Question ID
2025_7493
Legal act
Directive 2013/36/EU (CRD)
Topic
Remuneration
Article
94
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
EBA/GL/2021/04 - Guidelines on sound remuneration policies under CRD (repealing EBA/GL/2015/22)
Article/Paragraph
151
Type of submitter
Credit institution
Subject matter
Discretionary pension benefits
Question

According to Section 151 of the EBA Guidelines on sound remuneration policies under CRD, EBA/GL/2021/04 (“EBA Guidelines”), pension benefits included in the company’s pension scheme that are not based on performance and that are consistently granted to a category of staff should be considered as part of routine employment packages. 

What is the minimum number of persons that can form a category of staff in the meaning of the aforementioned Section? For example, can the Chief Executive Officer and Deputy Chief Executive Officer of an institution together (i.e. two persons) be considered “a category of staff” in the meaning of Section 151 of the EBA Guidelines? 

Background on the question

Some banks have taken the position that pension benefits granted to the Chief Executive Officer and/or the Deputy Chief Executive Officer are to be considered “routine employment packages” within the meaning of the EBA Guidelines on sound remuneration policies under CRD, EBA/GL/2021/04 (“EBA Guidelines”) (Section 151 and the definitions section of the EBA Guidelines). Consequently, these banks have classified such benefits as fixed remuneration. However, some banks have adopted a different view and do not consider such pension benefits as “routine employment packages”, because they are of the opinion that one person or two persons cannot be regarded as a “category of staff”, i.e. that at least three persons is required for a “category of staff”. 

In seeking to resolve the matter on its own behalf, the submitter has relied on opinions from external legal experts. These opinions have reached differing conclusions on the issue. 

The submitter considers the matter to be of relevance due to the divergent interpretations adopted by different banks and different legal experts. It is therefore deemed essential to obtain a correct and authoritative interpretation of the issue.

Submission date
Final publishing date
Final answer

In accordance with par. 151 of the EBA guidelines on sound remuneration policies under Directive 2013/36/EU, discretionary pension benefits are a form of variable remuneration. Where the terms of the company’s pension scheme include pension benefits that are not based on performance and that are consistently granted to a category of staff, such pension benefits should not be considered discretionary but should be considered as part of routine employment packages.

Routine employment package means ancillary components of remuneration that are obtainable for a wide population of staff or staff in specified functions based on predetermined selection criteria, including, for example, healthcare, childcare facilities or proportionate regular pension contributions on top of the mandatory regime and travel allowance.

Par. 151 of the EBA Guidelines on sound remuneration policies under CRD explicitly limit the notion of “category of staff” to a wider population than a single individual. As such a single individual cannot constitute a category. However, the executive committee could be considered as a category of staff.  Another example, two persons effectively directing the business of the institution could be considered as a category of staff.

The EBA guidelines on sound remuneration and practices contain additional supporting evidence of this position in its Par. 208, which states that “…, the remuneration policy may provide for a different ratio for individual identified staff members belonging to a certain category of staff compared with other staff members included in the same category of staff”. It appears clearly that a “category of staff” is, for all intents and purposes, understood as being a gathering of several staff members

Status
Final Q&A
Answer prepared by
Answer prepared by the EBA.

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