Financial Stability Forum Principles for Sound Compensation Practices

The Financial Stability Forum has issued Principles for Sound Compensation Practices.

The Principles require compensation practices in the financial industry to align employees’ incentives with the long-term profitability of the firm. The Principles call for effective governance of compensation, and for compensation to be adjusted for all types of risk, to be symmetric with risk outcomes, and to be sensitive to the time horizon of risks. Implementation by firms will be reinforced through supervisory examinations at the national level .

It is expected that APRA will take the Principles into account in drafting executive remuneration guidelines for ADI's.


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