10 Amendments of Gabriele ZIMMER related to 2009/0099(COD)
Amendment 41 #
Proposal for a directive – amending act
Recital 4
Recital 4
(4) Because excessive and imprudent risk- taking may undermine the financial soundness of financial institutions and destabilise the banking system, it is important that the new obligation concerning remuneration policies and practices should be implemented in a consistent manner. It isFurthermore, there is widespread concern that the refore appropriate to specify coremuneration of managers in the financial sector is excessive, often representing up to 300 times the salary of an average employee. Previously, the practice was that the remuneration of managers should not exceed 20 times the lowest salary of employees in the same sector. This development is entirely at odds with the traditions of the European social model and its aim of achieving a more equal distribution of income. A new model of corporate governance in the financial industry is necessary in order to promote long-term sustainability and social cohesion. It is therefore appropriate to specify clear principles on sound remuneration to ensure that the structure of remuneration does not encourage excessive risk-taking by individuals and is aligned with the risk appetite, values and long-term interests of the institution. In order to ensure that the design of remuneration policies is integrated in the risk management of the financial institution, the management body (supervisory function) of each credit institution or investment firm should establish the general principles to be applied, and the policies should be subject to at least annual independent internal review. Credit institutions and investment firms of a significant size should set up independent remuneration committees as an integral part of their governance structure and organisation. Such remuneration committees should cooperate with those responsible for the risk and compliance function in order to monitor the incentives created for managing risk, capital and liquidity.
Amendment 42 #
Proposal for a directive – amending act
Recital 4
Recital 4
(4) Because excessive and imprudent risk- taking may undermine the financial soundness of financial institutions and destabilise the banking system, it is important that the new obligation concerning remuneration policies and practices should be implemented in a consistent manner. It is therefore appropriate to specify clear and transparent core principles on sound remuneration, established with the involvement of staff members and their representatives within the firm, to ensure that the structure of remuneration does not encourage excessive risk-taking by individuals and is aligned with the risk appetite, values and long-term interests of the institution. In order to ensure that the design of remuneration policies is integrated in the risk management of the financial institution, the management body (supervisory function) of each credit institution or investment firm should establish the general principles to be applied, and the policies should be subject to at least annual independent internal review. Credit institutions and investment firms of significant size should set up independent remuneration committees as an integral part of their governance structure and organisation. Remuneration committees should cooperate with the risk and compliance function in order to supervise the incentives created for managing risk, capital and liquidity.
Amendment 44 #
Proposal for a directive – amending act
Recital 5
Recital 5
(5) Remuneration policy should aim at aligning the personal objectives of staff members with the long-term interests of the credit institution or investment firm concerned. The assessment of the performance-based components of remuneration should be based on longer- term performance and take into account the outstanding risks associated with the performance. The assessment of performance should be set in a multi-year framework, for example of three to five years, in order to ensure that the assessment process is based on longer-term performance and that the actual payment of performance-based components of remuneration is spread over the business cycle of the firm. The assessment of longer-term performance justifying the payment of deferred variable remuneration should include and adequately weight the criteria and targets in the European Foundation for Quality Management (EFQM) model for ‘sustainable excellence’ (as regards, inter alia, employee development, the enhancement of high-quality employment, customer satisfaction and management of resources), as well as corporate social responsibility targets.
Amendment 47 #
Proposal for a directive – amending act
Recital 5 a (new)
Recital 5 a (new)
(5a) Payment of the variable remuneration component ought to be deferred over a period of no less than three years. That period may increase significantly along with the level of seniority or responsibility. Moreover, a substantial portion of the variable remuneration component should be paid in the form of shares in the credit institution or investment firm, or share- linked instruments other than stock options, subject to the legal structure of the institution concerned. In the case of non-listed credit institutions or investment firms, that payment should, where appropriate, be made in other non-cash instruments. In that context, the principle of proportionality is of great importance since it may not always be appropriate to apply those requirements in the context of small credit institutions and investment firms.
Amendment 54 #
Proposal for a directive – amending act
Annex 1 – point 1
Annex 1 – point 1
Directive 2006/48/EC
Annex V – Section 11 – point 22 – point b a (new)
Annex V – Section 11 – point 22 – point b a (new)
(ba) remuneration policy should emphasise the need for proportionality in respect of remuneration within the firm, linking increases in the total remuneration and pensions of management to the remuneration and pensions of staff.
Amendment 55 #
Proposal for a directive – amending act
Annex 1 – point 1
Annex 1 – point 1
Directive 2006/48/EC
Annex V – Section 11 – point 22 – point e
Annex V – Section 11 – point 22 – point e
(e) Wwhere remuneration is performance related, the total amount of remuneration is based on a combination of the assessment of the performance of the individual and of the business unit concerned and of the overall results of the credit institution, and when assessing performance, financial as well as non-financial criteria are taken into account, including criteria related to the EFQM model and to corporate social responsibility;
Amendment 56 #
Proposal for a directive – amending act
Annex 1 – point 1
Annex 1 – point 1
Directive 2006/48/EC
Annex V – Section 11 – point 22 – point e a (new)
Annex V – Section 11 – point 22 – point e a (new)
(ea) the assessment of performance is set in a multi-year framework of at least three years in order to ensure that the assessment process is based on longer- term performance and that the actual payment of performance-based components of remuneration is spread over a period which takes account of the underlying business cycle of the firm and its business risks;
Amendment 57 #
Proposal for a directive – amending act
Annex 1 – point 1
Annex 1 – point 1
Directive 2006/48/EC
Annex V – Section 11 – point 22 – point e a (new)
Annex V – Section 11 – point 22 – point e a (new)
(ea) making up variable components of remuneration from stock options or similar instruments is prohibited;
Amendment 60 #
Proposal for a directive – amending act
Annex 1 – point 1
Annex 1 – point 1
Directive 2006/48/EC
Annex V – Section 11 – point 22 – point f
Annex V – Section 11 – point 22 – point f
(f) Ffixed and variable components of total remuneration are appropriately balanced; the fixed component represents a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible bonus policyrestrictive policy on variable remuneration components, including the possibility tof paying no bonusvariable remuneration component;
Amendment 61 #
Proposal for a directive – amending act
Annex 1 – point 1
Annex 1 – point 1
Directive 2006/48/EC
Annex V – Section 11 – point 22 – point h a (new)
Annex V – Section 11 – point 22 – point h a (new)
(ha) at least 50% of any variable remuneration component is subject to EFQM-model-related criteria and to corporate social responsibility or corporate social performance criteria and targets; variable remuneration components are subject to an appropriate retention policy designed to align incentives with the longer-term interests of the credit institution and to promote sustainable development;