Paragraph 183: Assosim retains these requirements too vague and indefinite. To avoid the application of discretionary criteria in determining the features of a performance, we are of the opinion that the term “exceptional” should be deleted. Moreover, such a term might as well evoke the concepts of an extraordinary/unusual/abnormal activity, which could herald the assumption of uncontrolled risks. The provision of targets to be achieved or overcome seems to be a safer approach.
The criteria set out by EBA for risk assessment seem to consider only activities entailing risks on assets; we hold the view that similar criteria should also be provided with reference to fee-based businesses, including advisory (i.e. M&A, etc.), placement of financial instruments and other investment banking services. These services primarily expose bank to relevant operational, compliance, reputational risks which require qualitative assessment and are more complex to measure compared to asset-based risks. As a consequence, risk-adjusted remuneration process is subject to higher level of discretion.
Paragraph 201 mentions expressly “objectives and measures on which the staff member has some direct influence”. In this respect Assosim notes that reference should be made also to teams of staff members. In fact, in some circumstances performance criteria (and, consequently, the amount of remuneration) are set in accordance with performances attributable to specific teams and not to specific person.