The Austrian Financial Market Authority (FMA) today issued its formal declaration to the European Securities and Markets Authority (ESMA) that it will apply the ESMA guidelines in full, in order to ensure “a sound remuneration policy that is compliant with the Alternative Investment Fund Managers Directive (AIFMD)”. These ESMA guidelines define in detail the provisions of the remuneration policy enshrined in the EU Directive on Alternative Investment Fund Managers (AIFM). AIFM are thereby subject to the FMA’s supervision and administration with immediate effect.
“These guidelines represent an important further step towards preventing excessive bonus payments in the financial system. It should not be possible in any segment of the financial market for the remuneration system for top managers to give inappropriate incentives to enter into excessive risk”, explained the FMA Executive Directors Klaus Kumpfmüller and Helmut Ettl.
The goal of the guidelines is to align the remuneration system with the risk profile and investment objectives of an Alternative Investment Fund (AIF). Therefore, they cover all forms of remuneration for employees who have a significant influence on the risk of an AIF (e.g. managers, risk bearers and staff in audit functions). The AIFM is furthermore obliged to disclose all relevant information on the remuneration policy.
The term ‘remuneration’ refers to all fixed and variable forms of payment and benefits made to these employees. Taking into account the principle of proportionality, at least 50% of the total remuneration must be paid out in the form of financial instruments, such as units or shareholdings in the AIF, the sale of which must be subject to an appropriate blocking period. The instruments used must be of a value that is commensurate with the performance of the individual employee. The variable element of remuneration must be weighted for risk and dependent on performance, according to the employee’s influence on the risk profile, and may fall to zero in the case of negative results. In addition, while some of the variable remuneration is paid out immediately, some should be reserved for the future, with a reduction to be made if results deteriorate.
The remuneration system must be assessed in detail at least once each year by the AIFM supervisory body to ensure that it meets national and international standards and that it delivers the intended results.
The text (German only) of the “ESMA Guidelines for Sound Remuneration Policies Compliant with AIFMD” can be downloaded from https://www.fma.gv.at/en/eu/esma-guidelines/
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43 (0)1 24959 5106
+43/(0)676/882 49 516