This supervisory statement (SS) is relevant to all firms regulated by the Prudential Regulation Authority (PRA) which fall within the scope of the Remuneration Part of the PRA Rulebook.
The purpose of this SS is to set out the PRA’s expectations on how firms should comply with the requirements of the Remuneration Part, enabling firms to make judgements which advance the objectives of the PRA. This SS replaces the following remuneration policy documents and letters to firms:
- Legacy Supervisory Statement (LSS) 8/13 ‘Remuneration standards: the application of proportionality’;
- SS2/13 ‘PRA expectations regarding the application of malus to variable remuneration’;
- SS27/15 ‘Remuneration’;
- ‘Remuneration – PRA expectations’, 8 December 2014; and
- ‘Procedure to increase the permitted ratio of fixed to variable remuneration’, 8 April 2014.
This SS is intended to be read together with the rules contained in the Remuneration Part.
This SS sets out the expectations of firms in relation to:
- material risk takers (MRTs);
- application of malus and clawback to variable remuneration;
- governing body/remuneration committees;
- risk management and control functions;
- remuneration and capital;
- risk adjustment (including long-term incentive plans);
- personal investment strategies;
- remuneration structures (including guaranteed variable remuneration, buy-outs and retention awards);
- deferral; and
- breaches of the remuneration rules.