GROUP’S STAFF REMUNERATION POLICIES 2020 1
RELEVANT REGULATIONS REGULATORY ENVIRONMENT REMUNERATION: PRINCIPLES AND GOVERNANCE INTERNAL GOVERNANCE PROCESS COMPONENTS OF REMUNERATION MEDIOBANCA REMUNERATION FRAMEWORK WHOLESALE BANKING DIVISION PRIVATE BANKING DIVISION CONSUMER BANKING AND WEALTH MANAGEMENT / AFFLUENT & PREMIER HOW THE INCENTIVE PLAN WORKS REMUNERATION SYSTEM FOR FINANCIAL ADVISORS THE IDENTIFIED STAFF POPULATION PERFORMANCE SHARES DEFERRAL MECHANISM SEVERANCE AND GOLDEN PARACHUTES CONSENSUS FOR REMUNERATIONS POLICIES FOR 2015-19 GROUP PAY MIX AND VARIABLE/FIXED REMUNERATION RATIO
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Dear Colleague, Working at Mediobanca not only means living up to the Group’s values and working to achieve the objectives assigned to you in line with the Group’s targets, it also means acting in full compliance with internal procedures, as well as the applicable legislation. Within this legislation, the supervisory authorities have focused particular attention on the subject of remuneration.
Group HR has prepared this booklet to outline the main aspects of the current remuneration policies approved by the governing bodies of Mediobanca, in order to make them easier to understand. These policies are continually aligned to the legislation, which is constantly evolving, and constitute the rules underlying the procedures, forms and instruments adopted for the remuneration of staff. The full version of the policies, the applicable internal documentation, as well as the most relevant, regularly updated, legislation, are available on the Mediobanca website and Intranet system.
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STAFF REMUNERATION POLICIES
RELEVANT REGULATIONS 30 March 2011
BANK OF ITALY Instructions on remuneration and incentivization policies and practices at banks and banking groups 18 November 2014
December 2011
CONSOB
BANK OF ITALY
• Article 133-ter of Italian Finance Act
New instructions on remuneration and incentivization policies and practices at banks and banking groups
• Article 6 of Issuers’ code of conduct (revised July 2015)
2009
2010
2013 2011
2 April and 25 September 2009
November 2010
FSB: PRINCIPLES FOR SOUND COMPENSATION
EU: DIRECTIVE 2010/76/EC (CRDIII)
The FSB, following the financial crisis, proposes reforms to corporate governance, global standards on compensation and greater disclosure and transparency
Directive on capital requirements
November 2009
EU: DIRECTIVE 2009/138/CE (SOLVENCY II) Directive on solvency principles
10 December 2010
CEBS: GUIDELINES ON REM POLICIES AND PRACTICES CEBS (later to become EBA) issues guidelines on sound remuneration
26 June 2013
2014 4 March 2014
EU: DIRECTIVE 2013/36/EU (CRDIV) - REGULATION 575/2013 (CRR)
EU: REGULATION 604/2014 IDENTIFIED STAFF
New Directive and Regulation on capital requirements (CRD IV and CRR)
Identification of staff with a material risk on an institution’s risk profile
28 April 2017
26 October 2018
CONSOB - BANK OF ITALY
BANK OF ITALY
Combined regulations AIFMS/UCITS V
Updated instructions on remuneration and incentivization policies and practices at banks and banking groups
2015
2018
2019
2017 21 December 2015
EBA GUIDELINES ON REM POLICIES AND PRACTICES EBA publishes guidelines on sound remuneration, with effect from 2017
1 January 2017
1 January 2018
ESMA
ESMA
New ESMA guidelines on remuneration and incentivization for GEFIA and UCITS
Guidelines on remuneration policies and practices related to the sale and provision of retail banking products and services
European Directives: AIFMD/GEFIA July 2014 UCITS V March 2016
MIFID II
April 2019
EU: DIRECTIVE 2019/878/EU (CRDV) - REGULATION 2019/876 (CRRII) New Directive and Regulation on capital requirements ( CRDV and CRRII)
STAFF REMUNERATION POLICIES
REGULATORY ENVIRONMENT MEDIOBANCA’S GOVERNING BODIES DEVOTE PARTICULAR ATTENTION TO STAFF AND REMUNERATION POLICIES, ALSO IN THE LIGHT OF THE NEW DOCUMENTS PUBLISHED BY THE SUPERVISORY AUTHORITIES.
These include, in particular: The European Capital Requirements Directive (CRD IV), effective from 1 January 2014 and adopted by the individual European Union countries, which includes the introduction of a cap on variable remuneration. Commission Delegated Regulation (EU) 604/2014, issued on 4 March 2014 (and published in the Official Journal of the European Union on 6 June 2014), which establishes the methods for identifying staff with a material impact on an institution’s risk profile (“Identified Staff”), based on a combination of qualitative and quantitative criteria. The document issued by the European Banking Authority (EBA) on 21 December 2015 and effective from January 2017 containing the new guidelines on remuneration formulated pursuant to CRD IV, and providing guidance for standardized implementation of the regulations at European level. “Instructions on remuneration and incentive policies and
practices in banks and banking groups” issued by the Bank
of Italy on 26 October 2018 (the “Instructions”), which
implement the European regulatory framework and are the
new benchmark regulations, incorporating and building on
the principles and standards agreed internationally, as part
of measures designed to ensure the stability and proper
functioning of the banking and financial system.
Some Group companies (notably MB SGR, Cairn and RAM) are also subject to the AIFMD/UCITS regulations. The Mediobanca Group remunerations policies are the result of ongoing alignment versus the supervisory authorities via the Joint Supervisory Team, with whom the key aspects have been gradually shared in the course of time with reference in particular to the performance metrics and models adopted.
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STAFF REMUNERATION POLICIES
GUIDELINES
PRINCIPLES
REMUNERATION PRINCIPLES AND GOVERNANCE COMPETITIVENESS
VALUE MERIT & PERFORMANCE
NO “PAY FOR FAILURE”
GOVERNANCE & COMPLIANCE
Attract and retain talent. Guarantee adequate pay mix.
Variable compensation strongly related to results.
Significant equity component. Variable remuneration deferral (performance conditions, malus and claw back clauses).
Structure of remuneration in line with the Italian law and market practices.
RISK-ADJUSTED
SHORT-TERM REMUNERATION
LONG-TERM APPROACH
SEVERANCE
Targets set at the beginning of the FY (budget targets and quantitative KPIs). Non-financial and qualitative criteria applied to foster l/t value creation. Cap applied to mitigate risk appetite. Mandatory deferral policy.
Performance targets to ensure a solid capital base, adequate liquidity ratios, profitable results and appropriate risk management. Total variable compensation vesting over no less than 3Y, 5Y for senior executives.
Gateways linked to Risk Appetite Framework, Bonus Pools calculated based on Economic Profit/ROAC/risk adjusted metrics. Malus conditions applied. Claw back in the event of damages on MB’s capital base, profitability, financial results and/or reputation.
No golden parachutes for directors in the event of voluntary or involuntary termination. Severance for Executives and MRT population: max 24 months of remuneration capped at €5m.
GOVERNANCE
REMUNERATION COMMITTEE Composition: 4 non-executive members 3 of which independent. Consultative role regarding General Manager, Executive Directors and staff remuneration and retention policies. Activities include: Reviews and assesses remuneration proposals and guidelines put forward by the CEO. Serves in an advisory capacity for decisions regarding the criteria to be used for compensation payable to all identified staff. Regularly reviews (through benchmarks & market practice analysis, regulatory framework and Bank of Italy recommendations) the adequacy, congruity, adherence and application of remunerations policies. Verifies performance achievements involving all relevant company units in devising and checking the remuneration and incentive policies and practices.
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STAFF REMUNERATION POLICIES
INTERNAL GOVERNANCE PROCESS VARIOUS PARTIES ARE INVOLVED IN THE PROCESS OF DRAWING UP MEDIOBANCA STAFF REMUNERATION POLICIES.
In particular: Group HR directs and guides the entire process, with the support of the governing bodies, control units and other teams responsible for verifying the Group’s earnings and financial data. The Planning, Accounting and Financial Reporting unit provides the data for verifying that the gateways have been met and determining the performances of the business lines based on the results achieved. The Risk Management unit helps in setting the metrics to be used to calculate the risk-adjusted company performance, in validating the results, and in checking that these are consistent with the Risk Appetite Framework. The Compliance unit carries out an annual assessment of the remuneration policies compliance with the applicable regulatory framework in order to prevent any legal or reputational risks. Along with the other control units, it is also responsible for verifying compliance breaches which are material for the purposes of performance evaluation and the award of variable remuneration. The Compliance unit is also involved in the processes of reviewing, adapting and managing the remuneration systems to ensure they are in line with current regulations. The Group Audit unit certifies that the staff remuneration
and incentive policy adopted by the Bank complies with regulations. It also carries out annual controls on data and process, and brings any irregularities to the attention of the competent bodies so that the appropriate corrective measures can be adopted.
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STAFF REMUNERATION POLICIES
COMPONENTS OF REMUNERATION
Reflects technical, professional and managerial capabilities, and the related responsibilities.
FIXED SALARY
Adapted to the market environment. Mediobanca avoids excessive reliance on the variable component of remuneration, while at the same time being careful not to make the overall package unduly rigid (balanced pay mix).
Functions as a recognition and reward for targets set and results achieved. Calculated based on risk-adjusted indicators.
VARIABLE REMUNERATION
An important motivational tool. Paid partly upfront and partly in subsequent years, subject to performance conditions being met, as well as a malus condition and clawbacks. Paid partly in cash and partly through equity instruments. Subject to a cap of 200% of fixed remuneration with the exception of asset management companies of the Group.
An integral part of the compensation package for Mediobanca’s staff, in line with market practices.
BENEFITS
Principally consist of pension, insurance, healthcare schemes and company welfare/flexible benefit schemes. May be differentiated according to professional groups and geographical areas, but do not involve individual discretionary assessments.
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STAFF REMUNERATION POLICIES
MEDIOBANCA REMUNERATION FRAMEWORK When they are met, these conditions trigger the activation of the bonus pool for Material Risk Takers and its disbursement. The following indicators (“gateways”) must be satisfied. Capital adequacy and liquidity requirements, based on the risk measures adopted in the Risk Appetite Framework(CET 1 ratio, Leverage ratio, AFR/ECAP, Liquidity Coverage Ratio, Net Stable Funding Ratio). The Risk Appetite Framework is approved by the Board of Directors. It identifies the risks the Bank is willing to assume and sets the objectives and limits for each risk in normal and stressed conditions, identifying the operational measures needed to bring the risk back within the set target. Operating profit at Group level.
At the proposal of the Chief Executive Officer and subject to approval of the Remunerations Committee, the Board of Directors may – exceptionally and for retention purposes – authorise disbursement of a bonus pool on an individual basis, even if the gateways are not met.
GATEWAYS 2019
Total variable remuneration is determined on the basis of the risk-adjusted earnings performance of the divisions by which staff are employed (Economic Profit and/or ROAC and/or other risk-adjusted metrics) and by other secondary quantitative and qualitative objectives. The annual variable remuneration component for CEO and General Manager is included in the aggregate bonus pool and reflects the achievement of the quantitative and qualitative targets assigned in individual scorecards approved by the Board of Directors. In general terms, if the financial objectives are met, the amount of the bonus payable to the them may be between 50% and 150% of their gross annual salary. This amount may be adjusted by the BoD according to whether or not the non financial objectives are also met up to a maximum cap of 160%. The Board of Director may approve a long term incentive plan for CEO and GM related to achievement of the strategic plan’s objectives in a range from 20% to 40% of the value of annual fixed remuneration for each year of the strategic plan’s.
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For staff employed at units which perform staffing and support duties and at the control units, both for Mediobanca S.p.A. and the Group companies, the variable remuneration is determined based on the general economic sustainability with only a limited correlation to the earnings results, i.e. fundamentally on the basis of qualitative considerations, to strengthen the guarantees of their role remaining independent.
STAFF REMUNERATION POLICIES
WHOLESALE BANKING DIVISION The variable remuneration for the Wholesale Banking division consists of a share of the Economic Profit booked and generated by the division itself during the reference financial year (the “top down” pool). Economic Profit (EP) is defined as the pre-tax profit earned by the division, net of variable labour costs and minus the cost (not booked) of regulatory capital required in order to perform its business: in other words, it measures the extra profit generated once capital has been remunerated. This amount is then compared with the sum of the bonus pools resulting from the scorecards assigned to the individual business units (the “bottom up” pool) which also use Economic Profit or other risk adjusted metrics depending on the nature of the business and activity as their primary metric along with other secondary quantitative metrics (which include cross-selling activities and reference to budget objectives) and qualitative metrics (management of the business/team and compliance issues). A cap is set. Scorecards may be finetuned to ensure that overall sustainability is maintained. The aggregate bonus pool thus reflects a balance between the need to reward the value created by the individual products/business units and the need to ensure overall financial sustainability vis-à-vis profits generated.
BUSINESS UNIT SCORECARDS (BOTTOM UP)
WB DIVISION BONUS POOL (“TOP DOWN”)
EQUITY RESEARCH
CIB CLIENT
INVESTMENT BANKING DIVISION
Corporate Finance
Equity Capital Market
DEBT DIVISION
DCM
MARKET DIVISION
DOT Sales
LSF
Syndication
Trading & Structuring
TRADING PORTFOLIO
EQUITY & DERIV. TRADING
Geographies 11
STAFF REMUNERATION POLICIES
PRIVATE BANKING DIVISION PRIVATE BANKING: SINGLE DIVISION SCORECARD WITH ALLOCATION TO UNITS AND INDIVIDUALS BASED ON MANAGEMENT REPORTING WHICH SHOWS CONTRIBUTIONS OF BOTH TEAM AND INDIVIDUAL MEMBERS
The bonus pool for the Private Banking division too is established by applying a payout to the ex ante results (ordinary gross operating profit), net of the cost of risk, consistent with a performance assessment based mostly on fee-related driver. To determine the bonus pool secondary quantitative metrics (e.g. intercompany cross selling, conversion of liquidity/AUA into more remunerative asset forms, operational risk assessment) and qualitative metrics (e.g. management of resources and compliance with internal and external regulations) are also applied. The division and its bankers are thus incentivized to offer their clients high-quality investments and at the same time to preserve and increase the assets entrusted to them, while guaranteeing growing AUM and a stable revenue base for the Bank itself.
MEDIOBANCA PRIVATE BANKING
Ultra High Net Worth Individuals
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High Net Worth Individual PB Network and HNWIs, Milan
International Offering Institutional Clients and HNWIs, Milan
Senior Executive Banker
STAFF REMUNERATION POLICIES
CONSUMER BANKING AND WEALTH MANAGEMENT /AFFLUENT & PREMIER
Mediobanca co-ordinates the activities of the principal Group companies, respecting the specific characteristics of the sectors in which they operate and their respective organizational structures. In particular it presides of the process of defining their identified staff, issues guidelines to be adopted, and contributes to the preparation of the Remuneration policies approved annually by the individual banks in the Banking Group in accordance with the Group policies. At the Group companies too, a variable remuneration component is paid to identified staff in accordance and compliance with the risk profile set in the respective Risk Appetite Framework. The variable component for Identified Staff at Compass and CheBanca! is established on the basis of individual scorecards (MBO) based on risk-adjusted earnings performance indicators (i.e. the Economic Profit metric) and non-financial/qualitative criteria. For headquarters units the decision is made primarily on the basis of qualitative criteria. Compass: the incentivization system for the network, which is determined at the start of the financial year based on the budget, involves commercial and credit objectives being set at the level of the branch office rather than at individual level. The commercial network’s performance criteria are balanced between objectives in terms of volumes and the quality of the risk being taken, with a cap at both branch and individual levels.
CheBanca!: the system involves commercial objectives being set at the “individual” and/or “team” business levels. No incentives are provided for individual products. The weight of the two components and the relevant “target bonus” are determined by the role which each staff member has with a cap set in both percentage and absolute terms. Payment of the bonus is subject to deferral, to application of malus conditions and clawback in the event of damages to capital, earnings, financial results and/or reputational issues, in the same way as the remunerations policy of Mediobanca S.p.A.
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STAFF REMUNERATION POLICIES
HOW THE INCENTIVE PLAN WORKS
The annual cycle of the individual performance evaluation process.
Awards to individual staff are made on the basis of an overall evaluation of the individual’s qualitative and quantitative performance.
Individual awards
The annual bonus is allocated to individual beneficiaries through a shared and recorded annual performance evaluation process based on merit and professional quality, with particular attention to issues of compliance.
July/August Objective Planning
The Performance Evaluation process consists of three phases:
Objective Planning Mid Year Feedback Year End Review
Feedback
Year End Review
June
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Mid Year Feedback
February/March
STAFF REMUNERATION POLICIES
HOW THE INCENTIVE PLAN WORKS THE ALLOCATION OF THE INDIVIDUAL VARIABLE COMPONENT IS THE RESULT OF VARIOUS DECISIONMAKING STEPS
The annual bonus is allocated to the individual beneficiaries through a process that must be recorded and repeatable.
1) At the start of the year, senior staff allocate professional, managerial, personal and company objectives in line with corporate strategies and targets. The objectives are duly weighted and clearly set out and are designed to be both achievable and challenging within a set time frame.
2) the senior staff then evaluate each staff member on the basis of the objectives set. Ongoing feedback throughout the year also allows the line manager and staff to agree on the expected performance, ensuring that each staff member has the right characteristics to ensure achievement of objectives, with an opportunity to objectively discuss individual performance.
3) at the end of the year, the Chief Executive Officer and senior management decide on awarding the individual bonuses, based on the bonus pool set following the performance evaluation for the Group and for the individual business units. The individual bonuses are based on an evaluation that is discretionary, but traceable and guided through the performance evaluation process, based on merit and professional skills.
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STAFF REMUNERATION POLICIES
HOW THE INCENTIVE PLAN WORKS
The multi-year time frame for the performance evaluation.
Payment Time Frame (Cash Flow)
Since the results are evaluated over a multi-year time frame, part of the bonuses awarded is deferred over time. The deferral currently varies from 3 to 5 years.
This is the verification of the performance conditions,
Ex-Post Adjustment (Malus – Compliance breach)
aimed at guaranteeing the sustainability of the results achieved, also at the business unit level, maintaining the Company’s solidity and liquidity, and ensuring appropriate conduct by the individual.
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STAFF REMUNERATION POLICIES
HOW THE INCENTIVE PLAN WORKS THE PAYMENT OF THE VARIABLE COMPONENT OF THE REMUNERATION IS ESTABLISHED BASED ON THE FOLLOWING STRUCTURE
1) A substantial proportion of the variable component is deferred in time and disbursed in the form of equity instruments, in order to link incentives to long-term value creation and to verify the continuity of the company’s results.
2) the upfront component and the deferred variable remuneration are paid 50% in cash and 50% in equity instruments.
3) After the vesting period, the equity instruments are subject to a further retention holding period of one year.
4) Particular emphasis is given to proper individual conduct (compliance breach) in observance of the provisions of the Code of Ethics, the Organisational Model, and Business Conduct Policy, and in general with the principles established by regulations, operational procedures and processes, particularly those considered to be most relevant in terms of reputational risk.
5) A clawback mechanism has been instituted for cases of conduct which have caused the Bank losses, for instances of fraud and wilful misconduct.
6) Staff members are not allowed to use hedging or insurance strategies on their remuneration or other aspects which could alter or otherwise distort the risk alignment effects inherent in the compensation mechanisms, especially if they refer to the variable component paid in the form of financial instruments.
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STAFF REMUNERATION POLICIES
REMUNERATION SYSTEM FOR FINANCIAL ADVISORS
Financial Advisors are professional figures linked to the company by an agency contract which allows them, without representing the company, to promote and sell financial products/services on an independent and exclusive basis, and to provide advice to clients acquired and/or assigned, with all the diligence required in order to achieve the company’s objectives. By virtue of the independent nature of the employment relationship, the FAs’ remuneration is wholly variable, but conventionally it tends to be described as consisting of recurring and non-recurring compensation components.
Recurring compensation
(equivalent to fixed remuneration component under normal employment contract)
The remuneration component which is distinct from the “non-recurring” component, and represents the most stable and ordinary part of the compensation. It mostly consists of different types of commissions: linked to sale, maintenance or management. Such commissions are not in themselves incentivizing in nature.
Non-recurring compensation
(equivalent to variable remuneration component under normal employment contract)
The remuneration component which is incentivizing in nature (linked, for example, to the increase in volumes of net deposits, beating certain product benchmarks, launch of new products, LTI schemes over long-term horizons, etc.).
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STAFF REMUNERATION POLICIES
THE IDENTIFIED STAFF POPULATION The criteria used to identify staff with a material impact on Mediobanca Group’s risk profile (identified staff) are those published in the Official Journal of the European Union on 6 June 2014. Qualitative, linked to the role held within the company organisation (including non-executive directors), material business units, control and staff functions. Quantitative, based on total overall remuneration received in the previous financial year.
Cluster
1)
Non-executive directors
2)
Directors with executive duties
3)
Senior management and heads of relevant BUs (principal business lines, geographical areas and other senior business figures)
4)
Heads and senior staff of internal control units
5)
Staff with managerial responsibilities in relevant business units
6)
7)
Heads and senior staff in staff and support units
Quantitative criteria
Definition
Normativa EBA
Non-executive members of BoD, including Chairman
Art. 3.2
Management who are members of the Executive Committee
Art. 3.1
Co Head CIB Co Head CIB/Head Inv. Banking Division CEO Compass/CB! Head Principal Investing Head MB Private Banking
Head CIB Markets Division Head CIB Debt Division Head of London Office Head Governance & Treasury Head of Finance Division CEO CMB
Art. 3.3 Art. 3.5 Art. 3.6
Compliance Risk Management Group Audit
Art. 3.4 Art. 3.7 Art. 3.15
Heads of trading desks, liquidity, trading origination, brokerage/sales Other staff with responsibility for specific product areas and business units General and Commercial Managers of Compass and CheBanca! and CEOs of SelmaBPM and MB Facta Financial Advisors with managerial responsibility and/or 10% Total Assets of the related network
Art. 3.8 Art. 3.15
Head of company financial reporting Head of accounts and financial reporting Chief Operating Officer Chief Information Officer
Art. 3. 9 Art. 3.15
Group Head of HR Group Head of Reward Legal counsel Macroeconomic Strategist
Holders of roles with total compensation ≥ €500,000 in the previous financial year not included in the above categories
Art. 4
Mediobanca regularly analyses its organisational structure via a documented process to identify staff that have an impact on its risk profile. Based on the criteria established by the current regulations, the Group has 108 identified staff as of June 2019 (the figure increases to 120 if non-executive directors are included). The identified staff (“material risk takers”) comprises of the Directors of Mediobanca, Executives of the Group, senior management and heads of material business units within the Parent Company and its subsidiaries, other staff with managerial responsibilities in material business units, and staff with a total remuneration above €500,000. In addition to the staff involved in business operations, the population includes the heads and senior figures of the control functions as well as staff and support areas.
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STAFF REMUNERATION POLICIES
PERFORMANCE SHARES
The performance share scheme provides for the assignment, under certain conditions, of Mediobanca shares freeof-charge to be allocated at the end of the vesting and/or holding periods.
Equity instrument
Used as a component of the variable remuneration
Free-of-charge assignment of shares to the employee (partly upfront, partly deferred) subject to the achievement of set performance objectives referring to a specific period of time, with the possibility of holding periods.
In connection with the equity instruments to
The shares are made available after a holding and/or vesting period provided the beneficiary is still an employee of the Group and the performance conditions have been met.
The performance shares allocated as the
be used as components of staff remuneration,
deferred equity portion, after verification of
Mediobanca has adopted a performance share
the satisfaction of the performance conditions
scheme, which was approved by shareholders at
for the year of reference, are subject to an
a general meeting held on 28 October 2015 and
additional annual holding period prior to their
updated in 2019 AGM.
actual allocation. Also the performance shares awarded upfront are subject to a one year
The scheme involves the award of shares to
holding period prior to their actual allocation.
employees. The shares are allocated at the end of a vesting period of at least three years – except for the amount envisaged for the upfront portion
area, the deferral involves fund stock units or
– provided the beneficiary is still an employee
cash instruments linked to them.
of the Group and the performance conditions have been met regarding the sustainability of the results achieved, also at the business unit level, with the maintenance of the Company’s solidity and liquidity, and appropriate conduct by the individual.
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For staff employed in the asset management
STAFF REMUNERATION POLICIES
DEFERRAL MECHANISM IN ORDER TO TIE THE INCENTIVES FOR IDENTIFIED STAFF TO LONG-TERM VALUE CREATION, PART OF THE VARIABLE REMUNERATION IS DEFERRED OVER TIME THROUGH THE DEFERRAL MECHANISM
The deferral mechanism is based on the following rules: The deferral period is set at three years (five years for senior management) The deferral amounts are differentiated based on the impact on risks of the categories identified and amount of variable remuneration The equity part of the deferred remuneration has a holding period of 1 year after verification of the performance conditions, before the shares actually become available. The upfront equity part has also a holding period of 1 year Mediobanca also defers 30% over a three-year time period, entirely in cash and subject to a malus condition, to all staff not included in the scope of identified staff who receive variable remuneration equal to or above €100,000.
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STAFF REMUNERATION POLICIES
DEFERRAL MECHANISM 40% UPFRONT – 60% DEFERRED
For directors with executive duties and senior management (i.e. groups 2 and 3 in the table of Identified Staff), the deferral period is always five years. The deferred component is 60% (55% in equities and 45% in cash), for variable remuneration equal to or higher than €425,000. The upfront component is paid half in cash and half in Mediobanca shares.
50% UPFRONT – 50% DEFERRED
For directors with executive duties and senior management (i.e. groups 2 and 3 in the table of Identified Staff), the deferral period is always five years. The deferred component is 50% (56% in equities and il 44% in cash) for variable remuneration of less than €425,000. The upfront component is paid half in cash and half in Mediobanca shares.
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STAFF REMUNERATION POLICIES
DEFERRAL MECHANISM 40% UPFRONT – 60% DEFERRED
For other Identified Staff, deferral is over a three-year time horizon, made up as follows 60% (50% in equities and 50% in cash), for variable remuneration equal to or higher than €425,000. The upfront component is paid half in cash and half in Mediobanca shares.
60% UPFRONT – 40% DEFERRED
For other Identified Staff, deferral is over a three-year time horizon, made up as follows 40% (50% in equities and 50% in cash), for variable remuneration of less than €425,000. The upfront component is paid half in cash and half in Mediobanca shares.
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STAFF REMUNERATION POLICIES
SEVERANCE AND GOLDEN PARACHUTES There are no provisions for compensation for directors upon termination of their office. As provided by the regulations and the Articles of Association, the shareholders in ordinary general meeting are responsible to determine the compensation awarded in the event of early termination of employment relationships or early termination of the office, including the limits in terms of annual fixed remuneration entitlements and the maximum amount resulting from their application. The regulations also establish that the compensation agreed in view of or upon early termination of the employment relationship or early termination of the office must be linked to the performance achieved and the risks assumed by the person and the Bank. Amounts agreed and/or paid as severance under the terms of an agreement between the Bank and staff in order to settle a dispute which has already arisen (or at least is feared with good reason) are therefore determined on the basis of the formula defined in the Remuneration policy.
1. Severance
Maximum of 24
2. Maximum amount â‚Ź5m
3. Means of payment
For identified staff included in
Court-proven
monthly payments at
clusters 2 and 3 the methods and
fraud and/or wilful
full pay.
timescales provided for in making
misconduct to the
severance payments follow
detriment of the Bank
payment’s method of variable
with individual liability
remuneration. For the remaining
of the employee
clusters, forms of deferral and risk
concerned.
adjustment can be applied by the most appropriate methods.
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4. Malus condition
STAFF REMUNERATION POLICIES
CONSENSUS FOR REMUNERATIONS POLICIES FOR 2015-19 Since 2014, a strategy has been launched for consistent engagement with investors and proxy advisors, in conjunction with the other company units responsible for contacting investors (Investor Relations) or involved by other resolutions (Group Corporate Affairs) consistent with the increase in the representation of institutional investors in the share capital. This dialogue with the market has served to improve results at AGMs over the past five years: overall consensus has consistently averaged 97.6%, with consent from minorities rising stable by 92% to over 94% averaging 95% for the period.
1) FTSE MIB – Fonte Morrow Sodali
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STAFF REMUNERATION POLICIES
GROUP PAY MIX AND VARIABLE/FIXED REMUNERATION RATIO Stable Group variable/fixed remuneration ratio 2019 vs. 2018: long term approach and sustainable remuneration mechanism applied in main BU. WB: avg. 98% vs. 101% (Group MRT WB: 116% vs. 135 %). MB PB: avg. 38% vs. 44% (Group MRT MB PB: 128% vs. 174%). Consumer: avg. 9% vs. 10% (Group MRT Consumer 102% vs. 109%). WM - Affluent/Premier: avg. 13% vs. 15% (Group MRT CB! 56% vs. 48%). CEO and GM FY19. fixed/variable ratio 137% vs. 138% in 2018. 60 % of variable compensation deferred. .
pay-mix: ≈45% to be paid in 5 years.
34,8%
25%
To be paid in the next 4/5 years
To be paid in the next 5 years
FY18/19 IDENTIFIED STAFF PAY MIX
22,2% 10,9% 10,9%
11,6% 11,6% Base salary 75% Base salary 42%
CEO/GM
Base salary
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Control function
Cash upfront
Base salary 56%
Other Identified Staff
Upfront equity
Deferred
VARIABLE REMUNERATION DISTRIBUTION BY MB GROUP ACTIVITY (% ON TOTAL BONUS POOL) CEO & GM 4% Investment banking 46%
Central and Control functions 15%
Private banking & AM 19% Retail& Consumer 16%
VARIABLE REMUNERATION/FIXED SALARY BY ACTIVITY 1(%) Investment banking (business)
CEO & GM
82%
130%
FY19 avg.: 31% FY18 avg.: 37%
Retail& Consumer (business) 12%
18% 43% Corporate functions
(non business – All divisions)
200% variable limit
Private banking & AM (business)
1) EBA classification
27
GROUP HR GROUP HR GOVERNANCE AND REWARD MEDIOBANCA INTERNAL COMMUNICATION NOVEMBER 2019
28