BPCE - 2019 Universal 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 (EXCEPT FOR THE CHAIRMAN OF MANAGEMENT BOARD AND THE CHIEF EXECUTIVE OFFICER OF NATIXIS)

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 reviewed. For members of the Management Board, variable pay is determined based on target pay equal to 80% of their fixed pay (including the special supplement, 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, specifically pertaining to the Group Basel III Common Equity Tier 1 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 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

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 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.

Multi-year variable pay

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

Exceptional pay

Grants of stock options/preference shares Grants of bonus shares

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

Attendance fees Sign-on bonus Benefits in kind

Members of the Management Board do not collect attendance fees. Members of the Management Board do not receive a sign-on bonus.

Based on a motion by the Remuneration Committee, the Supervisory Board may resolve to grant an annual housing allowance to members 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.

178

UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE

www.groupebpce.com