Act of 25 April 2014 on the status and supervision of credit institutions - A stricter regulation of the remuneration policy of credit institutions

02 Jul 2014

<p>For those credit institutions falling within its scope, the new Law imposes strict obligations for their remuneration policies.</p>

The new Act of 25 April 2014 transposes a European directive (Directive CRD IV) into Belgian law and imposes detailed obligations upon credit institutions concerning governance, capital surpluses and remuneration policy.

The Act obliges credit institutions to work out a remuneration policy for directors, personnel with an influence on the risk profile of the institution and personnel who are situated on the same level as those two categories in terms of remuneration.

In annex II, the principles for the fixed and variable remuneration for such categories are determined in detail. The variable remuneration is limited to the highest of the following amounts: 50% of the fixed remuneration or 50,000 EUR however without exceeding the fixed remuneration. Termination benefits are made subject to a similar regime as for the listed companies. Furthermore, with respect to so-called signing-on bonuses and pensions, certain principles to be respected are now placed on record.

Finally, credit institutions are obliged to abstain from effecting payments by any means that facilitate the circumvention of the principles of the Act. Credit institutions which receive exceptional government support cannot pay out any variable compensation to their executives.

> Action point

Credit institutions have to bring their remuneration policy into line with this new Act.