(c) the time necessary for the outcomes (c) the time necessary for the outcomes of those business activities to be reliably measured.

(c) the time necessary for the outcomes of those business activities to be reliably measured.

35. The Remuneration Policy must provide for the Board or, for an EFLIC, the Compliance Committee, to adjust performance-based components of remuneration downwards, to zero if appropriate, in relation to persons or classes of persons, if such adjustments are necessary to:

(a) protect the financial soundness of the regulated institution; or

(b) respond to significant unexpected or unintended consequences that were not foreseen by the Board Remuneration Committee or, for an EFLIC, the Compliance Committee.

36. The Remuneration Policy must set out who is covered by the Policy. The Remuneration Policy must cover, as a minimum:

(a) each responsible person, as that term is defined in Prudential Standard LPS 520 Fit and Proper, excluding Auditors, external Appointed Actuaries, non-executive directors and in the case of an EFLIC, members of the Compliance Committee;

(b) persons whose primary role is risk management, compliance, internal audit, financial control or actuarial control (collectively “risk and financial control personnel”); and

(c) all other persons for whom a significant portion of total remuneration is based on performance and whose activities, individually or collectively, may affect the financial soundness of the regulated institution.

A person will be included within one of the above categories if that person is: employed directly by the regulated institution; retained directly by the regulated institution under contract; employed by, or a contractor of, a body corporate (including a service company) that is a related body corporate of the regulated institution; or, subject to paragraph 37, an entity that is not a related body corporate of the regulated institution.

37. The Remuneration Policy must cover a service contract between a regulated institution and an entity that is not a related body corporate of the regulated institution, if:

    (a) the primary role of the entity is to provide risk management, compliance, internal audit, financial control or actuarial control services to the regulated institution; or (b) the services provided by the entity, either individually or collectively with like services provided by other entities, may affect the financial soundness of the regulated institution and, under the services contract with the regulated institution, a significant portion of the total payment to the entity is based on performance.

However, the Remuneration Policy need not cover a service contract with such an entity if:

(i) the regulated institution’s risk management framework explicitly addresses the structure of payments to entities of the relevant kind and the risk that payment incentives can give rise to inappropriate behaviour; and