BPCE - 2019 Universal Registration Document

REPORT ON CORPORATE GOVERNANCE

RULES AND PRINCIPLES GOVERNING THE DETERMINATION OF PAY AND BENEFITS

PAY POLICY APPLICABLE TO THE CHAIRMAN OF THE MANAGEMENT BOARD

Pay component

Principles and criteria adopted

Annual fixed pay

In accordance with Article 19 of the BPCE Articles of Association and based on a motion by the Remuneration Committee, the Supervisory Board sets the pay granted to the Chairman of the Management Board, taking into account the unique responsibilities of the Chairman of the Management Board compared to other Board Members. This pay primarily reflects the professional experience related to the position held and the responsibilities exercised, and is determined by comparison to market practices. Since January 1, 2018, it has included a special supplement equal to 20% of the Chairman’s fixed pay in respect of the Article 82 supplemental pension scheme. The fixed pay of the Chairman of the Management Board is periodically reviewed. For the Chairman of the Management Board : variable pay is determined based on target pay equal to 100% of fixed pay (including the special supplement) for the fiscal year, with a maximum of 120%. 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, specifically pertaining to the Group Basel III Common Equity Tier 1 ratio. For 2020, 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 December 20, 2019. No variable pay is granted 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 2020, qualitative criteria account for 40% of variable pay and are determined based on key targets in terms of:

Annual variable pay

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Retail Banking and Insurance; • Financial Solutions & Expertise; • Group Human Resources; • Finance and Strategy; • Supervision – control – governance; • information systems and digital; •

and a cross-business performance linked to the strategic plan. • 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 2022, 2023 and 2024 for deferred variable pay awarded in 2020), 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, assessed as a rolling average over the last three calendar years preceding the grant 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.

Multi-year variable pay

The Chairman of the Management Board does not receive any multi-year variable pay. The Chairman of the Management Board does not receive any exceptional pay.

Exceptional pay

Grants of stock options/preference shares Grants of bonus shares

The Chairman of the Management Board does not receive any stock options or preference shares.

The Chairman of the Management Board does not receive any bonus shares. The Chairman of the Management Board does not collect attendance fees. The Chairman of the Management Board does not receive a sign-on bonus.

Attendance fees Sign-on bonus Benefits in kind

Based on a motion by the Remuneration Committee, the Supervisory Board may resolve to grant an annual housing allowance to the Chairman of the Management Board. In the wake of the bases for contributions to R2E and CGP supplementary pension plans being capped at eight times the annual ceiling for social security annuities as of January 1, 2020, additional CGP and R2E compensation has been implemented at the same cost to the employer. This fixed compensation is not included in the calculation bases that determine the special supplement, variable pay, retirement bonuses and involuntary-termination severance pay.

The CET1 ratio requirement set by the ECB, including the “Pillar II 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 disclosed. (2) All of the variable pay allocated by Group companies for the year in question is taken into account when determining the percentage of deferred variable pay. This particularly (3) applies to company directors who may take up new offices during the year.

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE

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