aid from January 1, 2014. This created extensive innovations and details in the remuneration requirements. To name are u. a. Regulations on the distinction between variable and fixed remuneration, severance payments, foreign and functional allowances, retention bonuses, organizational guidelines and documentation requirements, disclosure obligations and clawback agreements with regard to variable remuneration (clawback).
Ongoing data collection by the supervisory authorities
The requirements in CRD III and in the Equity Capital Directive provide, among other things, that the national supervisory authorities collect remuneration-related data and pass it on to the European Banking Authority (EBA). This involves, on the one hand, information on the comparison of remuneration trends and practices and, on the other hand, information on remuneration from 1 million euros per person.
In order to make the data to be collected nationally comparable at EU level, the EBA published corresponding guidelines on July 27, 2012: the guidelines for a comparison of remuneration trends and practices (EBA Guidelines on the Remuneration Benchmarking Exercise - EBA / GL / 2012 / 4) and the guidelines on the collection of data on high earners (EBA Guidelines on the Data Collection Exercise Regarding High Earners - EBA / GL / 2012/5). The aforementioned guidelines were revised in 2014 and published by the EBA. In addition to regulations on the manner in which information is collected, they also contain registration forms for inquiries from the institutes. The EBA has now published evaluations of data for the years 2010 to 2016 on its website, which were collected on the basis of the aforementioned EBA guidelines.
EBA guidelines on the comparison of remuneration (benchmarking) (EBA / GL / 2014/8)
The aim of the guidelines for comparing compensation trends and practices is to enable both national supervisory authorities and the EBA to compare compensation trends and practices. The EU legal basis can be found in Article 75 (1) of the Capital Requirements Directive.
The query is on a fully consolidated basis, based on the European Economic Area and third countries. The supervisory authority in whose area of responsibility the parent company of the group is based is responsible. Information is asked about the number of people whose activities have a significant impact on the overall risk profile of an institution (so-called risk takers) as well as the number of remuneration elements and their amount. The content of the query is essentially based on the publication requirements from the Equity Capital Directive and the Capital Adequacy Ordinance.
EBA guidelines on data collection with regard to high earners (EBA / GL / 2014/7)
The guidelines for collecting data on high earners aim to determine the distribution of employees with total remuneration of EUR 1 million or more within the EU, broken down by Member State (territorial principle). The EU legal basis can be found in Article 75 (3) of the Capital Requirements Directive. It is also planned that the EBA will publish the information for each Member State in aggregated form.
The EBA requires that the query be addressed to all institutions in a member state. The query is on a consolidated basis, in contrast to the comparison of remuneration trends and practices exclusively based on the European Economic Area. The query is also made by the supervisory authority in whose area of responsibility the higher-level company of the group is based. The EBA collects all reports from the various national supervisory authorities on a Member State and aggregates them for the purpose of publication. Employees who mainly work outside the European Economic Area are not recorded.
The number of employees who receive total remuneration of EUR 1 million or more is queried, as well as information on how many of these people are risk takers. In addition, the amount of variable and fixed remuneration, broken down by business area, must be reported.
Individual evidence
- ^ Institute of International Finance (IIF): Compensation in Financial Services Industry: Progress and the Agenda for Change. March 2009, p. 2.
- ↑ Financial Stability Board - FSB (PDF; 89 kB)
- ↑ FSB Principles for Sound Compensation Practices - Implementation Standards (PDF; 36 kB)
- ↑ Directive 2010/76 / EU .
- ↑ CEBS Guidelines on Remuneration Policies and Practices ( Memento of the original dated September 19, 2013 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. (PDF; 607 kB)
- ↑ Directive 2013/36 / EU of the European Parliament and of the Council of June 26, 2013 on access to the activity of credit institutions and the supervision of credit institutions and investment firms, amending Directive 2002/87 / EC and repealing Directive 2006/48 / EG and 2006/49 / EG . In: Official Journal of the European Union. No. L 176, p. 338 ff.
- ↑ Regulation (EU) No. 575/2013 of the European Parliament and of the Council of June 26, 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 646/2012 . In: Official Journal of the European Union. No. L 176, p. 1 ff.
- ↑ EBA Implementation Study of April 12, 2012 ( Memento of the original of December 20, 2013 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. (PDF; 600 kB)
- ↑ EBA FINAL draft regulatory technical standards on on criteria to identify categories of staff whose professional activities have a material impact on an institution's risk profile under Article 94 (2) of Directive 2013/36 / EU of December 16, 2013.
- ↑ Delegated Regulation (EU) 604/2014
- ↑ EBA / GL / 2015/22 German
- ↑ Text and changes to the CRD IV Implementation Act (HTML, printable)
- ↑ Justification for the InstitutsVergV ( memento of the original from July 16, 2014 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ BT print. 17/13524 (PDF; 2.3 MB)
- ↑ BT print. 17/13541 (PDF; 572 kB)
- ↑ Federal Financial Supervisory Authority, interpretation aid for the Institute Compensation Ordinance as of February 15, 2018 (PDF; 703 kB)
- ↑ EBA / GL / 2014/8 German
- ↑ EBA / GL / 2014/7 German
literature
- Arne Martin Buscher: New regulatory remuneration requirements for institutions . Bucerius Law School, Hamburg 2011, ISBN 978-3-942569-02-6 ( Lectures by the Institute for Corporate and Capital Markets Law . Volume 3).
- Hannemann, Ralf / Schneider, Andreas / Weigl, Thomas: Minimum requirements for risk management (MaRisk), commentary taking into account the Institute Compensation Ordinance (InstitutsVergV) , 4th edition, Stuttgart 2013, ISBN 978-3-7910-3307-5 .
- Arne Martin Buscher: Regulatory requirements for remuneration systems in banks . In: Becker, Axel / Schulte-Mattler, Hermann (eds.): Financial crisis 2.0 and risk management of banks , Berlin 2012, pp. 235–283, ISBN 978-3-503-13688-9 .
- Buscher, Arne Martin / v. Harbou, Christopher / Link, Vivien / Weigl, Thomas: Institutsvergütungsverordnung (InstitutsVergV) - Ordinance on the regulatory requirements for remuneration systems of institutes , Commentary, 2nd edition, Stuttgart 2018, ISBN 978-3-7910-3779-0 .
- Annuß, Georg / Früh, Andreas / Hasse, Andreas (eds.): Institutsvergütungsverordnung und Versicherungsvergütungsverordnung , Commentary, Munich 2016, ISBN 978-3-406-67463-1 .
