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2019 Financial
and Social Report

Remuneration policy

The Bank Millennium Group has the "Employee remuneration policy in the Bank Millennium SA Group", which formulates the assumptions used to shape fixed and variable remuneration components for all employees of the Group.

The Bank Millennium Group pays attention to properly shape the remuneration of employees in managerial positions – making sure that decision-making process concerning their remuneration encourage care for the long-term good of the Bank and avoiding excessive risk exposure.

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In 2019, the employees identified as having a significant impact on the risk profile in the Bank Millennium Group were subject to additional regulations: „Rules for granting and paying variable remuneration to persons taking risks” – separate for the Management Board and other Risk Takers.
In 2019, variable remuneration for 2018 was paid in accordance with the following rules:

The award and payment of 50% of the variable remuneration value took place after the end of the accounting period and after the publication of the financial results, and the payment of 50% of the variable remuneration is postponed for 3 years, payable in equal annual instalments. Members of the Management Board receive each part of the bonus awarded – those paid out in the year following the settlement period and the deferred ones – half in cash and half in financial instrument (phantom shares), the value of which relates to the value of Bank Millennium shares.

The variable remuneration (annual bonus) paid for 2018 in 2019 was subject to the following rules: The bonus was paid in 50% in cash in the year following the given financial year. The remaining 50% was allocated in the financial instrument related to the value of Bank Millennium shares (phantom shares) – which, after re-evaluation, will be acquired in equal annual instalments during 3 years.

The variable remuneration (annual bonus) paid for 2018 in 2019 was subject to the following rules:

  • 60% of the variable remuneration was not deferred (granted in advance).
  • 40% of the variable remuneration was deferred and can be acquired proportionally over a period of 3 years, which includes three deferral periods (1-year deferral period – 14%, 2-year deferral period – 13% and 3-year deferral period – 13%).
  • 50% of the non-deferred variable remuneration component consists of cash and 50% of financial instruments.
  • 100% of the deferred variable remuneration component consists of financial instruments, which by resolution of the Supervisory Board was defined as Euro Bank shares. After the merger with Bank Millennium, the shares of Euro Bank granted under bonus programs were – by the decision of the Supervisory Board of Bank Millennium – converted into Bank Millennium own shares in accordance with the adopted conversion rate.

By the decision of the Supervisory Board of November 29, 2019, the Bank implemented modified remuneration rules under which 50% of variable remuneration for Risk Takers will be paid in the Bank’s own shares listed on the Warsaw Stock Exchange. Rules are stipulated in “the Remuneration Policy with respect to Risk Takers in the Bank Millennium Group SA”. and will apply to the payment of variable remuneration staring from 2020.

The remuneration policy for this group of employees is presented in more detail in the Report on capital adequacy, risk and remuneration policy of the Bank Millennium Capital Group as at December 31, 2019. 

Execution of the remuneration policy in 2019

According to the policy, in the Bank Millennium the main source of employees’ income is the base salary resulting from the employment contract. Variable remuneration is an additional, motivational element of total remuneration. The employee’s basic salary is shaped in relation to the tasks performed in a given organizational unit, the scope of responsibility, qualifications, impact on the company’s risk profile and based on the analysis of payroll information presented in payroll research on the financial market.

The Bank regularly reviews salaries and positions. Based on the assessment of the Group’s financial condition and business environment, the Bank’s Management Board may decide to allocate a pool of funds to change the base salary of employees. Salary levels are verified taking into account periodic assessment of work results, skills and are compared with market remuneration benchmarks information.

Variable remuneration is shaped within various bonus systems, which aim to motivate employees to implement business and organizational plans. Bonus systems and periodic assessment criteria in the Bank Millennium Group are adapted to the specific nature of employees’ activities in individual areas of the Group. The amount of bonus budgets allocated for the payment of bonuses is determined depending on the degree of implementation of the total net profit plan of the Bank Millennium Group and in the case of business line employees – the implementation of the objectives of business lines. It is assumed that individual bonuses may not exceed 100% of the total annual base salary. Bonuses are awarded within the bonus pool based on an assessment of the work and the degree of commitment to achieving the goals set for employees.

Harmonization of remuneration policies at Bank Millennium and Euro Bank

Bank Millennium and Euro Bank had a similar approach to remuneration policy, which supported relative smoothness of the harmonization process. A comparative analysis of bonus systems and levels of remuneration in merging banks was carried out in order to introduce the working conditions of employees in units originating from Euro Bank in line with those existing in Bank Millennium.

Changes in remuneration in organizational units, introduced into the organizational structure in 2019 as a result of the merger, mainly concerned the unification of the bonus level in relation to the basic remuneration.

Management Board Remuneration

Establishing the terms of contracts and remuneration for Management Board Members is a prerogative of the Supervisory Board. The Personnel Committee of the Supervisory Board handles matters relating to the principles of remuneration and the amount of remuneration of Management Board Members.

The total remuneration of Management Board Members consists of two parts: fixed and variable. The variable part of the remuneration can be the annual bonus, which depends on the Bank’s result compared to the annual budget, result compared to peer banks and the Management Board Member’s individual evaluation by the Personnel Committee.

Decisions relating to granting bonuses to Management Board Members are taken by the Personnel Committee of Supervisory Board after having analysed the results with the inclusion of the financial criteria:

  • implementation of planned budgets and ratios established for the managed activity area,
  • comparison with competitive banks of similar size,
  • business market criteria established for a given period;

and non-financial criteria, in particular:

  • overall quality of management in the responsibility area,
  • effective leadership and contribution to the Bank’s development,
  • management and supervision over the units in the responsibility area.

Members of the Supervisory Board receive exclusively fixed remuneration for their work in Board meetings and Committees which is adequate to the function performed by them and scale of activity of the Bank Millennium Group.

The total value of base remuneration of Members of the Management Board for performing this function in 2019 was PLN 10,474.79 thousand. Additionally, Members of the Board were paid part of an annual bonus for 2015, 2016, 2017 and 2018 years (in the form of cash and phantom shares) as well as additional benefits.

Fixed remuneration for the membership of Management Board paid to the Members in 2019 (in PLN thousand):

XLS
Name Period Fixed remuneration (PLN’000)
Joao Bras Jorge 01.01.2019 – 31.12.2019 2 280.00
Fernando Bicho 01.01.2019 – 31.12.2019 1 620.00
Wojciech Haase 01.01.2019 – 31.12.2019 1 317.48
Andrzej Gliński 01.01.2019 – 31.12.2019 1 299.83
Wojciech Rybak 01.01.2019 – 31.12.2019 1 320.00
Antonio Pinto Junior 01.01.2019 – 31.12.2019 1 320.00
Jarosław Hermann 01.01.2019 – 31.12.2019 1 317.48

 

Additional benefits of Management Board Members in 2019 (in PLN thousand)

XLS
Name Period Benefit (PLN’000)
Joao Bras Jorge 01.01.2019 – 31.12.2019 1 007.38
Fernando Bicho 01.01.2019 – 31.12.2019 74.65
Wojciech Haase 01.01.2019 – 31.12.2019 13.31
Andrzej Gliński 01.01.2019 – 31.12.2019 25.07
Wojciech Rybak 01.01.2019 – 31.12.2019 3.83
Antonio Pinto Junior 01.01.2019 – 31.12.2019 707.95
Jarosław Hermann 01.01.2019 – 31.12.2019 6.72

The additional benefits are mainly connected with accommodation of foreign members of the Management Board and healthcare benefits.

Variable remuneration paid in 2019 to Management Board Members and to persons who performed this function in prior years (in PLN thousand):

XLS
Awards paid for years 2015, 2016, 2017 and 2018 (PLN’000)
Name In cash In phantom shares
Joao Bras Jorge 928.82 915.70
Fernando Bicho 715.96 701.22
Wojciech Haase 590.16 579.51
Andrzej Gliński 556.66 539.31
Wojciech Rybak 464.66 428.90
Antonio Pinto Junior 198.00 158.39
Jarosław Hermann 123.75 99.00
Maria Campos 392.16 421.10
Michał Gajewski 33.60 40.32

In the period from 01.01.2019 do 31.12.2019 r. a provision was established for annual bonus in the amount of PLN 8,940 thousand.

The decision to award variable remuneration to Management Board Members for 2019 shall be taken by the Supervisory Board Personnel Committee after approval of the Bank’s results by the General Meeting of Shareholders.

Policy Evaluation

The Bank Millennium Group maintains a stable remuneration policy. The body supervising the activity of Bank Millennium, having reviewed the remuneration policy, has found that it is conducive to the development and security of the Bank Millennium SA Capital Group and the existing practice of managing variable components corresponds to the goals established in the Policy.

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