Financial and
ESG report 2020

Compensation policies

The Bank Millennium Group has in place a uniform Compensation Policy for employees in the Bank Millennium Group, which articulates the assumptions used to shape the fixed and variable components of compensation for all employees of the Group. It aims to provide a formal framework for shaping the practice of compensating all the Group’s employees from the perspective of corporate governance, institutional safety and the suitability of compensation to the Group’s standing, operating magnitude and growth potential.

Additionally, the Compensation Policy for risk takers in the Bank Millennium Group, which defines the rules for awarding bonuses and other conditions affecting the decisions to pay out bonuses, applies to employees identified as having material impact on the risk profile (“Risk Takers”). Bank Millennium has also implemented Instruction for identifying Risk Takers in the Bank Millennium Group, which provides guidelines for the annual Risk Takers identification process. 

In accordance with a statutory obligation, separate compensation policies are in place in the subsidiaries: Millennium Dom Maklerski SA and Millennium Towarzystwo Funduszy Inwestycyjnych SA. The solutions provided there fall within the framework of the Bank Millennium SA Group’s Compensation Policy. 

The adopted policies form an organizational framework for principles of compensation in crucial aspects:

  • the principles of shaping compensation amounts, 
  • the relation between variable and fixed compensations, 
  • the decision-making process when changing compensations, 
  • oversight of all compensation-related decisions made in the Bank and in the Group, 
  • association of bonuses with both good results of the company and performance of the employee, 
  • counteraction against stimuli encouraging such actions and decisions as pose a threat to the long-term welfare of the Bank and Clients, 
  • determination of appraisal criteria corresponding to short-, medium- and long-term targets set to employees, 
  • inclusion of additional qualitative criteria in performance appraisal in the units where work is oriented chiefly towards sales results. 

The Bank consistently applies stable forms of employment and compensation. Employees work under employment contracts and fixed compensation constitutes a major portion of the total compensation. The Policy outlines the framework for setting fixed compensations for employees – with consideration given to the tasks and competence levels applicable in particular teams and units. The assumed levels of compensation on specific positions are reviewed against the market situation and data derived from sector reports on compensation levels. 

The Bank monitors the solutions adopted in individual business lines on an ongoing basis in particular for them not to create stimuli inclining people to engage in activities and make decisions that pose a threat to the Bank’s long-term welfare and transcend the acceptable risk profile and not to incline people to undertake actions at odds with the best interests of the Group’s Clients and investors.   

Salary and position reviews are conducted in the Bank regularly. Pursuant to an assessment of the Group’s financial condition and its business environment, the Bank’s Management Board may make a decision to award a pool of funds to be used to modify employees’ base salaries. Salary levels are reviewed taking into account the periodic assessment of performance and skills and are compared with salary information presented in salary studies on the financial markets.  

Policy of variable compensation components

In pursuit of the Compensation Policy, the Bank Millennium Group has in place the “Regulations for awarding variable compensation elements” setting out the rules for awarding bonuses on a comprehensive basis for all of the Bank’s units, which is subject to an annual review. The document is a reference point for all solutions concerned with awarding bonuses in individual units of the Bank. Its provisions supplement the Rules and regulations for compensation of Bank Millennium SA’s Head Office employees. 

Variable compensation is an additional motivational part of the overall compensation. Variable compensation is shaped using differentiated bonus systems whose purpose is to motivate employees to achieve their business and organizational plans. The bonus systems and periodic evaluation criteria in the Bank Millennium Group have been adapted to the specific nature of work performed by employees in the Group’s various areas.  

The Bank does its best for the motivation mechanisms addressed to the employees of sales units and other units involved in processes related to customer service to be devised in such a way that they do not lead to a conflict of interest or incentives that may incline Group employees to place their own interests or the firm’s interest first thereby creating a prospective loss for any Group Client. 

The bonus pool amount depends on overall results and on the general condition of the Bank. Bonuses are paid out monthly in the Bank’s sales network and other head office units involved in the customer service of retail Clients or quarterly for employees of the Bank’s Head Office.  

An important part of this approach is a separate assessment for those in management positions, which encourages managers to pay special attention to the long-term welfare of the Bank and avoid excessive risk exposure. 

Bonus for key risk takers in the Bank Millennium Group – according to the policy, 50% is paid in cash and the remaining 50% is paid out in the form of a financial instrument. At least 40% of the awarded variable consideration is deferred to be paid in successive years. 

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