Remuneration Policies Sample Clauses

Remuneration Policies. In light of the financial crisis of 2007, the issue of remuneration in the financial sectors, especially performance-based fees, drew the attention of both EU and US securities regulators. It was generally perceived that the financial crisis ‘revealed that the remuneration and incentive schemes commonly applied within financial institutions were themselves exacerbating the impact and scale of the crisis’ and that these schemes created ‘incentives for taking excessive risk’, which increases systemic risk.187 At the EU level, this has resulted in the adoption of a set of rules related to the remuneration of fund managers in UCITS V (which amended the original UCITS Directive)188 and the AIFM Directive. For the most part, UCITS V aligns with the AIFM Directive on remuneration requirements.189 Both directives provide restrictions on the use of variable remunera- tion (although still allowed), rules on remuneration policies for UCITS and AIFs, and disclosure rules relating to the remuneration paid by the management company and the carried interest paid by the UCITS or AIF. With respect to the remuneration restrictions, fixed and variable components (including carried interest) must be appropriately balanced, and the fixed component must represent a sufficiently high portion. Furthermore, for the variable components of remuneration, additional re- quirements apply, including the requirement that guaranteed variable remuneration may only occur when hiring new staff, and only for the first year. See for these and other remuneration rules, section 2.5. 183. Article 69 of the Commission Delegated Regulation on AIFMs. 184. Article 67(2) of the Commission Delegated Regulation on AIFMs. 185. Article 70(1) of the Commission Delegated Regulation on AIFMs.