Remuneration policy
Decision-making processes regarding remuneration policy
In the year 2012 the Bank introduced “Policy for Variable Components of Remuneration of Persons Occupying Management Positions in the Group of Bank Millennium SA” prepared on the basis of assumptions concerning remuneration of employees in Bank Millennium Group – with consideration of the management and internal control system used as well as requirements Polish Financial Supervision Authority Resolution No. 258/2011 – by a dedicated project team composed of experts in HR, Bank Law and Labour Law, risk management and compliance. The method of analysis of scopes of responsibility for risk-based decisions, adopted remuneration assumptions as well as evaluation rules and criteria were presented to the dedicated Steering Committee. Subject to the Committee’s verification was the list of positions and persons responsible for taking decisions significantly affecting the bank’s risk profile. When drawing up “Policy for Variable Components of Remuneration of Persons Occupying Management Positions” no external consultants were used.
In the 2013 the text of the “Policy” became more detailed by the documents describing the rules for implementation of the Policy separately for Members of the Bank’s Management Board and for remaining Risk Takers in the Group and was also verified against European Parliament and Council Directive 2013/36 EU. Updates were drafted internally by a project team comprised of experts in risk management, compliance and legal – headed by the Director of the HR Department.
In 2015 the “Policy” was complemented i.a. others with rules for granting of fixed remuneration components. The name of the Policy has also been changed to “Policy for Remuneration of Persons Occupying Management Positions in Bank Millennium Group”. The currently binding policy is reflecting recommendations contained i.a. in principles of Corporate Governance valid in institutions supervised by Polish Financial Supervision Authority and the records of functioning so far “Policy for Variable Components of Remuneration of Persons Occupying Management Positions in Bank Millennium S.A. Group”.
In 2016, the Policy was supplemented with more detailed description of the way of an annual process of identifying persons holding managerial positions and influencing the risk profile of the Bank Millennium Group. On the 22nd July 2016, changes were approved by Bank Millennium Supervisory Board. Process of identifying staff for the 2017 bonus program was carried out already by these rules. In addition, in 2016 a distinct „Policy of remuneration in Millennium TFI” has been developed that entered into force on the 29 November 2016. The document refers to the requirements of Regulation of the Ministry of Finance dated 30 August 2016.
That remuneration policy is consistent in its assumptions with the Policy of remuneration of Bank Millennium Group, which has referred to Members of the Management Board of Millennium TFI since 2012. The rule to defer part of the variable remuneration or to convert its part into units of managed funds does not apply to other persons covered by TFI remuneration policy. This is due to the fact that Millennium TFI did not meet the criteria of significant investment fund company which at the end of 2016.
Composition, scope of tasks and procedure of work of the Supervisory Board Personnel Committee in 2016
In 2016, supervision of remuneration of persons holding managerial posts in Bank Millennium Group was held by Personnel Committee of the Supervisory Board, composed of:
- Andrzej Koźmiński – President,
- Nuno Manuel da Silva Amado,
- Miguel de Campos Pereira de Bragança,
- Bogusław Kott.
The Committee is responsible i.a. for defining terms and conditions of employment, defining evaluation criteria and evaluating work of members of the Bank’s Management Board. Moreover the Supervisory Board Personnel Committee in line with its powers pronounces opinions on the remuneration policy, including amount and type of components awarded to persons occupying management positions, including persons involved with risk management and compliance of the Bank’s activity with legal provisions and internal regulations.
The Supervisory Board Personnel Committee met three times in 2016; during the meetings the members of the Management Board were re-evaluated and rules of payment were established for deferred bonus of 2012, 2013, 2014. The personnel Committee assessed also the results of the work of individual members of the Management Board in 2015 and granted to individual members of the Board a bonus for year 2015 on the principles set out in the “Policy of remuneration of employees holding managerial posts in Bank Millennium Group”. In addition, the Personnel Committee has evaluated and recommended choice of candidate for a member of the Management Board, as well as assessed the performance of duties by a Member of the Management Board, who resigned from his function.
Once a year the Supervisory Board presents the General Meeting (GSM) with report evaluating the operation of the remuneration policy in Bank Millennium Group. GSM assesses whether the approved policy is conducive to the development and security of the Bank, and determine the remuneration of the Supervisory Board Members.
Information about the remuneration system, including criteria used when measuring results and adjusting for risk; about payments deferral policy and about eligibility criteria
Remuneration of persons taking decisions affecting the risk profile is determined in particular with consideration of:
- Scope of tasks performed in the organisational unit,
- Scope of responsibility of the employees,
- Based on analysis of salary information presented in labour market surveys of salaries in financial institutions.
Bonus pool vs. results
Variable remuneration components – annual bonus pool for persons occupying management positions is approved after prior analysis of the Bank’s situation regarding:
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Actual business performance: net profit, Result on Banking Activity, Cost to Income ratio, ROE;
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Liquidity: Loans/Deposits ratio, value of liquid assets;
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Capital adequacy ratios with respect to the KNF reference level.
The Bank’s results before approval of bonus pool for variable remuneration for persons occupying management positions are analysed in a three-year perspective.
The level of the bonus pool is correlated with the actual Result on Banking Activity, net profit, Cost to Income ratio, ROE. Capital adequacy ratios in the evaluated period cannot fall below levels accepted by KNF. Risk ratios regarding the Bank’s liquidity in the evaluated period cannot fall below levels accepted by KNF.
The bonus pool may be raised as the ratios improve. The bonus pool assigned for payment of bonus to Management Board Members cannot exceed 100% of total annual base remuneration and 2% of Consolidated Net Profit of Millennium Group. Variable remuneration of a person covered by the Policy cannot exceed 100% of the person’s total annual fixed remuneration.
Payments deferral policy
Management Board Members of Bank Millennium +
Awarding and payment of 50% of the value of variable components of remuneration occurs after the end of the settlement period and after announcement of financial results, while payment of 50% of variable remuneration is deferred for 3 years, payable in equal annual instalments. Members of the Management Board receive each part of the awarded bonus – paid in the year coming after the settlement period and deferred – half of it in cash and half in a financial instrument, the value of which is related to the value of shares of Bank Millennium.
Other persons +
Other persons covered by the Policy for Variable Components of Remuneration have the bonus paid in 50% in cash form in the year coming after the given financial year. The remaining 50% is paid in a financial instrument, the value of which is related to the value of shares of Bank Millennium – in equal annual instalments during 3 years.
Criteria of eligibility +
Criteria of evaluation of results on the level of the Bank. organisational units and personal. providing a basis for ascertaining and paying individual variable remuneration
Criteria of evaluation of results on the level of the Bank. organisational units and personal. providing a basis for ascertaining and paying individual variable remuneration
Members of the Bank’s Management Board: +
Decisions concerning awarding of bonus to Members of the Management Board are taken by the Supervisory Board Personnel Committee after analysis of results, with consideration of financial criteria:
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Fulfilment of planned budgets and ratios defined for the managed area of activity,
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Comparison with competitive banks of similar size,
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Market business criteria defined for the specific period;
And non-financial criteria, in particular:
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Overall quality of management in the area of responsibility,
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Effective leadership and contribution to the Bank’s development,
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Management and supervision over units in the area of responsibility.
Other persons +
The Personnel Committee of the Management Board of Bank Millennium evaluates work in the given settlement period looking at quantitative criteria for the particular area of responsibility (results of banking activity of business lines) as well as discretionary evaluation of personal work quality with particular consideration of the quality of decision affecting the bank’s risk profile in an at least three-year perspective. The each employee identified as Risk Taker had un measure in performance evaluation system assigned, tied to her/his scope of responsibility and related to influence on risk profile.
On this basis it determines the value of annual discretionary bonus.
Quantitative information regarding remuneration
Aggregated quantitative information concerning remuneration of persons in management positions in Bank Millennium Group. who have material impact on its risk profile, in the meaning of article 450 of CRR.
Table no 31 Aggregate quantitative information on remuneration per 2016, broken down by areas of the company’s activity and by senior management and members of staff whose actions have a material impact on the risk profile of the institution (PLN thous.)
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| Business lines | Total remuneration | ||
|---|---|---|---|
| Management Board | Risk Takers (without Management Board Members) | Total | |
| Retail Banking | 0 | 1 077 | 1 077 |
| Corporate Banking | 0 | 4 743 | 4 743 |
| Overall Bank Management | 10 687 | 6 848 | 17 534 |
| Total | 10 687 | 12 668 | 23 355 |
The amounts of remuneration for 2016 the financial year, split into fixed and variable remuneration. and the number of beneficiaries; the amounts and forms of variable remuneration, split into cash, shares, share-linked instruments and other types; the amounts of outstanding deferred remuneration, split into vested and unvested portions; broken down by Management Board Members, persons reporting directly to Management Board Members and other persons in management positions in Bank Millennium Group, whose actions have a material impact on the risk profile of the institution (PLN thous.)
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| Management Board Members | Persons in management positions – reporting directly to Management Board Members | Other persons in management positions | |
|---|---|---|---|
| Number of persons | 7 | 26 | 6 |
| Fixed remuneration | 10 687 | 9 230 | 1 598 |
| Variable remuneration (*) | 0 | 1 555 | 285 |
| Total cash | 0 | 778 | 143 |
| Cash paid | 0 | 778 | 143 |
| Cash deferred | 0 | 0 | 0 |
| Total financial instrument | 0 | 778 | 143 |
| Vested financial instrument | 0 | 0 | 0 |
| Paid financial instrument | 0 | 0 | 0 |
| Deferred financial instrument | 0 | 778 | 143 |
(*) As at publication date, variable remuneration of Management Board Members for 2016 was not granted yet
The amounts of outstanding deferred remuneration for 2016 the financial year, split into vested and unvested portions; broken down by Management Board Members, persons reporting directly to Management Board Members holding function in 2016 and other persons in management positions in Bank Millennium Group in 2016, whose actions have a material impact on the risk profile of the institution (PLN thous.)
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| Management Board Members | Persons in management positions – reporting directly to Management Board Members | Other persons in management positions | |
|---|---|---|---|
| Variable remuneration with deferred payment – part already awarded | 0 | 0 | 0 |
| Variable remuneration with deferred payment – part not yet awarded | 0 | 778 | 143 |
| Total deferred variable remuneration | 0 | 778 | 143 |
The amounts of deferred remuneration awarded during 2016 year, paid out and reduced through performance adjustments for persons in management positions (including former employees), broken down by Management Board Members, persons reporting directly to Management Board Members and other persons in management positions in Bank Millennium Group, whose actions have a material impact on the risk profile of the institution (PLN thous.)
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Management Board Members | Persons in management positions – reporting directly to Management Board Members | Other persons in management positions |
|---|---|---|---|
| Number of persons | 8 | 28 | 6 |
| Employed as of end of year | 5 | 21 | 5 |
| Former employees | 3 | 7 | 1 |
| Deferred remuneration paid out during the financial year, subject to adjustment for performance in previous financial years (**) | 2 965 | 754 | 83 |
| Employed as of end of year | 1 982 | 528 | 75 |
| Former employees | 983 | 226 | 8 |
(**) Deferred remuneration for 2012, 2013, 2014 and 2015 programmes
New sign-on and severance payments made during the financial year, and the number of beneficiaries of such payments among persons in management positions, broken down by Management Board Members, persons reporting directly to Management Board Members and other persons in management positions in Bank Millennium Group, whose actions have a material impact on the risk profile of the institution (PLN thous.)
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| Management Board Members | Persons in management positions – reporting directly to Management Board Members | Other persons in management positions | |
|---|---|---|---|
| New sign-on and severance payments | 1 677 | 90 | 0 |
| Highest such payment | 1 017 | 90 | 0 |
| Number of persons receiving such payments | 2 | 1 | 0 |
The number of individuals being remunerated EUR 1 million or more per financial year
1 person – remuneration in band 1-1,5 mln EUR.
Detail information concerning remuneration of Management Board Members are presented in chapter VIII.3 of Management Board Report on Activity of Bank Millennium S.A. for 2016.