Although the remuneration changes to APRA APS 510 do not commence until 1 April 2010, in APRA's response to submissions it says it expects immediate compliance:
it is APRA’s expectation that regulated institutions negotiating or renegotiating contracts between the release of the revised governance standards (1 December 2009) and their commencement date will be fully cognisant of APRA’s requirements and will begin the transition during this period for existing arrangements that would not meet the revised standards. Any attempts to circumvent APRA’s requirements during this time will expose the relevant institution to a supervisory response from APRA.
Contracts in force at 1 April 2010 must be fully compliant with the standards at the first opportunity for renegotiation, and in any event by 31 March 2013.
If you don't have a contracts register now is the time to set it up.
It is important to note the wide scope of the persons to whom the standard applies to:
- responsible persons (excluding responsible auditors and non-executive directors);
- risk management, compliance, internal audit and financial control personnel (collectively, ‘risk and financial control personnel’); and
- all other employees or agents for whom a significant portion of total remuneration is variable and determined by performance measures. A person need not be an employee of the regulated institution to be covered, and may be an employee of a subsidiary or otherwise related company, a consultant, a contractor or an agent. It can cover persons such as commissioned sales personnel and third party intermediaries such as agents, loan brokers, insurance brokers and financial planners.
Contact us if you need assistance with drafting or reviewing your agreements or developing your Remuneration Committee charter or remuneration policy.