On 15 July 2022, the Bank of England (BoE) published Consultation Paper 8/22 ‘Remuneration: Unvested pay, material risk takers and public appointments (CP8/22).

In CP8/22 the PRA sets out draft changes to Supervisory Statement 2/17 ‘Remuneration’ (SS2/17). The PRA is setting out a proposed new chapter 4 of SS2/17 covering changes to the instruments or claims that comprise unvested, deferred sums awarded to material risk takers (MRTs) as part of their variable pay. Specifically the PRA sets out its expectations that:

  • In general, unvested, deferred claims that comprise the variable pay of MRTs should not be converted from an equity claim into a claim on other instruments (or vice versa) after an award has been made.
  • This expectation should apply to all unvested, deferred sums, and not exclude amounts above the regulatory minima.
  • In exceptional circumstances, such as where there are potential conflicts of interest arising from a (proposed) public-sector appointment that cannot otherwise be sufficiently mitigated, it may be appropriate for a conversion to occur subject to the prior non-objection of the PRA, and on the basis that the relevant retention requirements remain unchanged.

The deadline for comments on CP8/22 is 19 September 2022.