The regulatory requirements for the remuneration systems of credit institutions, financial services companies, capital management companies and insurance companies are constantly increasing. Regulated companies in the financial market are faced with the challenges of content and process-related issues that are necessary to ensure that remuneration systems conform to the rules and at the same time are designed in line with the needs of the market in terms of employment law, supervisory law, company law, accounting law and taxation expertise. At the same time, legislation and auditing practice are determining increasingly complex requirements for external and internal audits of remuneration systems. At the same time, attractive remuneration systems are an essential instrument for employers to recruit, develop and retain their employees over the long term.
The lawyers of Deloitte Legal's Sound Compensation Team provide clients with comprehensive advice on the design, implementation and modification of their regulated remuneration systems and governance. At the same time, they are part of the Deloitte Sound Compensation network, in which we bundle our legal, tax, accounting and strategic expertise into regulated compensation systems.
Since 2011, the lawyers working in our Sound Compensation team have advised more than 160 domestic and foreign credit institutions, financial services companies, capital management companies and insurance companies on the implementation and/or revision of remuneration systems that comply with the regulatory requirements and the instructions of the Federal Financial Supervisory Authority (BaFin).
Furthermore, in recent years they have audited the remuneration systems of more than 60 companies in the financial sector as specialists working for the respective auditor as part of the annual audit; this with a focus on the obligatory audit of the remuneration systems of credit institutions and financial service companies in accord-ance with § 12 PrüfbV.
Our many years of experience in dealing with regulated remuneration systems enables us to provide tailor-made advice on all relevant legal issues and challenges, tailored to the needs of each individual case. We are familiar with the focus and the particular features of the individual auditors (financial supervision, auditors, remuneration officers, central audit authority in accordance with § 12 of the InstitutsVergV, internal audit).
Our focus areas
Advice on the structuring and content of remuneration systems
- Analysis of the remuneration systems to identify any need for adjustment and/or implementation with regard to specific regulatory requirements (if necessary as maturity level analysis)
- Conception of needs-based and legally compliant compensation systems for members of management and other employee groups
- Employment law implementation of the remuneration systems in the employment relationships of members of the executive management bodies and other employees (in the case of cross-border remuneration systems in cooperation with Deloitte legal colleagues in the respective countries)
- Conception and implementation of group/groupwide remuneration systems
- Preparation of legal opinions on individual issues relating to the implementation of regulatory requirements in remuneration systems (including with regard to § 14 InstitutsVergV, on the concrete application of the supervisory principle of proportionality in capital management companies and on cross-border issues)
Advice on the conceptual design, implementation and modification of remuneration governance
- Analysis of remuneration governance to verify possible regulatory action and implementation requirements (if required as maturity level analysis)
- Identification of risk takers
- Advice with regard to legal compliance with disclosure obligations (including pursuant to § 16 InstitutsVergV, Art. 450 CRR)
- Support in the needs-based design of remuneration governance on the stakeholder side (Remuneration Control Committee, Remuneration Committee, Remuneration Officer, Malus Commit-tee)
Performance of audit services and support in audits of remuneration systems (including annual audit, internal audit, § 44 KWG audit by the financial supervisory authority, annual appropriateness audits)
- Maturity level analysis of the existing remuneration systems and remuneration governance in preparation for the concrete audit and technical support during the audit (including in the form of answering individual regulatory questions arising during the annual au-dit as well as in the processing of any changes and/or adjustments required as a result of findings)
- Performance of the audit of the appropriateness of the compensation system of the Executive Board pursuant to § 10 (1) InstitutsVergV
- Carrying out the annual audit on the appropriateness of the remuneration systems in accordance with § 12 InstitutsVergV or assisting the internal auditors responsible with the audit.
- Carrying out the audit of the internal audit or supporting the internal audit in the audit of the remuneration system
- Supporting the Compensation Control Committee in examining the appropriateness of the compensation systems for management and other employees (Section 15 InstitutsVergV)
- Supporting the remuneration officer in the annual review of the appropriateness of the remuneration system (including the preparation of the remuneration control report)
Training courses and workshops on the regulatory requirements for remuneration systems and remuneration governance
- Training of members of the Management Board and members of the Supervisory Board/Board of Administration in the fulfilment of regulatory training obligations (§§ 25c, 25d KWG)
- Training of remuneration officers to meet their regulatory training obligations (§ 23 InstitutsVergV)
- training of managers and other staff involved in the implementation of remuneration systems