In order to fulfil the requirements of the Resolution No 258/2011 of the Polish Financial Supervision Authority of 4 October 2011 on detailed principles for functioning of the risk management system and internal control system and detailed terms of estimating internal capital by banks and reviewing the process of estimating and maintaining internal capital, and the principles for determining the variable salary components policy for key management personnel at the Bank, the Bank implemented by resolutions of:
- the Supervisory Board of the Bank: ‘The variable salary components policy for key management personnel at the Bank’ (constituting the basis of further regulation issue) and ‘The variable salary components policy for the Management Board members’,
- the Management Board of the Bank: ‘The variable salary components policy for key management personnel’,
Supervisory Boards of selected subsidiaries of the PKO Bank Polski Group (PKO Leasing SA, PKO TFI SA, PKO BANKOWY PTE SA, PKO Życie Towarzystwo Ubezpieczeń SA, PKO Towarzystwo Ubezpieczeń SA, PKO Bank Hipoteczny SA): ‘The variable salary components policy for the Management Board members’.
Cited Principles and Regulations issued on their basis, describe the procedure of granting variable salary components associated with the results and effects of work to the above-mentioned persons. In accordance with the requirements of the cited resolution of the PFSA and in proportion specified in it, the variable salary components are granted in the form of:
- non-deferred (in the first year after the calendar year constituting a period of assessment),
- deferred (for the next three years after the first year of the assessment period),
and both the non-deferred and deferred salary, is granted in equal parts in cash and in the form of a financial instrument, i.e. the phantom shares (in which conversion into cash is carried out after an additional period of retention).
Component of salary in the form of a financial instrument is converted into phantom shares after granting a particular component - including the median of the daily average prices of the Bank’s shares (Volume Weighted Average Price) on the Warsaw Stock Exchange, published in the Thomson Reuters or Bloomberg information system - from the fourth quarter of the assessment period. Next, after a period of retention and deferral period, shares are converted into cash - including the median of the daily average prices of the Bank’s shares (Volume Weighted Average Price) on the Warsaw Stock Exchange from the period of a third quarter preceding the payment (the Management Board) and a third quarter of a calendar year, in which the payment is made (other persons on managerial positions), published in the Thomson Reuters or Bloomberg information system.
The deferral salary may be reduced in the event of deterioration in the financial performance of the Bank or a Group Entity respectively, the loss of the Bank / Company or deterioration of other variables related to the effects of work during the evaluation of persons holding managerial positions and results of the performance of organisational units/cells supervised or managed by these persons, which revealed after a period of evaluation.
As at 31 December 2015 a provision for variable salary components with charges for the years 2012 - 2015 amounted to PLN 41 million, of which PLN 26.7 million for persons holding managerial positions except for the Bank’s Management Board and PLN 14.2 million for the Bank’s Management Board, and PLN 10 million for the entities of the Group.
As at 31 December 2014 the provision for variable salary components for the years 2012 -2014 amounted to PLN 34 million, of which for the Bank’s Management Board amounted to PLN 11 million and for the entities of the Group it amounted to PLN 3.4 million.
Under current regulations, in 2015, non-deferred component was paid out - cash and financial instrument convertible into cash for persons holding managerial positions (except for the Bank’s Management Board) relating to bonuses for the year 2014 and deferred component relating to bonuses for the year 2012 – 2013 cash in total amount of PLN 11.5 million (without charges), and for the Bank’s Management Board – in the amount of PLN 4.7 million without charges, and PLN 1.9 million for the entities of the Group.
Under current regulations, in 2014, bonuses for the year 2012-2013 were paid out (without charges) for persons holding managerial positions except for the Bank’s Management Board in the amount of PLN 10.6 million, for the Bank’s Management Board in the amount of PLN 3.9 million, and PLN 1.8 million for the entities of the Group.
Payment of phantom shares for the year 2012 - 2014, calculated in accordance with law provisions, based on the share price in the third quarter of 2015 in the amount of PLN 29.25, was made in November 2015 for persons holding managerial positions except for the Bank’s Management Board in the amount of PLN 5.1 million without charges, and PLN 0.9 million for the entities of the Group. In January 2016 for the Bank’s Management Board – PLN 1.95 million (without charges) was paid.