Ordinance No. 48 of 20.03.2013 on Requirements for Remuneration

ORDINANCE 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

Section I
General Provisions

Art. 1. (Amended - State Gazette, No. 41 of 2019; amended and supplemented, No. 61 of 2020.) (1) (Amended - State Gazette, No. 41 of 2019; amended, No. 61 of 2020.) This Ordinance 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 - State Gazette, No. 61 of 2020.) This Ordinance 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 Law on the Activity of Collective Investment Schemes and Other Collective Investment Undertakings. (3) (Previous para. 2, amended - State Gazette, No. 61 of 2020.) This Ordinance determines the principles and requirements for the policy and practice of determining and paying remuneration of the members of the management and supervisory bodies of public companies. (4) (New - State Gazette, No. 61 of 2020.) Public companies that are credit institutions, investment intermediaries, insurers, reinsurers, supplementary social security companies, and management companies, in addition to the sectoral requirements regarding the policy and practice of determining and paying remuneration of the members of their management and supervisory bodies, shall also apply the requirements of Section III. The first sentence shall 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 - State Gazette, No. 61 of 2020)

Art. 2. (Amended and supplemented - State Gazette, 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 responsible actuary and actuaries;
4. employees performing control functions;
5. (amended - State Gazette, 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 the person referred to in Art. 1, para. 1, and in the case of supplementary social security companies - and on the risk profile of the funds managed by them.
   (2) (New - State Gazette, No. 41 of 2019.) The remuneration policies of supplementary social security companies shall also cover:
6. persons performing the functions under Art. 123e, para. 7, items 1 and 3 of the Social Security Code;
7. employees whose professional activities have a significant impact on the risk profile of the companies and the funds managed by them.
   (3) (New - State Gazette, 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 perform the functions under Art. 78, para. 1, items 1-3 of the Insurance Code, and employees in the units that perform 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 - State Gazette, 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, in order to guarantee an objective assessment of the appropriateness of the remuneration policy, including its consequences for risk and risk management.

Art. 3. (Amended and supplemented - State Gazette, No. 41 of 2019; amended and supplemented, No. 61 of 2020.) (1) (Amended - State Gazette, No. 41 of 2019; amended, No. 61 of 2020.) The supervisory board or board of directors, respectively the supervisory council, 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 - State Gazette, 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 - State Gazette, No. 41 of 2019.) Insurers and reinsurers shall ensure that all their employees are made aware of the remuneration policy.

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

1. promote prudent and effective risk management and not incentivize risk-taking 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 - State Gazette, No. 41 of 2019) be consistent with the principles and good practices for the protection of the interests of consumers of insurance services, clients of management companies, and investors in collective investment schemes, respectively.
   (2) (New - State Gazette, 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 activity, 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 - State Gazette, 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 for therein, including in relations with service providers. The remuneration policy must not jeopardize the ability of the insurer, respectively the reinsurer, to maintain the required own funds. (4) (New - State Gazette, 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:
5. persons who develop the remuneration policy, approve or review it, as well as those who prepare, conclude, or review agreements regarding remuneration;
6. persons who conclude or underwrite insurance or reinsurance contracts that may significantly affect the risk profile of the insurer or reinsurer;
7. asset managers.
   (5) (Previous para. 2 - State Gazette, 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 - State Gazette, No. 64 of 2021.) (1) The insurer, respectively the reinsurer, which is a participating undertaking, the insurance holding, or the financial holding with mixed activity, shall adopt a remuneration policy for the entire group, whereby the policy must reflect the complexity and structure of the group in order for 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 activity, must 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 within the group comply with legal and regulatory requirements regarding remuneration;
3. conditions are created for the management of significant risks at group level related to the implementation of the remuneration policy within the group.

Art. 5. (Amended - State Gazette, 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 - State Gazette, No. 61 of 2020.) Fixed remuneration must constitute a sufficiently large part of the total remuneration amount, so as to allow the implementation of a flexible policy for variable remuneration, including the possibility of not being 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 activity;
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 - State Gazette, No. 41 of 2019; amended, No. 39 of 2026.) When, within one year, variable remuneration amounting to more than 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 activity of the person referred to in Art. 1, para. 1 and the risks arising from it, as well as from the position of the respective employee. (4) (Amended - State Gazette, No. 41 of 2019.) The remuneration policy shall provide that persons referred to in Art. 2, para. 1 and 2 must return fully or partially any variable remuneration paid on the basis of data that subsequently turned out to be incorrect or misleading. Contracts of persons referred to in Art. 2, para. 1 and 2 shall include clauses guaranteeing the return of variable remuneration. (5) The provision of deferred variable remuneration shall be carried out proportionally or by 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, with 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 - State Gazette, No. 41 of 2019; amended, No. 61 of 2020; amended, No. 60 of 2021; supplemented, No. 64 of 2021.) (1) (Amended - State Gazette, 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 - and of the funds managed by them. (2) (Supplemented - State Gazette, 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 - and 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 assessment 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 their remuneration in accordance with the degree of achievement of objectives related to these functions, regardless of the results of the controlled structural units.
   (2) The responsible actuary and actuaries shall receive remuneration in a manner corresponding to their role and contribution, and not depending 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 supervisory council.

Art. 8. (Amended - State Gazette, No. 41 of 2019.) (1) (Amended - State Gazette, No. 41 of 2019.) Any person referred to in Art. 1, para. 1 shall establish a procedure for notifying employees referred to in Art. 2, para. 1 and 2 regarding the remuneration policy in the part applicable to them. When necessary, the contracts of these employees shall include clauses guaranteeing the implementation of the remuneration policy. (2) (Amended - State Gazette, 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 - State Gazette, No. 41 of 2019; amended, No. 61 of 2020; amended, No. 39 of 2026.) (1) (Amended - State Gazette, 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 the annual financial reports, or in another suitable form.
(3) Information subject to disclosure includes:

1. the decision-making process used for determining the remuneration policy, including, if applicable, information regarding the composition and mandate of the remuneration committee, the name of the external consultant whose services were used for determining the remuneration policy, and the role of the respective interested parties;
2. the link between pay and performance;
3. the criteria used to measure results and take risk into account;
4. the criteria for achieved 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 benefits other than cash.

Art. 10. (Amended - State Gazette, No. 61 of 2020.) Management companies that have obtained a license to carry out activities under the Law on the Activity of Collective Investment Schemes and Other Collective Investment Undertakings 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 of Members of the Management and Supervisory Bodies of Public Companies

Art. 11. (Amended and supplemented - State Gazette, No. 61 of 2020; amended, No. 39 of 2026.) (1) (Amended and supplemented - State Gazette, No. 61 of 2020.) The public company shall adopt and apply a remuneration policy for the members of the management and supervisory bodies of the company in accordance with Art. 116v, para. 1 of the Law on Public Offering of Securities (LPOS). 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 is established. (3) (Amended - State Gazette, No. 61 of 2020.) Proposals for the adoption of a remuneration policy, amendments and/or additions thereto, or for 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 LPOS, and shall be adopted by the general meeting of shareholders. (4) (New - State Gazette, 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 when this is necessary to achieve the objectives under para. 8. (5) (New - State Gazette, 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 the 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 - State Gazette, 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 the 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 revised amendments and/or additions thereto, respectively a revised new policy, at the next general meeting. (7) (Previous para. 4, amended - State Gazette, 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 the 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 at least until it is in force. (8) (New - State Gazette, 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 the members of the management and supervisory bodies of the company, and indicate their relative share.
   (9) (New - State Gazette, 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 the members of the management and supervisory bodies of the company.
   (10) (New - State Gazette, No. 61 of 2020.) The remuneration policy shall include information on the timeframes for deferring the payment of variable remuneration, including the conditions under which the company may request the return of paid variable remuneration.
   (11) (New - State Gazette, 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 - State Gazette, 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, it 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 - State Gazette, 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 - State Gazette, No. 61 of 2020.) (1) (Supplemented - State Gazette, 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 to the annual financial report on the company's activity.
(2) (Supplemented - State Gazette, 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 an emphasis on significant changes adopted therein compared to the previous financial year. (3) (New - State Gazette, 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 were taken into account. (4) (Previous para. 3, amended - State Gazette, No. 61 of 2020.) After the holding of the general meeting at which the annual financial report is 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