In accordance with the requirements of CRD IV and the Commission Delegated Regulation (EU) No. 604/2014 of 4 March 2014 supplementing Directive 2013/36/EU of the European Parliament and of the Council with regard to regulatory technical standards with respect to qualitative and appropriate quantitative criteria to identify categories of staff whose professional activities have a material impact on an institution’s risk profile, the bank updates the principles for setting variable remuneration components on an ongoing basis.
Variable remuneration components are awarded primarily based on bonus targets set within the framework of the Management by Objectives (MbO) programme.
The purpose of the targets set is to guarantee that the risk related to the activities of the bank is taken into account. Risks are reflected both by determining the appropriate risk-sensitive criteria for work effectiveness assessment, and reducing or clawback of the variable remuneration component in the case of deteriorated financial results, loss or deterioration in other ratios.
Variable remuneration components for the particular assessment period (calendar year) are awarded after settling bonus targets, in:
- non-deferred form – 60% of the variable remuneration component (in the first year after the assessment period),
- deferred form – 40% of the variable remuneration component (in equal instalments over the net years after the first year after the assessment period),
while both the non-deferred and deferred remuneration is awarded in equal parts in cash and in financial instruments, i.e. the phantom shares (that are converted into cash based on the updated price of the bank’s shares after the period of retention, and in the case of the deferred remuneration component – after a deferral period).
If the variable remuneration component for the particular year exceeds PLN 700 thousand, the amount of PLN 280 thousand plus 60% of the excess over the amount of PLN 700 thousand shall be deferred. Variable remuneration components cannot exceed 100% of the annual basic salary.
Each of the components of accrued variable remuneration may be reduced as a result of:
- breach of the obligations arising from the contract,
- lack of compliance with legal regulations or customer service standards,
- improper performance of professional duties,
- attitude towards other employees breaching social coexistence rules.
The bonus amount:
- for a member of the Management Board can be adjusted (decreased or increased) by a certain ratio, depending on the results achieved by the bank, specified in the bank’s Annual Note (a set of key management indicators specified for a given calendar year);
- for an MRT (Material Risk Taker), who is not a member of the Board, it can be adjusted (increased) by a certain ratio, depending on the results achieved by the bank, specified in the bank’s Annual Note.
In the case of:
- a significant deterioration in the bank’s results,
- identifying a significant adverse change in equity,
- MRT breaching the law or making serious errors,
- adjustment of the achievement and degree of achievement of the results or targets of MRT,
- deterioration in the performance of the structures supervised or managed by the aforementioned persons,
- granting the variable remuneration component based on incorrect or misleading information or MRT fraud,
the Supervisory Board or the Management Board respectively may apply a malus solution reducing the amount of the variable remuneration component due, deferred to subsequent settlement periods.
Material Risk Takers (except members of the bank’s Management Board) may benefit from health care services financed by the bank, the social benefits fund, and the Employee Pension Scheme (EPS). Material Risk Takers (including members of the bank’s Management Board) can use PPEs.
In the case of severance pay related to dismissal (other than resulting from generally applicable laws), the amount reflects the performance assessment for the last three years of employment. At the same time, the bank’s internal regulations stipulate the maximum amount of the severance pay.
A member of the Management Board shall be entitled to severance pay subject to fulfilling the function of member of the bank’s Management Board for at least twelve months before termination of the aforementioned contract. An MRT can receive the severance pay subject to being employed as an MRT for at least twelve months before termination of the employment contract.
Members of the Management Board and certain MRTs are additionally subject to non-competition agreements. These agreements provide for payment of the compensation equivalent of up to 100% of the basic salary arising from the contract for refraining from employment in a competitive firm after the termination of employment with the bank, for no more than six months.