Decree No. 48 of 20.03.2013 on Requirements for Remuneration

DECREE No. 48 of 20.03.2013 on the Requirements for Remuneration

Pub. - State Gazette, No. 32 of 02.04.2013; amended and supplemented, No. 41 of 21.05.2019; amended, No. 66 of 20.08.2019; amended and supplemented, No. 61 of 10.07.2020; amended, No. 60 of 20.07.2021; amended and supplemented, No. 64 of 03.08.2021; amended, No. 70 of 20.08.2024; amended and supplemented, No. 39 of 28.04.2026.

Adopted by Decision No. 140-N of 20.03.2013 of the Financial Supervision Commission (FSC).

Section I General Provisions

Art. 1. (Amended - SG, No. 41 of 2019; amended and supplemented, No. 61 of 2020.) (1) (Amended - SG, No. 41 of 2019; amended, No. 61 of 2020.) This Decree determines the principles and requirements for the policy and practice of determining and paying remuneration in insurers, reinsurers, and supplementary social security companies that have obtained a license to carry out activities under the Insurance Code and the Social Security Code, respectively.

(2) (New - SG, No. 61 of 2020.) This Decree determines the principles and requirements for the policy and practice of determining and paying remuneration in management companies that have obtained a license to carry out activities under the Collective Investment Schemes and Other Collective Investment Undertakings Act.

(3) (Previous para. 2, amended - SG, No. 61 of 2020.) This Decree determines the principles and requirements for the policy and practice of determining and paying remuneration to members of the management and supervisory bodies of public companies.

(4) (New - SG, No. 61 of 2020.) Public companies that are credit institutions, investment intermediaries, insurers, reinsurers, supplementary social security companies, and management companies, in addition to sectoral requirements regarding the policy and practice of determining and paying remuneration to members of their management and supervisory bodies, shall also apply the requirements of Section III. The first sentence does not apply in case of contradiction between the sectoral requirements and the requirements of Section III.

Section II Remuneration Policy in Insurers, Reinsurers, Supplementary Social Security Companies, and Management Companies

(Title amended - SG, No. 61 of 2020.)

Art. 2. (Amended and supplemented - SG, No. 41 of 2019; amended, No. 61 of 2020; amended, No. 60 of 2021; amended and supplemented, No. 64 of 2021.) (1) The persons referred to in Art. 1, para. 1 shall adopt and apply a policy that covers all forms of remuneration, such as salaries and other financial and/or material incentives, including benefits related to voluntary pension and/or health insurance, for the following categories of personnel:

1. employees in managerial positions;
2. employees whose activities are related to risk-taking;
3. the chief actuary and actuaries;
4. employees performing control functions;
5. (amended - SG, No. 41 of 2019; amended, No. 61 of 2020; amended, No. 60 of 2021.) all other employees whose remuneration is comparable to the remuneration of employees under items 1 and 2 and whose activities have an impact on the risk profile of a person referred to in Art. 1, para. 1, and in the case of supplementary social security companies - also on the risk profile of the funds managed by them.

(2) (New - SG, No. 41 of 2019.) The remuneration policies of supplementary social security companies shall also cover:

1. persons exercising the functions under Art. 123e, para. 7, items 1 and 3 of the Social Security Code;
2. employees whose professional activities have a significant impact on the risk profile of the companies and the funds managed by them.

(3) (New - SG, No. 64 of 2021.) Employees performing control functions in the insurer, respectively the reinsurer, within the meaning of para. 1, item 4, are persons who lead the functions under Art. 78, para. 1, items 1 - 3 of the Insurance Code, and employees in the units that exercise these functions. The remuneration policy of the insurer, respectively the reinsurer, shall define the positions of employees who may have a significant impact on the risk profile of the undertaking under para. 1, item 5, or contain a methodology for their determination.

(4) (Previous para. 2 - SG, No. 41 of 2019; previous para. 3, No. 64 of 2021.) The remuneration policy shall be developed by the management or supervisory bodies in cooperation with the internal control service and, where appropriate, with experts in the field of human resources who possess the necessary qualification and functional independence, with the aim of ensuring an objective assessment of the appropriateness of the remuneration policy, including its consequences for risk and risk management.

Art. 3. (Amended and supplemented - SG, No. 41 of 2019; amended and supplemented, No. 61 of 2020.) (1) (Amended - SG, No. 41 of 2019; amended, No. 61 of 2020.) The supervisory board or the board of directors, respectively the control board, of the person referred to in Art. 1, para. 1 shall adopt the remuneration policy and be responsible for its implementation and periodic review.

(2) The implementation of the remuneration policy shall be subject to periodic and independent internal review at least once a year by or with the participation of the specialized internal control service.

(3) (Amended - SG, No. 41 of 2019; amended, No. 61 of 2020.) The remuneration policy must be clear and documented and be available to the persons referred to in Art. 2, para. 1 and 2, to whom it applies.

(4) (New - SG, No. 41 of 2019.) Insurers and reinsurers shall ensure that all their employees are informed about the remuneration policy.

Art. 4. (Amended and supplemented - SG, No. 41 of 2019; amended and supplemented, No. 64 of 2021; amended, No. 70 of 2024.) (1) The remuneration policy must:

1. encourage prudent and effective risk management and not stimulate the taking of risks exceeding an acceptable level;
2. be consistent with the company's business strategy (activity programs, rules, and policies), objectives, values, and long-term interests;
3. provide for measures to avoid conflicts of interest;
4. (amended - SG, No. 41 of 2019.) be consistent with the principles and good practices for the protection of the interests of users of insurance services, clients of management companies, and investors in collective investment schemes, respectively.

(2) (New - SG, No. 41 of 2019; amended, No. 70 of 2024.) The remuneration policy of supplementary social security companies must meet the requirements under para. 1, items 1 - 3 and be consistent with the results of the company's activities, its financial stability, and the risk profiles of the company and the funds managed by it, as well as with the long-term interests of the insured persons, persons insured under PEPP, pensioners, and PEPP beneficiaries.

(3) (New - SG, No. 64 of 2021.) The remuneration policy of insurers and reinsurers must meet the requirements under para. 1, items 1 - 4, whereby for the purpose of item 1, "acceptable level" is determined in accordance with the risk management policies and the risk-taking limits provided therein, including in relations with service providers. The remuneration policy must not jeopardize the ability of the insurer, respectively the reinsurer, to maintain the necessary own funds.

(4) (New - SG, No. 64 of 2021.) The insurer, respectively the reinsurer, shall ensure that the measures to avoid conflicts of interest under para. 1, item 3 cover at least:

1. persons who develop the remuneration policy, who approve or review it, as well as those who prepare, conclude, or review agreements regarding remuneration;
2. persons who conclude or underwrite insurance or reinsurance contracts that may significantly affect the risk profile of the insurer or reinsurer;
3. asset managers.

(5) (Previous para. 2 - SG, No. 41 of 2019; previous para. 3, No. 64 of 2021.) The remuneration policy shall be updated in accordance with changes in the market and the financial condition of the person referred to in Art. 1, para. 1.

Art. 4a. (New - SG, No. 64 of 2021.) (1) The insurer, respectively the reinsurer, which is a participating undertaking, the insurance holding, or the financial holding with mixed financial activity, shall adopt a remuneration policy for the entire group, whereby the policy must reflect the complexity and structure of the group with a view to uniform and consistent application throughout the group in accordance with the group's risk management strategies. The policy shall apply to all persons at group level and to each individual undertaking.

(2) The insurer, respectively the reinsurer, which is a participating undertaking, the insurance holding, or the financial holding with mixed financial activity, shall ensure that:

1. there is mutual binding of remuneration policies within the group and their compliance with legal and regulatory requirements for the undertakings that are part of it, and that they are applied correctly;
2. all undertakings in the group comply with legal and regulatory requirements regarding remuneration;
3. conditions are created for the management of material risks at group level related to the implementation of the remuneration policy within the group.

Art. 5. (Amended - SG, No. 41 of 2019; amended, No. 61 of 2020; amended, No. 39 of 2026.) (1) The persons referred to in Art. 1, para. 1 may pay both fixed and variable remuneration, whereby the remuneration policy shall determine the appropriate ratio between fixed and variable remuneration depending on the personnel category and a maximum upper limit of variable remuneration for each personnel category.

(2) (Amended - SG, No. 61 of 2020.) Fixed remuneration must constitute a sufficiently large part of the total remuneration amount so as to allow for the application of a flexible policy for variable remuneration, including the possibility that it not be paid, in cases where any of the following circumstances exist:

1. criteria and indicators predetermined in the remuneration policy have not been met;
2. there is a significant deterioration in the financial condition of the person referred to in Art. 1, para. 1, especially in cases where this may lead to the expectation of termination of activities;
3. extraordinary circumstances have occurred leading to significant risk for the financial stability or other long-term interests of the person referred to in Art. 1, para. 1.

(3) (Amended - SG, No. 41 of 2019; amended, No. 39 of 2026.) When, within one year, a variable remuneration amount exceeding one third of the gross annual remuneration is determined for a person referred to in Art. 2, para. 1 and 2, no less than 40% of the variable remuneration shall be deferred for a period with a minimum duration of three years, depending on the economic cycle, the nature of the activities of the person referred to in Art. 1, para. 1 and the risks arising therefrom, as well as the position of the respective employee.

(4) (Amended - SG, No. 41 of 2019.) The remuneration policy shall provide that persons referred to in Art. 2, para. 1 and 2 must return in full or in part any variable remuneration paid based on data that subsequently proved to be incorrect or misleading. Contracts with persons referred to in Art. 2, para. 1 and 2 shall include clauses guaranteeing the clawback of variable remuneration.

(5) The provision of deferred variable remuneration shall be made proportionally or through gradual increase during the deferral period. The deferred part of the remuneration may consist of shares, options, cash, or other instruments. The criteria for assessing future results, to which the deferred part is linked, must allow for adjustment of its amount in accordance with current and future risks.

(6) Compensation related to early termination of contract must reflect the results achieved over time by the respective persons and must be determined so as not to reward failure.

Art. 6. (Amended - SG, No. 41 of 2019; amended, No. 61 of 2020; amended, No. 60 of 2021; supplemented, No. 64 of 2021.) (1) (Amended - SG, No. 41 of 2019; amended, No. 61 of 2020; amended, No. 60 of 2021.) Variable remuneration shall be linked to performance results through a combination of assessments of the employee's work, the respective structural unit, and the person referred to in Art. 1, para. 1, and for supplementary social security companies - also of the funds managed by them.

(2) (Supplemented - SG, No. 64 of 2021.) The assessment of the employee's work shall be based on financial and non-financial indicators, and in the case of an employee of an insurer, respectively a reinsurer - also on compliance with risk management rules and regulatory framework and internal acts of the insurer, respectively the reinsurer.

(3) The assessments under para. 1 shall cover a period of several years, so that the evaluation process is based on long-term performance and the payment of variable remuneration is distributed over a period taking into account the economic cycle and the risks assumed by the person referred to in Art. 1, para. 1.

(4) The performance assessment used in determining variable remuneration and its distribution must take into account all current and future risks, the cost of capital, and the required liquidity.

Art. 7. (1) The head and employees of the specialized internal control service and other employees performing control functions:

1. have appropriate powers and are independent from the structural units over which they exercise control;
2. receive remuneration consistent with the degree of achievement of objectives related to these functions, regardless of the results of the controlled structural units.

(2) The chief actuary and actuaries shall receive remuneration in a manner corresponding to their role and contribution, and not dependent on the results of the respective supplementary social security company, insurer, or reinsurer.

(3) Compliance with the remuneration policy regarding persons under para. 1 and 2 shall be monitored directly by the remuneration committee, or if such is not formed - by the supervisory board, independent members of the board of directors, or the control board.

Art. 8. (Amended - SG, No. 41 of 2019.) (1) (Amended - SG, No. 41 of 2019.) Any person referred to in Art. 1, para. 1 shall establish a procedure for informing employees referred to in Art. 2, para. 1 and 2 regarding the remuneration policy in the part applicable to them. Where necessary, clauses shall be provided in the contracts of these employees to guarantee the application of the remuneration policy.

(2) (Amended - SG, No. 41 of 2019.) The criteria and procedures for evaluation and changes thereto shall be drawn up in writing and brought to the knowledge of the respective persons referred to in Art. 2, para. 1 and 2 upon assuming the respective position and upon any subsequent change.

Art. 9. (Amended - SG, No. 41 of 2019; amended, No. 61 of 2020; amended, No. 39 of 2026.) (1) (Amended - SG, No. 41 of 2019; amended, No. 61 of 2020; amended, No. 39 of 2026.) Persons referred to in Art. 1, para. 1 shall disclose information regarding the remuneration policy and any subsequent changes thereto in a clear and accessible manner.

(2) The disclosure of information under para. 1 may be in the form of a separate statement, periodic disclosure in annual financial reports, or another suitable form.

(3) Information subject to disclosure includes:

1. the decision-making process used to determine the remuneration policy, including, if applicable, information on the composition and mandate of the remuneration committee, the name of the external consultant whose services were used to determine the remuneration policy, and the role of the respective stakeholders;
2. the link between pay and performance;
3. the criteria used to measure results and account for risk;
4. the criteria for performance results on which the right to receive shares, options, and variable elements of remuneration is based;
5. the main parameters and justification of the scheme for possible annual cash bonuses and other non-cash benefits.

Art. 10. (Amended - SG, No. 61 of 2020.) Management companies that have obtained a license to carry out activities under the Collective Investment Schemes and Other Collective Investment Undertakings Act shall apply respectively Art. 2, para. 3, Art. 3, para. 3, Art. 4, para. 1, item 4, Art. 5, para. 1 - 5, Art. 6, para. 4, Art. 7, para. 3, and Art. 8 - 10.

Section III Remuneration Policy for Members of the Management and Supervisory Bodies of Public Companies

Art. 11. (Amended and supplemented - SG, No. 61 of 2020; amended, No. 39 of 2026.) (1) (Amended and supplemented - SG, No. 61 of 2020.) The public company shall adopt and apply a remuneration policy for members of the management and supervisory bodies of the company in accordance with Art. 116v, para. 1 of the Public Offering of Securities Act (POSA). The public company shall pay remuneration only in accordance with the remuneration policy adopted by the general meeting.

(2) The remuneration policy shall be developed by the supervisory board, respectively the board of directors of the public company, with the assistance of the remuneration committee, if such has been established.

(3) (Amended - SG, No. 61 of 2020.) Proposals for the adoption of a remuneration policy, amendments and/or additions thereto, or its review shall be included as a separate item in the agenda of the general meeting of the public company, announced in the invitation under Art. 115, para. 2 of POSA, and shall be adopted by the general meeting of shareholders.

(4) (New - SG, No. 61 of 2020.) The public company shall review the remuneration policy at least once every 4 years, as well as when significant amendments and/or additions thereto are necessary or this is required to achieve the objectives under para. 8.

(5) (New - SG, No. 61 of 2020.) Until the adoption of a remuneration policy or when the general meeting does not adopt the proposed policy, the public company shall pay remuneration to members of its management and supervisory bodies in accordance with its existing practice. In these cases, the management board of the public company is obliged to present for adoption a policy, respectively a revised policy, at the next general meeting.

(6) (New - SG, No. 61 of 2020.) When an adopted remuneration policy exists and the general meeting does not adopt the proposed amendments and/or additions thereto, respectively the proposed new policy, the public company shall continue to pay remuneration to members of its management and supervisory bodies in accordance with the adopted policy. In these cases, the management board of the public company is obliged to present for adoption at the next general meeting revised amendments and/or additions thereto, respectively a revised new policy.

(7) (Previous para. 4, amended - SG, No. 61 of 2020; amended, No. 39 of 2026.) The public company is obliged to disclose its remuneration policy and any subsequent changes thereto. The adopted remuneration policy, with the date of adoption and date of entry into force indicated therein, and the results of the vote of the general meeting, shall be published immediately on the company's website and be freely accessible for at least as long as it is in force.

(8) (New - SG, No. 61 of 2020.) The remuneration policy must:

1. contribute to the achievement of business objectives and be consistent with the long-term interests and sustainability of the company;
2. contain information on how the company will achieve the objectives under item 1;
3. be clear and understandable, describe the components of fixed and variable remuneration, including all bonuses and all other benefits in any form that may be provided to members of the management and supervisory bodies of the company, and indicate their relative share.

(9) (New - SG, No. 61 of 2020.) The remuneration policy shall describe how the remuneration and working conditions of employees in the company have been taken into account in the development of the remuneration policy for members of the management and supervisory bodies of the company.

(10) (New - SG, No. 61 of 2020.) The remuneration policy shall include information on the deferral periods for the payment of variable remuneration, including the conditions under which the company may request the return of paid variable remuneration.

(11) (New - SG, No. 61 of 2020.) When remuneration based on shares is provided, the remuneration policy shall contain a description of the manner in which share-based remuneration contributes to the achievement of the objectives under para. 8, the vesting period, and, where applicable, the conditions for retaining shares after acquisition.

(12) (New - SG, No. 61 of 2020.) The remuneration policy shall include a description of the decision-making process used for its determination, review, and implementation, including measures to prevent or manage conflicts of interest, and, where applicable, the role of the remuneration committee or other committees in the company. In case of amendments and/or additions to the remuneration policy, the policy shall include a description and explanation of the significant changes and the manner in which the results of the votes of the general meeting, the opinions of shareholders, and the minutes of the general meetings at which the remuneration policy was considered and voted on have been taken into account.

(13) (New - SG, No. 61 of 2020.) The remuneration policy may specify extraordinary circumstances under which the company may temporarily not apply part of the policy. The extraordinary circumstances under the first sentence are circumstances where the non-application of part of the policy is necessary and is related to the long-term interests and sustainability of the public company or its viability. In the case under the first sentence, the remuneration policy shall provide for under what procedural conditions and which of its components may temporarily not be applied.

Art. 12. (Amended and supplemented - SG, No. 61 of 2020.) (1) (Supplemented - SG, No. 61 of 2020.) The public company shall disclose to its shareholders the manner in which it applies the remuneration policy in a report on the implementation of the policy, which is a separate document attached to the annual financial report on the company's activities.

(2) (Supplemented - SG, No. 61 of 2020.) The report under para. 1 shall contain a program for the implementation of the remuneration policy for the next financial year or for a longer period, a review of the manner in which the remuneration policy was applied during the year, including all benefits in any form that have been provided or are due to current and former members of the management or supervisory body, with emphasis on significant changes adopted therein compared to the previous financial year.

(3) (New - SG, No. 61 of 2020.) Any shareholder or his representative participating in the regular general meeting may make recommendations regarding the report under para. 1. If recommendations are made, the company shall indicate in the next report under para. 1 how the recommendations have been taken into account.

(4) (Previous para. 3, amended - SG, No. 61 of 2020.) After the holding of the general meeting at which the annual financial report was approved, the public company shall publish the report under para. 1 on its website, which shall be freely accessible for a period of 10 years. The public company may...