Regulatory Alerts2011-10-06
Justification for the Regulation on Supervisory Requirements for Remuneration Systems of Institutions (InstitutsVergV)
The German Federal Financial Supervisory Authority (BaFin) issued this regulation to implement FSB principles and CRD III requirements, mandating that remuneration systems align with long-term success and risk management. The rule distinguishes between general requirements for all institutions and stricter standards for significant institutions, defined by balance sheet size and risk profiles. It prohibits guaranteed variable pay, limits risk-taking incentives, and enforces transparency through detailed reporting and publication obligations.
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