Code principles which apply to Code Staff remuneration
- Set “appropriate ratios” between the fixed and variable components of total remuneration; fixed percentage to represent “a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible policy on variable remuneration components, including the possibility to pay no variable remuneration component”.
- At least 50% of any variable remuneration as a whole should consist of shares, share-linked instruments or other equivalent non-cash instruments (in the case of a non-listed credit institution).
- At least 40% of the variable remuneration component of an individual’s remuneration must be deferred, with vesting over a period of three to five years and no faster than on a pro-rata basis. The first vesting of deferred remuneration should be no sooner than one year after the award.
- At least 60% of all variable remuneration must be deferred when variable remuneration is £500,000 or above.
- Firms should retain the ability to make adjustments to an individual’s unvested deferred amounts of variable remuneration, after the amount has been communicated to the employee, to reflect actual outcomes as they materialise over time. This means that further assessment will need to be made immediately prior to vesting or pay out in order to determine whether the relevant conditions have been met.
- Guaranteed bonuses should be exceptional and should occur only in the context of hiring new Code Staff and will be limited to the first year of employment (not only Code staff).
- Payments in connection with the early termination of a contract should reflect the performance achieved and should not reward failure.