Deutsche Bank

Human Resources
Report 2015

Aligning the reward system to evolving requirements

Compensation plays an integral role in the successful delivery of Deutsche Bank’s strategic objectives. Attracting and retaining the most capable employees on a global basis is central to the Bank’s compensation strategy. The cornerstone of this is the concept of pay for performance, within a sound risk management and governance framework, and with due consideration of market factors and societal values. As the organization seeks to align compensation to evolving external and internal expectations, reward structures are regularly reviewed and changed as needed.

Underlining this, the decision was taken to communicate total compensation for 2015 to employees in March 2016 rather than in February. This allows for greater transparency in compensation decisions as well as more time to assess full-year performance and strike an appropriate balance between rewards for employees and those for the Bank’s shareholders.

Linking compensation with performance and culture

Deutsche Bank historically established a close link between employees’ compensation and their performance and behavior at all levels and across all divisions of the organization. This takes into consideration a host of factors including, but not limited to, the Bank’s performance, divisional performance and the employee’s individual performance. In accordance with regulatory requirements, managers of senior employees must attest that they have thoroughly reviewed and considered all of the relevant performance and risk metrics, and other guidance relevant to their specific areas of work, when making decisions on variable compensation. In addition, managers may be required to explain how the compensation parameters (both quantitative and qualitative) influenced their decision. This is particularly important with regard to Material Risk Takers as well as in instances involving staff with behavioral issues.

In 2015, as the global regulatory environment continued to evolve, there was continued focus on compliance in a number of areas, for example:

  • designing and implementing a revised, sustainable process for identifying Material Risk Takers in line with CRD IV, including continuing to ensure that compensation structures for regulated populations in the Bank are appropriately aligned with regulatory requirements;
  • continuing to refine the Bank’s compensation governance requirements, including those related to the appropriate governance and documentation of sub-divisional and individual compensation decisions;
  • actively contributing to shaping the regulatory landscape by participating in consultations and giving direct input to regulators and industry associations.

In 2015, Deutsche Bank revised its compensation framework to better align pay with performance and drive sustainable performance at all levels of the Bank. The new framework, introduced in January 2016, provides clear guidance on the target proportion of fixed to variable compensation by corporate title and by division or function. Starting in 2016, variable compensation is intended to include two components. The group component reflects the performance of Deutsche Bank, tying individual total compensation more closely to the Bank’s results and acknowledging each employee’s contribution. The second component is more discretionary and recognizes individual achievements in the context of divisional performance. Further information: A message from John Cryan and Karl von Rohr on Deutsche Bank’s new compensation framework