Material Risk Takers

Material Risk Takers – Employee pyramid (graphics)

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 Material Risk Takers (“MRTs”), and subsequently designing suitable compensation structures for them, is essential in order not to incentivize inappropriate risk-taking. The European Banking Authority’s Regulatory Technical Standards (“EBA RTS”), which have been adopted by the InstitutsVergV, came into effect in June 2014. The RTS outline prescriptive quantitative and qualitative criteria for identifying MRTs.

To promote alignment with new regulatory requirements, the 2014 MRT identification process is based on a combination of qualitative and quantitative criteria as set out in the EBA RTS, and internal criteria developed by the Bank to identify additional categories of employees whose professional activities have a material impact on the Bank’s risk profile.

On a global basis, 2,903 employees were identified as MRTs for performance-year 2014, spanning 47 countries. This represents an increase of 124 % compared to 2013, when 1,295 were identified. In prior years, the number of our MRTs has been significantly higher than many of our principal competitors, both from an absolute level and as a percentage of total employee population. However, and as intended, it is expected that the application of the EBA RTS will result in a much more level playing field.

Compensation Structures for Material Risk Takers

Material Risk Takers are subject to the same deferral matrix as the general employee population, save for the requirement that at least 40 % –60 % of VC must be deferred. If a MRT’s VC 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, MRTs are subject to deferral rates in excess of the minimum 40 % –60 % regulatory requirements.

All MRTs receive 50 % of their deferred VC in the form of a Restricted Equity Award (“REA”) and typically the remaining 50 % as a Restricted Incentive Award (“RIA”). A limited number of MRTs in Deutsche AWM received a portion of their RIA in the form of an Employee Investment Plan (“EIP”) Award. These are cash settled awards based on the value of funds managed by the business, and 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 their 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, MRTs receive less than 15 % of their 2014 VC 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.

All deferred awards and the EUA are subject to forfeiture following a Policy/Regulatory Breach or Revenue Impairment event. In addition, all deferred awards are subject to forfeiture provisions linked to the performance of the respective division and/or the Group as a whole.

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

Compensation Disclosure pursuant to Section 16 InstitutsVergV

Section 16 InstitutsVergV provides that the duties of disclosure for institutions are determined solely by Article 450 of Regulation (EU) No. 575/2013 (the Capital Requirements Regulation, “CRR”). Article 450 CRR introduces new disclosure requirements and the tables below have been created in accordance with this.

Aggregate remuneration

As described above, we have developed, refined and implemented a structured and comprehensive approach in order to identify Material Risk Takers in accordance with the InstitutsVergV requirements. The collective remuneration elements for this population of employees are detailed in the table below. Please note that ‘variable pay’ is reported in the table, which includes variable compensation as well as other discretionary remuneration elements. Variable pay has been used for fixed to variable remuneration ratio purposes.

All Management Board members and Board members of other significant Group Subsidiaries per Section 1 and 17 InstitutsVergV are included in the Geschäftsleiter column. Non-executive Board members and Supervisory Board members are included in the adjacent column. Compensation information is not reported for Non-executive Board members and Supervisory Board members. Their compensation (limited to a fixed fee/expenses) is not part of the SECC’s remit or governance.

 

2014

in € m.
(unless stated otherwise)1

CB&S

PBC

GTB

Deutsche AWM

Geschäfts­leiter (Significant Institutions)

Non-executive & Super­visory Board (Significant Institutions)

NCOU

Group Total

N/M – Not meaningful

1

Excluding Postbank

2

Fixed pay defined as: base salary + Additional Fixed Pay Supplement + relevant local allowances

3

Variable pay defined as: VC + other discretionary remuneration payments

4

Termination payments have been disclosed collectively for the Group in order to safeguard employee confidentiality due to the low number of recipients

Number of employees

2,057

108

141

388

76

67

67

2,903

thereof:

 

 

 

 

 

 

 

 

Senior Management Group

58

15

13

21

25

0

7

139

Other material risk takers

1,998

93

128

367

51

67

60

2,764

Total Pay

2,072

98

120

381

109

N/M

74

2,854

thereof:

 

 

 

 

 

 

 

 

Fixed Pay2

980

50

55

169

54

N/M

38

1,347

Variable Pay3

1,092

48

65

212

55

N/M

36

1,508

Variable Pay

1,092

48

65

212

55

N/M

36

1,508

thereof:

 

 

 

 

 

 

 

 

Variable in cash

553

24

32

108

25

N/M

19

761

Variable in shares

539

24

32

102

30

N/M

17

745

Variable in share-linked instruments

0

0

0

0

0

N/M

0

0

Variable in other types of instruments

0

0

0

2

0

N/M

0

2

Outstanding deferred Variable Pay

2,049

81

94

296

167

N/M

73

2,760

thereof:

 

 

 

 

 

 

 

 

Vested awards

12

0

0

0

12

N/M

0

25

Unvested awards

2,037

81

94

296

154

N/M

73

2,735

Termination payments4

N/M

N/M

N/M

N/M

N/M

N/M

N/M

4

Number of beneficiaries

N/M

N/M

N/M

N/M

N/M

N/M

N/M

6

All figures in the table include the allocation of Infrastructure related compensation and number of employees according to our established cost allocation key. The table may contain marginal rounding differences.

Sign-on awards are intended to be a one-off premium to exceptional new hires and are included as variable pay in the year of joining for the purposes of the maximum fixed to variable ratio. As such, Sign-on awards are included in ‘variable pay’ in the above table. For 2014, € 6.09 million Sign-on awards were granted to a total number of 15 MRTs.

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 2014 was € 3.01 million.

During the course of 2014, seven MRTs 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 or Revenue Impairment. The total amount forfeited (based on the value of the awards at grant) was € 2.75 million. As at the end of 2014, one individual was also under review by the Bank’s committees and subject to suspended vesting or delivery of deferred awards due to ongoing investigations.

Remuneration of high earners

Per Article 450 CRR, the Bank is also required to disclose the number of individuals remunerated € 1 million or more. This information is provided below:

 

2014

 

Number of employees

Total Pay1

 

1

Total Pay defined as fixed pay (base salary + AFPS + relevant local allowances) plus variable pay (VC plus other discretionary remuneration payments)

1,000,000 to 1,499,999

391

1,500,000 to 1,999,999

168

2,000,000 to 2,499,999

85

2,500,000 to 2,999,999

56

3,000,000 to 3,499,999

35

3,500,000 to 3,999,999

25

4.000,000 to 4,499,999

19

4,500,000 to 4,999,999

8

5,000,000 to 5,999,999

15

6,000,000 to 6,999,999

7

7,000,000 to 7,999,999

5

8,000,000 to 8,999,999

2


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