BPCE - 2018 Registration document

3 REPORT ON CORPORATE GOVERNANCE

Rules and principles governing the determination of pay and benefits

PAY POLICY APPLICABLE TO THE MEMBERS OF THE MANAGEMENT BOARD ➡

Pay component

Principles and criteria adopted

Fixed pay Based on a motion by the Remuneration Committee, the Supervisory Board sets the pay granted to the members of the Management Board. Fixed pay primarily reflects the professional experience related to the position held and the responsibilities exercised, and is determined by comparison to market practices. The fixed pay of the members of the Management Board is periodically revised. Annual variable pay For members of the Management Board, the variable portion is determined based on target pay equal to 80% of their fixed pay (including the special increase, if applicable) for the fiscal year, with a maximum of 100%. Variable pay is determined based on the quantitative and qualitative criteria previously validated by the Supervisory Board. It is awarded if the criterion for triggering variable pay is met, pertaining specifically to the Group Basel III CET1 ratio. This level corresponds to the minimum CET1 level, plus the P2R, P2G and the phase-in combined buffers set by the ECB in its letter of February 14, 2019. No variable portion is paid if this criterion is not met (1) . Quantitative criteria account for 60% of variable pay and are defined based on quantitative factors that reflect how well a number of the Group’s financial fundamentals are being satisfied. These criteria are defined by the Supervisory Board, and take into account (2) : net income attributable to equity holders of the parent (30%); - the Group’s cost/income ratio (20%); - the Group’s net banking income (10%). - For each of these criteria, if the target as set by the Supervisory Board is reached, Management Board Members would be entitled to receive the entire fixed percentage. In respect of fiscal year 2019, qualitative criteria account for 40% of variable pay and are determined based on key targets in terms of: Retail Banking and Insurance; - Specialized Financial Services; - Group Human Resources; - Finance and Strategy; - Supervision – control – governance; - Digital and Information System. - Only quantitative criteria can be used to determine outperformance. Between 50% and 70% of variable pay is deferred in equal installments over three years ( i.e. in 2021, 2022 and 2023 for deferred variable pay awarded in 2019), depending on the variable pay amount (3) . The deferred portion is indexed to the change in net income attributable to equity holders of the parent (4) , assessed as a rolling average over the last three calendar years preceding the allocation year and the payment year. Payment of the deferred portion is contingent upon attaining a standard Return on Equity (ROE) for core Group businesses that is at least equal to 4% during the fiscal year before payment falls due. Payment of variable pay owed in respect of 2019 will be submitted for an ex-post vote of the Annual General Shareholders’ Meeting in 2020 called to approve the financial statements for fiscal year 2019.

Multi-year variable pay Members of the Management Board do not receive any multi-year variable pay. Exceptional pay Members of the Management Board do not receive any exceptional pay. Grants of stock options/preference shares

Members of the Management Board do not receive any stock options or preference shares.

Grants of bonus shares Attendance fees Sign-on bonus

Except when related to the nature of the corporate office, members of the Management Board do not receive any bonus shares.

Members of the Management Board do not collect attendance fees.

Members of the Management Board do not receive a sign-on bonus. The CET1 ratio requirement established by the ECB, including the "Pillar 2 Guidance" component, is not subject to disclosure. (1) The Supervisory Board has established specific expected targets for these quantitative goals, but for confidentiality reasons, they are not publicly dislcosed. (2) All of the variable pay allocated by Group companies for the year in question is taken into account when determining the percentage of variable pay. This particularly applies to company directors who (3) may take up new offices during the year. For fiscal years preceding 2016, deferred variable pay was indexed to net income attributable to equity holders of the parent after neutralizing the impact of the revaluation of own debt. (4)

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Registration document 2018