Publications

Reward bulletin: G20 agrees remuneration reform principles - 09/28/2009

On 25 September the G20 published its communique which included some provisions on remuneration reform in the financial services sector. These largely reinforce and clarify existing principles but include some guidance from the Financial Stability Board (FSB) around certain issues. Key developments include:

• Guidance that appropriate deferral of variable pay is 40% to 60% for senior executives and those with material impact on the firm's risk profile, rising to over 60% for the most senior executives
• A facility for total compensation to be restricted to a certain (undefined) percentage of net revenues where a firm needs to rebuild its capital base
• Guaranteed bonuses to be limited to recruitment of new staff and limited to one year
• Extensive banded disclosure requirements relating to quantum, mix, and structure of compensation for senior executives
• Immediate prospective compliance required

Enforcement will continue to be driven by local regulators, and so the extent to which the detailed FSB Implementation Standards will actually come to pass in reality remains uncertain. However, the development represents a further momentum push towards globally consistent regulation in this area.

Please follow the link here to read our briefing of 28 September commenting on the G20 announcement.

For more information, please contact Jon Terry or your usual PwC adviser.