All market participants should ensure that the performance assessment and compensation of employees takes adequate account of governance, compliance and market conduct – and not solely of profits generated. Individuals who do not meet a specified threshold of acceptable behaviour that is aligned to their employer’s value system and conduct expectations should feel the direct effect on their discretionary compensation.
To guide this, the Financial Stability Board (FSB) has developed a set of principles for sound compensation practices; the aim of these principles is to reduce incentives for excessive risk taking that may arise from the structure of compensation schemes in significant financial institutions. As a member of the FSB, South Africa subscribes fully to these principles.