Employees Regulated under the InstitutsVergV

Employee pyramid (graphic)

In accordance with the InstitutsVergV we are required to identify all employees whose work is deemed to have a major influence on the overall risk profile of the Group. Appropriately identifying InstitutsVergV Regulated Employees, and subsequently designing suitable compensation structures for them, is essential in order to ensure we do not incentivize inappropriate risk-taking. The SECC has overseen the development and implementation of a robust, risk-focused Regulated Employee identification process for performance-year 2013, which incorporated an assessment of appropriate qualitative and quantitative criteria. The process identified the following employee populations:

  • Executive members of the Group (Management Board, Group Executive Committee and Board Executive (Geschäftsleiter) of significant Group Subsidiaries);
  • Senior Management responsible for the day-to-day management of front office Divisions and Regional Management;
  • Senior employees responsible for the Group’s independent control functions, including Global Heads of Control Functions, members of Global Infrastructure Committees and members of key Risk Committees;
  • Employees with the ability to expose the Group to material risk, including all Managing Directors in CB&S (excluding Research and German Large Corporates);
  • If not already identified, employees with similar remuneration to those captured under the above criteria.

On a global basis, 1,295 employees were identified as InstitutsVergV Regulated Employees for performance-year 2013, spanning 38 countries. This represents an increase of 7 % compared to 2012, when we identified 1,215 Regulated Employees. This increase was primarily driven by (i) the identification of key Risk Committee members with significant authority levels, (ii) the identification of additional employees, outside of CB&S, with the ability to expose the institution to material risk and (iii) a strategic decision by the SECC to lower the remuneration threshold. As in prior years, we expect the number of Regulated Employees to be significantly higher than many of our principal competitors, both from an absolute level and as a percentage of total employee population.

Given incoming regulatory requirements and the forthcoming EBA Regulatory Technical Standards, we expect our Regulated Employee identification methodology to evolve further in performance-year 2014.

Compensation Structures for Regulated Employees

Regulated Employees are subject to the same deferral matrix as the general employee population, save for the requirement that at least 40 % -60 % of Variable Compensation must be deferred. If a Regulated Employee’s Variable Compensation does not trigger a deferral of at least 40 % under the Group’s global deferral matrix then (providing their VC is in excess of € 50,000) the matrix is overridden to ensure that regulatory obligations are met. On average, however, Regulated Employees are subject to deferral rates in excess of the minimum 40 % -60 % regulatory requirements.

All Regulated Employees receive 50 % of their deferred Variable Compensation in the form of a Restricted Equity Award (“REA”) and typically the remaining 50 % as a Restricted Incentive Award (“RIA”) (A limited number of Regulated Employees in our division DeAWM received a portion of their RIA in the form of an Employee Incentive Plan (EIP) Award. These are cash settled awards based on the value of funds managed by the business. Deferral and forfeiture provisions under the EIP remain the same as the RIA. These employees still received 50 % of their deferred award in equity (as a REA) as required by regulation). Upon the vesting of each REA tranche (or at the end of the 4.5 year vesting period for the Senior Management Group), a further minimum six-month retention period applies during which time employees are not permitted to sell the shares. Employees can still forfeit their REA under the Policy/Regulatory Breach and Revenue Impairment forfeiture provisions or if they are subject to termination for Cause during the retention period.

In addition to the deferred award, 50 % of the upfront award (the remaining portion after the deferred element is calculated) is also awarded in equity in the form of an Equity Upfront Award (“EUA”). At award, the equity is subject to a minimum six-month retention period during which time the shares cannot be sold. Adding the EUA to the deferred portion of the award means that, on average, Regulated Employees receive less than 15 % of their 2013 Variable Compensation as an immediate cash payment (i.e., average deferral rates in excess of 85 %). EUAs are subject to the Policy/Regulatory Breach and Revenue Impairment forfeiture provisions during the retention period and will also be forfeited if the employee leaves the Group either voluntarily or for cause.

See “Ex post risk adjustment” in the Group Compensation Overview and Disclosure section for a full summary of the performance and forfeiture provisions.

Compensation Disclosure pursuant to Section 8 InstitutsVergV

As described above, we have developed, refined and implemented a structured and comprehensive approach in order to identify Regulated Employees in accordance with the InstitutsVergV requirements. The collective compensation elements for this population of employees are detailed in the table below. All Management Board members and Board members of other significant Group Subsidiaries per Section 1 of the InstitutsVergV are included in the Geschäftsleiter column.

 

2013

in € m. (unless stated otherwise)1

CB&S

GTB

DeAWM

PBC

Geschäftsleiter (Significant Institutions)

NCOU

Group Total

1

Excluding Postbank.

2

Upfront equity portion of Upfront Awards may be less than 50 % due to the impact of local legal requirements and tax legislation.

3

Including guarantees.

4

Sign-on payments and termination payments have been disclosed collectively for the Group with the exception of CB&S in order to safeguard employee confidentiality due to the low number of recipients.

5

The total includes the stated number for CB&S in addition to the aggregate sum for all other divisions.

Total Compensation

1,388

41

120

48

97

39

1,733

Number of employees

1,093

27

76

35

38

26

1,295

thereof:

 

 

 

 

 

 

 

Fixed Compensation

324

9

24

11

20

8

397

Variable Compensation

1,065

31

96

36

76

32

1,336

Variable Compensation

 

 

 

 

 

 

 

thereof: Deferred Awards

809

24

74

28

67

25

1,028

thereof: Deferred Equity

406

12

37

14

39

13

521

thereof: Upfront Awards

255

7

22

8

9

6

308

thereof: Upfront Equity2

127

4

11

4

5

3

154

thereof:

 

 

 

 

 

 

 

Awards subject to clawback

937

28

85

32

72

28

1,182

Awards subject to sustained performance metrics

809

24

74

28

67

25

1,028

Sign On payments3,4

27

 

 

 

 

 

375

Number of beneficiaries

28

 

 

 

 

 

385

Termination payments4

18

 

 

 

 

 

315

Number of beneficiaries

55

 

 

 

 

 

625

All figures in the table include the allocation of Infrastructure related compensation and number of employees according to our established cost allocation key.

We are conscious that any discretionary termination payments made must be determined based on the sustained commitment of the individual and their personal contribution to the success of the Bank during the course of their employment. The largest single award made in 2013 was € 3.7 million.

All deferred awards and the EUA are subject to clawback following a Policy/Regulatory Breach or Revenue Impairment event. In addition, all deferred awards are subject to clawback provisions linked to the performance of the respective Division and/or the Group as a whole. During the course of 2013, four Regulated Employees had awards subject to forfeiture as a result of being terminated for Cause or as a result of a finding of a Policy/Regulatory Breach. The total amount forfeited (based on the value of the awards at grant) was € 9.24 million. As of the end of 2013, 17 individuals were also under review by the Bank’s committees and subject to suspended vesting or delivery of deferred awards due to ongoing investigations.


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