The UK's Financial Services Authority has published a statement concerning firms' remuneration policies in which it observes: "[it] would appear that in many cases the remuneration structure of firms may have been inconsistent with sound risk management". The FSA makes clear that it does not want to become involved in setting remuneration levels but explains that it wishes to see firms adopt remuneration policies which are aligned with sound risk management systems and controls. In this regard, the FSA sets out in an annex to its statement a list of criteria for good and bad remuneration policies. These criteria represent the FSA's initial thoughts and are arranged within the following headings: - Measurement of performance for the calculation of bonuses
- Composition of the remuneration
- Performance adjusted deferred compensation
- Governance
The FSA also explains that its statement does not extend to non-executive director remuneration.
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