APRA closer to exec pay change
(9 September 2009 – Australia) APRA has moved one step closer to finalising changes to remuneration of finance executives with its second consultation package, highlighting the need to align pay with long term company performance.
Australian Prudential Regulation Authority (APRA) released a second consultation package on remuneration for authorised deposit-taking institutions (ADIs) and general and life insurance companies.
APRA said that it received 51 submissions that generally agreed that risks could arise through unsound remuneration practices at financial institution.
The submissions supported a principles-based framework to encourage alignment of remuneration practices with prudent risk-taking.
APRA Executive Member John Trowbridge said that APRA's principles-based approach requires Boards of regulated institutions to have a remuneration policy that aligns remuneration arrangements with the long-term financial soundness of the institution and its risk management framework.
The submissions thus confirmed APRA’s underlying principles of its remuneration proposals from its first consultation package, with some minor revisions so that the principles are better understood.
One example of the additions made in this second package is clarification of which banks come under the requirements. Mr Trowbridge said that changes make it clear that the remuneration requirements extend to Australian foreign branches.
Implementation of the APRA proposal has been pushed back to April next year. APRA said that the final prudential standards and associated product practice guide (PPG) will be released in November 2009 and be effective from 1 April 2010.
APRA said that it received 51 submissions that generally agreed that risks could arise through unsound remuneration practices at financial institution.
The submissions supported a principles-based framework to encourage alignment of remuneration practices with prudent risk-taking.
APRA Executive Member John Trowbridge said that APRA's principles-based approach requires Boards of regulated institutions to have a remuneration policy that aligns remuneration arrangements with the long-term financial soundness of the institution and its risk management framework.
The submissions thus confirmed APRA’s underlying principles of its remuneration proposals from its first consultation package, with some minor revisions so that the principles are better understood.
One example of the additions made in this second package is clarification of which banks come under the requirements. Mr Trowbridge said that changes make it clear that the remuneration requirements extend to Australian foreign branches.
Implementation of the APRA proposal has been pushed back to April next year. APRA said that the final prudential standards and associated product practice guide (PPG) will be released in November 2009 and be effective from 1 April 2010.
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