On 26 November 2013 the Finance Minister issued a consultation document in respect of the proposed Financial Sector Remuneration Policy Act. Parties can respond until 31 December 2013.
The legislation is proposed to come into effect on 1 January 2015. The proposal introduces a number of measures regarding the remuneration policy of the financial sector, including:
- a bonus cap of 20% of fixed pay
- retained remuneration elements
- a prohibition on guaranteed variable remuneration (except certain golden hello payments)
- a limitation of severance payments to 100% of fixed pay for statutory directors
- a prohibition on severance payments, amongst other things if the engagement is terminated by reason of gross negligence or at the initiative of the individual
- the adjustment and claw back of variable remuneration and severance payments
- disclosure obligations
The measures are aimed to cover a wide range of engagements, such as employment contracts, service contracts and secondment contracts.
According to the proposal the 20% bonus cap would not apply to managers of alternative investment funds (such as private equity and hedge funds), UCITS managers or proprietary traders. It therefore appears that the proposed 20% bonus cap will not apply to carried interest/ performance fee schemes for fund managers.
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