CEIOPS consults on Remuneration Issues concerning Solvency II

22 July 2009

Second set of advice on Solvency II Level 2 implementing measures: providing additional, stand-alone, advice on remuneration issues within the governance system.

Second set of advice on Solvency II Level 2 implementing measures: providing additional, stand-alone, advice on remuneration issues within the governance system.

• An overall remuneration policy that is in line with the undertaking’s business and risk strategy shall be adopted.
• There shall be a clear, transparent and effective governance structure around remuneration
• Depending on the nature, scale and complexity of the undertaking’s activities, a remuneration committee working in close cooperation with the administrative or management body could be created.
• When remuneration schemes include both fixed and variable components, these shall be appropriately balanced
• The variable component could be based on a combination of the assessment of the individual and the collective performance.
• The payment of the major part of a significant bonus, irrespective of the form in which it is to be paid, should contain a flexible, deferred component that considers the nature and time horizon of the undertaking’s business.
•  When defining an individual’s performance, other factors apart from financial performance shall be considered.
•  The measurement of performance, as a basis for bonus awards, shall include an adjustment for current and future risks, taking into account the undertaking’s risk profile, and cost of capital for members of the administrative or management body, the senior management and the personnel undertaking activities that involve risk-taking.

 

© CEIOPS