At a glance
- Under Section 46 Investment Firm Act (Wertpapierinstitutsgesetz) (WpIG), security institutions must have appropriate and transparent remuneration systems that are geared towards the sustainable development of the institution.
- The ordinance specifying these requirements – the Remuneration Regulation for Investment Institutions (Wertpapierinstituts-Vergütungsverordnung) (WpIVergV), was published in the Federal Law Gazette on 11 January 2024.
According to Section 46 WpIG, security institutions must have appropriate and transparent remuneration systems that are geared towards the sustainable development of the institution. The ordinance specifying these requirements, the WpIVergV, was finally published in the Federal Law Gazette on 11 January 2024, more than three years after the law came into force. The final draft looks different in comparison to the last consulted draft of 19 October 2022.
The main changes are:
- security institutions are obliged to set a threshold for particularly high variable remuneration, which must not exceed EUR500,000;
- the requirements of the regulation are applicable to the remuneration systems of group risk takers in a corresponding manner;
- the provisions of Section 18 paragraph 1 sentence 2 and paragraph 2 WpIVergV on group-wide remuneration rules, should not apply to subordinated companies that are based in a contracting state that is bound by special remuneration requirements in accordance with other EU legal acts; and
- section 19 WpIVergV also contains a transitional provision according to which the main provisions on variable remuneration, severance payments, retention bonuses and buyouts are to be applied for the first time from the beginning of the financial year following the entry into force of the regulation. For security institutions whose financial year is the calendar year, this means that these provisions will have to be observed for the first time in 2025.
