The Financial Supervisory Authority (FIN-FSA) has decided that Finnish financial-sector companies need to review their remuneration principles in relation to regulatory requirements.
FIN-FSA recommends that the remuneration policies at banks and other financial-sector companies should be changed so that in the future the payment of the performance-related bonuses to the directors should be delayed by at least three years.
When the remuneration scheme is spread out over a longer time, it is possible to take into account the risks related to the achievement of the performance. The bonuses could be cancelled if the risks became reality before the payment.
Nowadays Finnish banks, investment companies, and insurance companies usually pay the bonuses in the year following the end of the financial year.
According to FIN-FSA, performance-related bonuses should not become unreasonably high relative to fixed pay.
FIN-FSA is to introduce its recommendations at the beginning of 2010, but they will be changed to regulations later on in order to comply with the new European Union directive on remuneration policies in financial sector.
