CRD IV: CSSF Circular 14/594 - Transposition of the EBA guidelines on the applicable notional discount rate for variable remuneration
These guidelines aim to explain the calculation and the rules for applying the discount rate referred to in Article 94(1)(g)(iii) of CRD IV.
Institutions may apply the discount rate in the calculation of the ratio between the fixed and variable components of remuneration to a maximum of 25% of the total variable remuneration provided it is paid in instruments that are deferred for a period of not less than five years. “Discount ratio” shall mean the value by which a nominal amount of variable remuneration which will be acquired in the future is multiplied to obtain the present value.
The EBA guidelines on the applicable notional discount rate for variable remuneration entered into force on 1 June 2014. The CSSF Circular 14/594 comes into force with immediate effect.