What's happening?
On April 16, 2013, the European Parliament approved proposals to cap variable pay in the EU banking sector at 100% of fixed salary. With the approval of 66% of voting shareholders – or 75% if fewer than 50% of shareholders have voted – this can be raised to 200%. At least 25% of the bonus exceeding 100% of salary must then be deferred for a minimum of five years. Up to 25% of the variable pay can be discounted if paid through long-term instruments, again defined as deferred for at least five years. The discounting method and eligible instruments are to be determined by the European Banking Authority (EBA) by March 31, 2014. The cap would apply to all entities covered by Capital Requirements Directive (CRD) IV, including EU-headquartered banks and EU subsidiaries of foreign banks.
