The evaluation report concludes that 10 Member States – Austria, Belgium, Denmark, Germany, Italy, Lithuania, the Netherlands, Portugal, Slovenia, and the United Kingdom – have implemented at least half of the recommendations.
What are the Commission reports on the 2009 Recommendations on Remuneration?
In April 2009, the Commission adopted two Recommendations on remuneration policy in the financial services sector and on directors' remuneration. The Commission committed to publish an evaluation report one year later on Member States' application of both Recommendations, which they had been invited to implement by 31 December 2009. The two reports of the Commission respond to this commitment.
What are the main conclusions of the two Reports on Recommendations on remuneration?
Under the Recommendation on remuneration policy in the financial services sector (IP/09/674), Member States were invited to ensure that financial institutions have remuneration policies for risk-taking staff that promote sound and effective risk-management. The Recommendation set out guidelines on the structure of pay, on the process of design and implementation of remuneration policies and on the role of supervisory authorities in their review. The evaluation report concludes that only 16 Member States – Belgium, Bulgaria, Cyprus, Germany, France, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Romania, Spain, Sweden and the United Kingdom – have taken measures to fully or partially promote the application of the Recommendation at national level. The remaining 11 have not yet adopted any national measures, but the Czech Republic, Denmark, Estonia, Finland, Ireland and Portugal have indicated that they are in process of doing so.
The Recommendation on directors' remuneration (IP/09/673) set out best practices for the design of an appropriate remuneration policy for directors, focusing on certain aspects of the structure and determination of their remuneration, including shareholder supervision. The evaluation report concludes that 10 Member States – Austria, Belgium, Denmark, Germany, Italy, Lithuania, the Netherlands, Portugal, Slovenia, and the United Kingdom – have implemented at least half of the recommendations. However, most recommendations have been implemented only by a minority of Member States.
What will be the next steps on remuneration?
As regards remuneration in financial services, the Commission has already adopted in July 2009 a legislative proposal to modify the Capital Requirements Directive for remuneration in credit institutions (i.e. banks) and investment firms. Provisions on remuneration are also now part of the draft AIFM Directive under negotiations in Council and Parliament. Other legislative measures for remaining sectors of financial services (i.e. UCITS and insurance companies) are under preparation and should be adopted by the Commission in the course of next year.
As regards the remuneration of directors of listed companies, the Commission report on the implementation by Member States of measures to promote the application of existing recommendations shows that this application is neither uniform nor satisfactory. For this reason, the Commission gives consideration in this Green Paper to the need for and content of relevant legislative measures. Following the outcome of the pubic consultation, the Commission will decide on the need and the content of these legislative proposals.
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