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The European Parliament has voted in favour of draft remuneration rules implementing variable pay caps for UCITS fund managers. The rules include the requirement for a significant proportion of variable pay to be deferred for three to five years, with a cap on variable pay of one times salary.
Stephen Cahill, head of compensation and benefits at Deloitte, comments:
“These new rules are likely to have a significant impact on the way asset managers pay their employees. Changes to pay structures could create unwelcome complexity for asset managers in the EU. The cap on variable remuneration included in both the UCITS rules and CRD IV, is likely to lead to increases in salary levels across the financial services sector and will increase fixed costs at a time when firms are looking to keep them down. These developments are likely to place the European financial services sector at a disadvantage to counterparts in the US and Asia, and will make it much harder for European firms to attract and retain their key talent.”