New EU Regulation of Remuneration in Financial Institutions

In July 2010, the European Parliament approved new requirements governing the remuneration of certain personnel of credit institutions and investment firms subject to the EU Capital Requirements Directive (“CRD”). The EU Council of Ministers did not adopt the new rules – known as “CRD III” – at its July meeting, however, and it is now expected to do so only in October 2010. CRD III’s remuneration rules will apply from January 1, 2011, including retroactively in respect of compensation paid in 2011 for services rendered in 2010. This Memorandum summarizes the main features of CRD III’s new remuneration rules and highlights some of the issues they may raise in practice.