December 30, 2013
European Cap on Banker Bonuses: More Guidance Issued
– Broc Romanek, CompensationStandards.com
This Morgan Lewis memo describes the European “Capital Requirements Directive IV” (CRD IV), which contains a new cap on bonuses payable to certain classes of employees within the financial services sector. It takes effect on January 1st. Here’s the new development, excerpted from the memo:
Once in force, CRD IV will apply to all bonus payments made to “material risk takers”, which commentators initially assumed would, in broad terms, amount to those employees previously identified as “code staff” under the Financial Conduct Authority’s Remuneration Code. However, in May 2013, the EBA published a consultation
paper in which it sought to significantly widen the class of employees who would be caught by the bonus cap. After receiving negative feedback to the consultation paper, the EBA, on December 17, issued its final draft RTS, which adopt a far narrower approach.