Date of issue: 9 January 2024
Applicable from: 12 January 2024

Preamble

On the basis of section 46 (3) of the Investment Firm Act (Wertpapierinstitutsgesetz) in conjunction with section 1d no. 2 of the Regulation on the Transfer of Powers to Issue Statutory Orders to the Federal Financial Supervisory Authority (Verordnung zur Übertragung von Befugnissen zum Erlass von Rechtsverordnungen auf die Bundesanstalt für Finanzdienstleistungsaufsicht), which was inserted by Article 1 of the Regulation of 26 June 2021 (Federal Law Gazette I (Bundesgesetzblatt), p. 2027), in agreement with the Deutsche Bundesbank and after consulting with the leading associations of investment firms, the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht: the Supervisory Authority) issues the following Regulation:

Section 1 Scope

(1) Subject to subsection (3), this Regulation applies to all medium-sized investment firms within the meaning of section 2 (17) of the Investment Firm Act. This Regulation concerns the remuneration of risk takers at investment firms.

(2) Section 18 must additionally be applied by superordinated undertakings. This also applies if the superordinated undertaking is not an investment firm within the meaning of section 2 (17) of the Investment Firm Act.

(3) This Regulation does not apply to

1. remuneration established
   a) in a collective agreement (Tarifvertrag);
   b) within the scope of application of a collective agreement through an agreement of the contracting parties on the application of the provisions of the collective agreement; or
   c) on the basis of a collective agreement in a plant-level or service agreement (Betriebs- oder Dienstvereinbarung); in addition to
2. commercial agents within the meaning of section 84 (1) of the Commercial Code (Handelsgesetzbuch).

Section 2 Definitions

(1) Remuneration within the meaning of this Regulation comprises:

1. all financial benefits, irrespective of their nature, including pension benefits;
2. all benefits in kind, irrespective of their nature, including pension benefits; and
3. all benefits from third parties;

received by a risk taker in respect of their professional activities for the investment firm. Benefits in kind within the meaning of sentence 1 no. 2 that are not to be considered income from salaried employment in accordance with the Income Tax Act (Einkommensteuergesetz) or that are excluded under section 8 (2) sentence 11 of the Income Tax Act need not be taken into account.

(2) Risk takers within the meaning of this Regulation are members of the management board within the meaning of section 2 (36) of the Investment Firm Act whose professional activities have a material impact on the risk profile of the investment firm or of the assets managed by the investment firm.

(3) Remuneration systems within the meaning of this Regulation are an investment firm’s internal remuneration rules and the actual implementation and application thereof by the investment firm. This also includes the identification of risk takers in accordance with section 3.

(4) Fixed remuneration within the meaning of this Regulation is the portion of remuneration:

1. whose award and amount are non-discretionary;
2. whose award and amount do not provide risk takers with incentives for risk assumption;
3. for which the conditions for the award and amount have been predetermined;
4. for which the conditions for the award and amount are transparent for the risk taker;
5. whose award and amount are permanent;
6. that cannot be reduced, suspended or cancelled by the investment firm unilaterally; and
7. that does not depend on performance or on the fulfilment of predefined criteria.

Fixed remuneration also includes:

1. financial benefits or benefits in kind that:
   a) are based on a predetermined, general, non-discretionary and firm-wide policy;
   b) are not performance-related;
   c) do not provide incentives for risk taking; and
   d) benefit either the majority of risk takers or risk takers that meet predetermined criteria; or
2. payments to comply with statutory requirements.

By way of derogation from sentence 1 no. 5, allowances are also regarded as fixed remuneration if the additional conditions under sentence 4 are also fulfilled provided the allowances are:

1. paid to expatriate risk takers for the duration of their stay abroad considering the cost of living or the tax rates in the respective country or in order to adjust the contractually agreed fixed remuneration within the meaning of sentence 1 to the level that would be paid on the local employment market for a comparable position (expatriation allowance); or

2. paid to risk takers considering their temporary assumption of a more demanding duty, function or organisational responsibility (function allowance).

The allowances under sentence 3 must meet the following additional conditions in order to be regarded as fixed remuneration:

1. the allowance is paid on a non-discretionary basis to all risk takers in a similar situation on the basis of a consistent, firm-wide policy;
2. the level of the allowance is based on specified criteria; and
3. entitlement to payment of the allowance is subject to the condition subsequent that the reason for its award ceases to apply.

(5) Variable remuneration within the meaning of this Regulation is that portion of the remuneration which is not fixed. If it is not possible to clearly allocate a remuneration component to fixed remuneration, this component is regarded as variable remuneration.

(6) Discretionary pension benefits within the meaning of this Regulation are those components of variable remuneration that are granted to risk takers within an investment firm as pension benefits at the discretion of the investment firm.

(7) Severance payments within the meaning of this Regulation are remuneration that a risk taker receives relating to the early termination of an employment contract, agency contract or service contract.

(8) Staff members within the meaning of this Regulation are all staff members of the investment firm within the meaning of section 5 (1) of the Labour Court Act (Arbeitsgerichtsgesetz) in addition to all natural persons:

1. whose services the investment firm uses in providing investment services, ancillary investment services and ancillary business, particularly on the basis of an employment contract, agency contract or service contract; or
2. who, within the framework of an outsourcing agreement with an outsourcing entity which belongs to the group, are directly involved in providing services to the investment firm for the purpose of providing investment services, ancillary investment services or ancillary business.

(9) Remuneration parameters within the meaning of this Regulation are the quantitative and qualitative factors used to measure the performance and the success of a risk taker or one of the investment firm’s internal organisational units or the overall success of an investment firm or a group.

(10) Performance contributions within the meaning of this Regulation are the actual achievements and performance, as determined on the basis of the remuneration parameters, of risk takers or organisational units or the overall performance of an investment firm or a group, which are used in determining the amount of the variable remuneration components. Performance contributions may also be negative.

(11) Control units within the meaning of this Regulation are organisational units with control functions within the meaning of Article 1(2) of Commission Delegated Regulation (EU) 2021/2154 of 13 August 2021 supplementing Directive (EU) 2019/2034 of the European Parliament and of the Council with regard to regulatory technical standards specifying appropriate criteria to identify categories of staff whose professional activities have a material impact on the risk profile of an investment firm or of the assets that it manages (OJ L 436 of 7 December 2021, p. 11), as amended.

(12) Superordinated undertakings within the meaning of this Regulation are German EU parent investment firms within the meaning of section 2 (33) of the Investment Firm Act, EU parent investment holding companies within the meaning of section 2 (34) of the Investment Firm Act or EU parent mixed financial holding companies within the meaning of section 2 (35) of the Investment Firm Act that are required to carry out consolidation under Article 7 of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314 of 5 December 2019, p. 1; L 20 of 24 January 2020, p. 26; L 405 of 2 December 2020, p. 79; L 261 of 22 July 2021, p. 60), as amended.

(13) Subordinated undertakings within the meaning of this Regulation are undertakings that, in accordance with Article 7(1) of Regulation (EU) 2019/2033, are to be included in the consolidated situation of the superordinated undertaking within the meaning of point 11 of Article 4(1) of Regulation (EU) 2019/2033.

(14) Group risk takers within the meaning of this Regulation are the members of the management board within the meaning of section 2 (36) of the Investment Firm Act alongside all staff members of an investment firm or other undertaking belonging to an investment firm group whose professional activities have a material impact on the risk profile of the investment firm group or of the assets managed by it.

Section 3 Identification of risk takers

Investment firms must independently identify all risk takers on the basis of a risk analysis. The assessment of whether staff members are to be deemed risk takers is determined according to the criteria set out in Delegated Regulation (EU) 2021/2154. As necessitated by the special features of an investment firm’s risk profile, the investment firm must apply additional internal criteria to identify all risk takers.

Section 4 Responsibilities

(1) In accordance with section 46 of the Investment Firm Act and this Regulation, the management board is responsible for the appropriate design of remuneration systems for risk takers who are not members of the management board. The management board must inform the supervisory board (Verwaltungs- oder Aufsichtsorgan), provided there is one, about the design of the remuneration systems of the investment firm at least once a year. If there is a supervisory board, the chair of this board must also be granted a corresponding right to obtain information from the management board.

(2) If an investment firm has a supervisory board, this board is responsible for the appropriate design of the remuneration systems for members of the management board and for monitoring the appropriate design of remuneration systems in accordance with section 46 (1) and (2) of the Investment Firm Act and this Regulation. In particular, this includes monitoring the remuneration of managers of the risk control and compliance functions. If an investment firm does not have a supervisory board, the shareholders or owners are responsible for the appropriate design and monitoring of the remuneration systems of members of the management board; the shareholders or owners must document their activities in detail.

(3) The control units are to be involved, within the scope of their respective duties, in the design and monitoring of remuneration systems.

Section 5 Alignment with the investment firm’s strategy

The remuneration strategy and the remuneration systems must be designed to achieve the aims laid down in the investment firm’s business and risk strategies. The long-term effects of the investment firm’s investment decisions and its company culture must also be taken into account. The remuneration parameters must be aligned with the strategies and support the achievement of the strategic aims.

Section 6 Appropriateness of the remuneration and the remuneration systems

(1) Remuneration systems are appropriately designed if they:

1. clearly distinguish between fixed and variable remuneration with
   a) fixed remuneration primarily reflecting the relevant professional experience and organisational responsibility within the undertaking as stipulated in the descriptions of the risk taker’s activities as part of their work or employment contract, and
   b) variable remuneration reflecting the sustainable and risk-adjusted performance of the risk taker alongside performance that extends beyond the description of the risk taker’s duties;

2. are gender-neutral;
3. are consistent with and promote sound and effective risk management;
4. incorporate measures for the avoidance of conflicts of interest;
5. promote responsible business conduct;
6. take consumers' rights and interests into account; in particular, quantitative remuneration parameters may not be used exclusively where this directly affects consumer interests;
7. avoid incentives to take disproportionately high risks and promote risk awareness; and
8. do not conflict with the monitoring function of the control units and of the member of the management board responsible for risk management;

(2) As a rule, remuneration systems are not appropriately designed if entitlements to variable remuneration are unaffected by negative performance contributions.

(3) Remuneration systems are considered to conflict with the monitoring function of the control units in particular if

1. the amount of variable remuneration of risk takers in the control units and the amount of variable remuneration of risk takers in the organisational units overseen by the control units is to a considerable extent determined in accordance with corresponding remuneration parameters and there is a risk of a conflict of interests;
2. the amount of the variable remuneration of risk takers in the control units is not determined according to the extent to which the risk takers’ objectives related to the duties of the control units are reached;

3. the remuneration of risk takers in the control units

   a) is not designed in a way that allows for staffing that it is adequate in terms of quality and quantity; or
   b) primarily comprises variable remuneration components.
   Sentence 1 nos. 1 and 2 applies mutatis mutandis with regard to the member of the management board responsible for risk control.

(4) Severance payments and contractually agreed non-competition compensation for the duration of a post-contractual non-competition clause are regarded as variable remuneration. With regard to the approval of severance payments, the investment firm must lay down principles in written or electronic form that must, in particular, specify a maximum amount for severance payments or the criteria for determining the amounts of severance payments. Severance payments must be granted and appropriately documented in accordance with the framework under section 13 (1) sentence 2 no. 3. Taking into account the provisions of sentence 5, such payments must reflect the performance achieved by the risk taker over time and may not reward negative performance contributions or misconduct by risk takers. The following remuneration does not fall within the scope of section 11 and need not be considered when assessing the appropriateness of the ratio between variable and fixed remuneration in accordance with section 7 (1):

1. severance payments

   a) to which a statutory entitlement exists;
   b) made on the basis of a social compensation plan within the meaning of section 112 (1) of the Works Constitution Act (Betriebsverfassungsgesetz) or under section 79 (1) no. 5 of the Federal Staff Representation Act (Bundespersonalvertretungsgesetz) or under corresponding federal state laws;
   c) that must be made on the basis of a final court judgment or court settlement; or
   d) that, in the case of termination of a contract through redundancy by mutual agreement or by the investment firm unilaterally, or to avoid imminent court proceedings, do not exceed an amount calculated through a predetermined generic formula set in the principles under sentence 2;

2. contractually agreed non-competition compensation for the duration of a post-contractual non-competition clause, provided the payments, subject to section 74 (2) of the Commercial Code, do not exceed the amount of fixed remuneration owed originally; and
3. other severance payments, provided the investment firm has demonstrated to the Supervisory Authority the reasons and the appropriateness of the amount; for severance payments up to an amount not exceeding 200,000 euros the amount is deemed appropriate and the investment firm may forgo the demonstration.
   Where the remuneration is composed of several components pursuant to sentence 5 that, in sum, exceed the threshold under sentence 5 no. 3, demonstration to the Supervisory Authority in accordance with sentence 5 no. 3 is required in any case.

(5) Additional variable remuneration granted for the purposes of retaining risk takers in the investment firm (retention bonuses) are only permissible where the investment firm is able to substantiate its legitimate interest in awarding such retention bonuses. In particular, they must meet the provisions under section 5 and additionally, subject to section 10, the provisions under section 8 (3) and (4) and section 11. In calculating the appropriateness of the ratio in accordance with section 7 (1), retention bonuses must either be taken into account on a pro rata basis or with the full amount when the bonus is due.

(6) In complying with the provisions of this Regulation, the investment firm must take its size, internal organisation and the complexity of its activities into account.

Section 7 General provisions for variable remuneration

(1) The investment firm must set appropriate values for the ratio between the fixed and variable remuneration of risk takers, taking the business activities of the investment firm into account, alongside the associated risks and the impact of the risk takers’ activities on the risk profile of the investment firm or of the assets managed by the investment firm.

(2) The portion of fixed remuneration must be sufficiently high to allow the investment firm sufficient flexibility with regard to variable remuneration in order that the investment firm can forgo payment of variable remuneration entirely where necessary.

(3) Risk takers must not be significantly dependent on variable remuneration.

(4) The amount of variable remuneration may not be guaranteed. Sentence 1 does not apply to remuneration granted to new risk takers in their first year of employment with the investment firm provided the investment firm has adequate own funds and the risk taker’s occupation directly previous to the occupation for which remuneration is guaranteed was not within the same investment firm group. In cases according to sentence 2, the provisions under section 8 (3) to (5) may be waived.

(5) Components of variable remuneration that serve to compensate for lost remuneration from a previous employment relationship must, in derogation from subsection (4) sentence 3, be aligned with the long-term interests of the investment firm, taking the provisions under section 8 (3) to (5) into account.

Section 8 Specific provisions for variable remuneration

(1) The amount of variable remuneration is based on performance and is determined on the basis of an evaluation of the risk taker’s individual performance contributions, the performance contributions of the business segments concerned and the overall performance of the investment firm. The evaluation of performance takes account of the business cycle and the business risks of the investment firm and covers a time period of more than one year. Before the variable remuneration specified in sentence 1 is determined and granted, performance contributions are calculated on the basis of an accrual period of at least one year. The subsequent determination of variable remuneration to be granted by the investment firm must comply with the provisions of section 11. With the exception of cases specified under section 10, retrospective evaluation of performance must comply with subsections (4) and (6), and payment of a portion of remuneration in an instrument must comply with subsection (3).

(2) In the assessment of the individual performance of risk takers, both financial and non-financial remuneration parameters must be taken into consideration. In derogation from sentence 1, for risk takers in the control units, exclusively non-financial remuneration parameters may be used, provided they are composed of quantitative and qualitative parameters. In particular a breach of duty related to the risk taker’s professional activities must result in a significant reduction in variable remuneration.

(3) At least 50% of variable remuneration must be composed of at least one of the following instruments:

1. subject to the legal form of the investment firm concerned, shares or equivalent participating interests that sustainably reflect the value of the undertaking;
2. subject to the legal form of the investment firm concerned, share-based or equivalent non-cash payment instruments that sustainably reflect the value of the undertaking;
3. additional Tier 1 instruments or Tier 2 capital or other instruments that can be fully converted to Common Equity Tier 1 instruments or written down and that reflect the credit quality of an investment firm as a going concern and comply with the provisions of Commission Delegated Regulation (EU) 2021/2155 of 13 August 2021 supplementing Directive (EU) 2019/2034 of the European Parliament and of the Council with regard to regulatory technical standards specifying the classes of instruments that adequately reflect the credit quality of the investment firm as a going concern and possible alternative arrangements that are appropriate to be used for the purposes of variable remuneration (OJ L 436 of 7 December 2021, p. 17), as amended;
4. non-cash payment instruments that reflect the instruments of the portfolio managed; or
5. with the consent of the Supervisory Authority, alternative non-cash payment instruments, provided the investment firm does not issue any of the instruments specified in nos. 1 to 4.

The instruments under sentence 1 must be subject to an appropriate retention period of, as a rule, at least one year and the relevant portion of the variable remuneration may only be available to the risk takers at the earliest after the expiry of this retention period. The long-term interests of the investment firm, its creditors and customers must be taken into account. In the absence of a share price or other market value for the instruments used in accordance with sentence 1, valuation of the instrument used must be carried out at the time the variable remuneration is determined, at the time the expectant right to variable remuneration that has been deferred according to subsection (4) is vested, and at the end of the retention period according to sentence 2.

(4) At least 40% of variable remuneration must be deferred and may not be granted faster than on a pro rata basis over a period of three to five years, depending on the business cycle of the investment firm, the nature of its business and the activities of the risk takers. If the amount of variable remuneration is particularly high, the proportion of variable remuneration to be deferred must amount to at least 60 percent. An entitlement or expectant right to the part of the variable remuneration component that is deferred in accordance with sentence 1 or sentence 2 or section 9 (2) sentence 1 vests only after the deferral period has elapsed on the basis of a subsequent assessment of the performance originally determined, taking the provisions of subsections (1), (2) and (6) into account. During the deferral period, risk takers are only entitled to the error-free determination of that proportion of the variable remuneration which has not yet vested as an expectant right or an entitlement, but not to that proportion of the variable remuneration itself.

(5) Every investment firm must stipulate a threshold in its remuneration system for particularly high variable remuneration in accordance with subsection (4) sentence 2. This threshold may not exceed 500,000 euros.

(6) A reduction or repayment of variable remuneration is to be ensured by means of malus or clawback rules, which are determined on the basis of criteria set by the investment firm taking the remuneration parameters specified in sections 1 and 2 into account. The financial result of the investment firm must be taken into account. In the case of a weak or negative financial result, variable remuneration should be appropriately reduced. Variable remuneration is to be reduced in full or repaid in particular if the risk taker concerned

1. is responsible for considerable losses incurred by the investment firm;
2. participated in activities that resulted in considerable losses for the investment firm; or
3. can no longer be regarded as having the necessary expertise and good repute for their role.
   Remuneration components that have already been granted are to be repaid in a time period beginning with the determination of variable remuneration and ending one year after expiry of the deferral period for the component of the affected variable remuneration vested most recently.

Section 9 Discretionary pension benefits

(1) Discretionary pension benefits must be aligned with the business strategy, objectives, values and long-term interests of the investment firm.

(2) If a risk taker leaves the investment firm before reaching retirement age, discretionary pension benefits must be deferred by the investment firm for a period of five years in instruments in accordance with section 8 (3) sentence 1. If the risk taker reaches retirement age, discretionary pension benefits must be paid by the investment firm with instruments in accordance with section 8 (3) sentence 1 and held by the risk taker for at least five years.

Section 10 Exceptions with regard to variable remuneration and discretionary pension benefits

(1) Section 8 (3) to (6) and section 9 (2) do not apply to investment firms that meet the criteria of section 44 (3) sentence 2 no. 1 or no. 2 of the Investment Firm Act.

(2) Section 8 (3) to (6) and section 9 (2) do not apply to annual variable remuneration that does not exceed 50,000 euros and does not account for more than one quarter of the affected risk taker’s total annual remuneration.

Section 11 Conditions for determining the total amount of variable remuneration and the vesting of deferred remuneration components

(1) The total amount of variable remuneration must be determined in a formalised, transparent and comprehensible process with the appropriate involvement of the control units according to their area of responsibility. The responsibilities under section 4 apply mutatis mutandis.

(2) The assessment of performance which serves as the basis for the calculation of the annual total amount of variable remuneration must take account of all categories of existing and future risks in addition to the costs of generating own funds and liquid assets in accordance with Regulation (EU) 2019/2033. The allocation of various components of variable remuneration within the investment firm must take account of all the investment firm’s existing and future risks. Variable remuneration must not prevent the investment firm from ensuring it has adequate own funds.

(3) Variable remuneration may only be determined and vested if and to the extent that the requirements under subsection (2) are fulfilled at the respective points in time. Subsequent compensation for a reduction in variable remuneration is not permitted.

Section 12 Prohibition on restricting or nullifying risk adjustment

(1) The risk adjustment of variable remuneration may not be restricted or nullified by the investment firm by hedging activities or other countermeasures. In particular, no vehicles or measures that would lead to a circumvention of the requirements of this Regulation may be used.

(2) The investment firms must establish appropriate compliance structures to prevent hedging activities or other countermeasures by risk takers that may restrict or nullify the risk adjustment of remuneration. Appropriate compliance structures include, in particular, an obligation for risk takers not to use any personal hedging activities or other countermeasures aimed at restricting or nullifying the risk adjustment of their remuneration. Compliance with this obligation must be checked in a risk-oriented manner at least using spot-check inspections by the investment firm’s compliance function.

Section 13 Principles for remuneration systems in the organisational guidelines; documentation requirements

(1) The investment firm must set out and document principles for the remuneration systems in its organisational guidelines. The principles must include, in particular:

1. details about the design and amendment of the remuneration systems and about the composition of the remuneration;
2. the rules regarding the relevant responsibilities and decision-making powers of the management board, the supervisory board, where applicable the remuneration control committee, the control units and the other organisational units in decision-making processes; and
3. a framework for determining and approving severance payments, including clear allocation of responsibilities and decision-making powers, with the involvement of the control units within the scope of their respective responsibilities.

(2) The investment firm must appropriately document the contents and results of decision-making processes in which the total amount and the distribution of variable remuneration within the investment firm is determined.

Section 14 Review and amendment of remuneration systems

(1) The appropriateness of remuneration systems and the underlying remuneration parameters must be reviewed by the investment firm within the scope of a central and independent internal review at least once a year, especially with regard to their alignment with the business and risk strategies. For this purpose the institution must consult, at least, the relevant reports of the internal audit function and the audit report of the annual auditor in accordance with section 76 (1) of the Investment Firm Act. The review must be documented in writing or electronically and the result of the review must be submitted to the management board and, if there is one, to the supervisory board.

(2) If deficiencies are identified during the review, a remedial action plan must be developed and implemented as soon as possible. 2The measures taken to remedy the deficiencies identified must be documented.

Section 15 Information on remuneration systems

(1) Risk takers must be informed by the investment firm in text form about the design of the remuneration systems relevant to them and, in particular, about the design of the remuneration parameters relevant to them.

(2) The additional information regarding the remuneration systems to be disclosed by investment firms in accordance with Article 51 of Regulation (EU) No 2019/2033 must be made accessible to all risk takers in text form.

Section 16 Amendment of existing agreements

(1) The investment firm must endeavour to ensure that existing

1. contracts concluded with risk takers;
2. plant-level or service agreements; and
3. consistent company practices (betriebliche Übungen);

that are not compatible with this Regulation are amended without undue delay as far as is legally permissible.

(2) Such amendments must be made on the basis of a well-founded legal evaluation of the legal situation that is comprehensible to third parties, and taking account of the concrete prospects of success.

Section 17 Duties of the remuneration control committee

(1) If an investment firm has established a remuneration control committee in accordance with section 44 (3) of the Investment Firm Act, this committee must perform, in particular, the duties under section 44 (6) and (7) of the Investment Firm Act and under subsections (2) to (4).

(2) The remuneration control committee assists the supervisory board in establishing an appropriate design of the investment firm’s remuneration systems for members of the management board. 2This includes, in particular:

1. preparation of the decisions of the supervisory board stipulating the total variable remuneration in accordance with section 11 (2) and determining appropriate remuneration parameters, performance contributions, performance periods and deferral periods and the conditions for a complete loss or partial reduction of deferred variable remuneration or for the clawback of remuneration already paid out; and
2. a regular review, which should be carried out at least once a year, of whether decisions by the supervisory board regarding the points specified in no. 1 are still appropriate; in the case of identified deficiencies, a remedial action plan must be developed as soon as possible.

(3) The remuneration control committee assists the supervisory board of the investment firm in monitoring the appropriate design of the remuneration systems for risk takers who are not members of the management board. The respective duties of the remuneration control committee include, in particular, a regular review, which should be carried out at least once a year, of whether

1. the total amount of variable remuneration has been determined according to the provisions under section 11 (2);
2. the principles specified for measuring remuneration parameters, performance contributions, performance periods and deferral periods, including the conditions for a complete loss or partial reduction of the variable remuneration component, are appropriate; and
3. the remuneration systems of the risk takers in the control units comply with the provisions of this Regulation.

(4) As part of its duties, the remuneration control committee assesses the impact of the remuneration systems on the investment firm’s and investment firm group's risk, capital and liquidity situation and monitors that the remuneration systems comply with the provisions under section 5.

Section 18 Group-wide remuneration rules

(1) The superordinated undertaking in an investment firm group must establish a group-wide remuneration strategy that complies with the provisions of section 46 (1) and (2) of the Investment Firm Act and this Regulation. The superordinated undertaking must ensure compliance with the group-wide remuneration strategy by the subordinated undertakings, regardless of the location of their registered office. Where a subordinated undertaking domiciled in another signatory state is subject to stricter provisions under the law of the respective country than under German law, the superordinated undertaking must take this into account when determining the group-wide remuneration strategy and must endeavour to ensure that the subordinated undertaking complies with the stricter provisions.

(2) The superordinated undertaking must, on the basis of the consolidated situation, identify the group risk takers. The assessment of whether risk takers are to be deemed group risk takers is determined according to the criteria set out in Delegated Regulation (EU) 2021/2154. The provisions of this Regulation apply to the remuneration systems of the group risk takers mutatis mutandis.

(3) The provisions under subsection (1) sentence 2 and subsection (2) do not apply to subordinated undertakings

1. that are domiciled in a signatory state, and that are subject to specific remuneration requirements in accordance with other European Union legal acts; or
2. that are domiciled in a third country where they would be subject to specific remuneration requirements in accordance with other European Union legal acts if they were established in a signatory state.

(4) By way of derogation from subsection (3), with regard to staff members or members of the management board who are employed at a subordinated undertaking that is either an asset management company (Kapitalverwaltungsgesellschaft) within the meaning of section 17 (1) sentence 1 of the Investment Code (Kapitalanlagegesetzbuch), an EU management company within the meaning of section 1 (17) of the Investment Code, or a foreign AIF management company within the meaning of section 1 (18) of the Investment Code, or at an undertaking that provides the investment services and activities listed in points (2) to (4), (6) and (7) of Section A of Annex I to Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173 of 12 June 2014, p. 349; OJ L 74 of 18 March 2015, p. 38; OJ L 188 of 13 July 2016, p. 28; OJ L 273 of 8 October 2016, p. 35; OJ L 64 of 10 March 2017, p. 116; OJ L 278 of 27 October 2017, p. 56), which was last amended by Regulation (EU) 2022/858 (OJ L 151 of 2 June 2022, p. 1), the group remuneration strategy must ensure compliance with the provisions under subsection (1) sentence 2 and subsection (2) if the professional activities of those staff members or members of the management board have a direct material impact on the risk profile of at least one investment firm within the group or of the assets managed by the investment firm.

(5) Where appropriate, the superordinated undertaking must endeavour to ensure that a remuneration control committee which complies with the provisions under section 44 (6) and (7) of the Investment Firm Act and section 15 of this Regulation is established in the subordinated undertaking.

Section 19 Transitional provision

Section 6 (4) and (5), section 7 (4) and (5), sections 8, 9, 11 (2) sentences 1 and 2 and subsection (3), sections 14, 17 (3) sentence 2 and section 18 (1), (2) sentence 3 and subsection (4) apply from the start of the financial year beginning after entry into force of this Regulation.

Section 20 Entry into force

This Regulation enters into force on the day following its promulgation.