BPCE - 2020 Universal Registration Document

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REPORT ON CORPORATE GOVERNANCE

RULES AND PRINCIPLES GOVERNING THE DETERMINATION OF PAY AND BENEFITS

PAY POLICY APPLICABLE TO THE CHAIRMAN OF THE MANAGEMENT BOARD

Principles and criteria adopted

Pay component

Fixed pay

In accordance with Article 19 of BPCE’s Articles of Association and on the recommendation of the Remuneration Committee, the Supervisory Board determines the pay of the Chairman of the Management Board. It takes into account the special responsibilities of the Chairman of the Management Board in relation to the other members of the Management Board. 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 2021, this level corresponds to the minimum CET1 level, plus the P2R, the P2G and the phase-in combined buffers as requested by the ECB. This level was confirmed by the ECB in its letter of November 17, 2020 and reflects the Decision of April 8, 2020 on the composition of the P2R (which amends the SREP decision 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 2021, qualitative criteria account for 40% (of which 10% for CSR cross-business performance and 10% for Digital & IT cross-business performance) of variable pay and are determined based on key targets in terms of: Retail Banking and Insurance; • Financial Solutions and Expertise; • Group human resources; • Finance and Strategy; • Supervision – control – governance; • Information systems and digital; • And two CSR (10%) and Digital & IT (10%) cross-business performances; • Only quantitative criteria can be used to determine outperformance. In compliance with the regulations applicable to effective managers, between 40% and 60% of the variable pay of the Chairman of the Management Board is deferred in equal installments over five years (i.e. between 2023 and 2027 for deferred variable pay awarded in 2021), depending on the variable pay amount (3) . In addition, at least half of the variable pay awarded to the Chairman of the Management Board is indexed. The methods for indexing portions of deferred variable pay will be set by the Supervisory Board allocating variable pay for fiscal year 2021. The payment of the deferred portions of the variable pay awarded for the year 2021 is conditional on the achievement of a financial criterion representative of the Group’s financial position, which will be approved by the Supervisory Board awarding the variable pay for fiscal year 2021.

Annual variable pay

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

Exceptional pay

Grants of stock options/preference shares Grants of bonus 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 Supervisory Board has also decided to grant the Chairman of the Management Board the benefit of collective and mandatory pension plans (incapacity, disability, death) and additional reimbursement of healthcare costs applicable to BPCE SA employees.

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 2020 | GROUPE BPCE

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