UK: Clawback of vested variable remuneration - a proposed change to the Remuneration Code

Yesterday the Prudential Regulation Authority published a short consultation paper in which it set out its intention to amend the Remuneration Code in order to require all PRA-authorised firms to amend employee contracts in order that they are able to clawback vested variable remuneration: see here (pdf).

Six years is the maximum time period proposed by the PRA and, as a minimum, firms should be able to clawback remuneration when: (a) there is reasonable evidence of employee misbehaviour or material error; or (b) the firm or the relevant business unit suffers a material downturn in its financial performance; or (c) the firm or the relevant business unit suffers a material failure of risk management.