The PRA has published Consultation Paper 6/14: Clawback (CP6/14).
In CP6/14, the PRA sets out proposals that are designed to extend the Remuneration Code (the Code) so that it requires PRA authorised firms subject to the Code to amend employment contracts so that they are able to apply clawback to vested variable remuneration on a group-wide basis. The proposed changes to the Code are set out in appendix 1 of CP6/14.
The proposed rule will come into force on 1 January 2015. The PRA expects firms to amend employment contracts to allow for the application of clawback to all vested awards up to six years after vesting. The PRA also expects firms to take all reasonable steps to amend employment contracts to reflect awards made prior to 1 January 2015, but which vest after that date, again subject to a limit of six years after vesting. Six years is the maximum time period proposed in line with the statute of limitations for contracts.
The deadline for comments on CP6/14 is 13 May 2014.
View Consultation Paper 6/14: Clawback, 13 March 2014