Principles for remunerating Members of the Bank’s Management Board
In the first half of 2017, principles for remunerating Members of the Bank’s Management Board, set by the Supervisory Board, applied to Members of the Bank’s Management Board. In accordance thereto, the following remuneration components were due to Members of the Management Board:
- basic salary in the amount specified in the resolution of the Supervisory Board for each Member of the Management Board separately;
- benefits due to the Bank’s employees (except for benefits due to employees under the Collective Bargaining Agreement):
- based on generally binding legal regulations;
- based on the internal regulations of the Bank, showing standardised or exceptional features, awarded on a basis of factors other than an assessment of the performance of a Member of the Bank’s Management Board or performance in the area supervised by this Member of the Management Board;
- performance-related variable remuneration components, in particular bonuses, awards for special professional achievements, severance pays;
- insurance financed by the Bank, in particular life insurance, insurance against serious illness, permanent disability, permanent or long-term damage to health, incapacity to work (a detailed scope of insurance will arise from the insurer’s offer and conditions negotiated by the Bank).
Principles for setting the remuneration of Members of the Management Board were defined by resolution no. 2/2017 of the Extraordinary General Meeting of Shareholders of the Bank of 13 March 2017. Based on the resolution of the General Meeting of Shareholders on the principles for setting the remuneration of Members of the Management Board, the Supervisory Board adjusted the employment form and method of remunerating Members of the Bank’s Management Board to the provisions of the Act of 9 June 2016 on the terms of setting the remuneration of managers of certain companies (Journal of Laws of 2016, item 1202, as amended).
Based on the above, as of July 2016, the Principles for employment and remuneration of Members of the Bank’s Management Board came into force. In accordance with these Principles, Members of the Management Board are entitled to:
- fixed remuneration in the amount specified in the resolution of the Supervisory Board for the President of the Management Board, Vice-President of the Management Board in charge of the Risk Management Area and remaining Members of the Management Board separately;
- variable remuneration – additional remuneration awarded and paid after the performance assessment period, in particular bonuses, awards for special professional achievements, severance pay (excluding fixed remuneration and benefits awarded based on the applicable legal regulations).
The fixed remuneration amounts to:
- in the case of the President of the Management Board – times15;
- in the case of the Vice-President of the Management Board in charge of the Risk Management Area – times 14;
- in the case of remaining Members of the Management Board – times 13;
the average monthly remuneration in the enterprise sector without out of profit payments in the fourth quarter of the previous year, announced by the President of the Central Statistical Office.
Benefits for Members of the Management Board of the Bank, paid in 2017 and 2016 (in thousands PLN)
| 2017 | 2016 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Period | Fixed remuneration | Variable remuneration | Other benefits* | Period | Fixed remuneration | Variable remuneration | Other benefits* | ||
| 1. | Zbigniew Jagiełło | 01/01/2017- 31/12/2017 | 1.341 | 1.126 | 862 | 01/01/2016 - 31/12/2016 | 1.951 | 948 | 130 |
| 2. | Piotr Alicki | - | 5 | 828 | 512 | 01/01/2016 - 30/10/2016 | 1.219 | 741 | 1.120 |
| 3. | Rafał Antczak | 02/07/2017- 31/12/2017 | 342 | 0 | 0 | - | 0 | 0 | 0 |
| 4. | Janusz Derda | 01/01/2017- 09/08/2017 | 436 | 12 | 45 | 01/01/2016 - 31/12/2016 | 55 | 0 | 0 |
| 5. | Bartosz Drabikowski | 01/01/2017- 21/12/2017 | 1.126 | 965 | 283 | 01/01/2016 - 31/12/2016 | 1.626 | 804 | 115 |
| 6. | Maks Kraczkowski | 01/01/2017- 31/12/2017 | 1.073 | 144 | 133 | 04/07/2016 - 31/12/2016 | 683 | 0 | 15 |
| 7. | Mieczysław Król | 01/01/2017- 31/12/2017 | 1.066 | 165 | 80 | 06/06/2016 - 31/12/2016 | 786 | 0 | 19 |
| 8. | Adam Marciniak | 01/10/2017- 31/12/2017 | 172 | 0 | 0 | - | 0 | 0 | 0 |
| 9. | Piotr Mazur | 01/01/2017- 31/12/2017 | 1.094 | 835 | 301 | 01/01/2016 - 31/12/2016 | 1.463 | 619 | 104 |
| 10. | Jarosław Myjak | - | 0 | 495 | 15 | 01/01/2016 - 22/03/2016 | 364 | 590 | 1.399 |
| 11. | Jacek Obłękowski | - | 4 | 641 | 19 | 01/01/2016 - 21/03/2016 | 367 | 734 | 1.626 |
| 12. | Jakub Papierski | 01/01/2017- 31/12/2017 | 1.066 | 892 | 296 | 01/01/2016 - 31/12/2016 | 1.446 | 757 | 108 |
| 13. | Jan Emeryk Rościszewski | 01/01/2017- 31/12/2017 | 1.066 | 132 | 120 | 18/07/2016 - 31/12/2016 | 629 | 0 | 1 |
Full information on remuneration components and other benefits for individual Members of the Management Board of PKO Bank Polski SA during the reporting period is published in the Financial Statements of PKO Bank Polski SA for the year ended 31 December 2017 (note 45).
Variable remuneration components for Members of the Management Board and key managers having a material impact on the Bank’s risk profile (Material Risk Takers – MRTs)
In accordance with the requirements of CRD IV and the Commission Delegated Regulation (EU) No. 604/2014 of 4 March 2014 supplementing Directive 2013/36/EU of the European Parliament and of the Council with regard to regulatory technical standards with respect to qualitative and appropriate quantitative criteria to identify categories of staff whose professional activities have a material impact on an institution’s risk profile, the Bank updates the principles for setting variable remuneration components on an ongoing basis.
Variable remuneration components are awarded primarily based on bonus targets set within the framework of the Management by Objectives (MbO) programme.
The purpose of the targets set is to guarantee that the risk related to the activities of the Bank is taken into account. Risks are reflected both by determining the appropriate risk-sensitive criteria for work effectiveness assessment, and reducing or clawback of the variable remuneration component in the case of a deteriorated financial result, loss or deterioration in other ratios.
Variable remuneration components for the particular assessment period (calendar year) are awarded after settling bonus targets, in:
- non-deferred form – 60% of the variable remuneration component (in the first year after the assessment period);
- deferred form – 40% of the variable remuneration component (in equal instalments over the net years after the first year after the assessment period);
while both the non-deferred and deferred remuneration is awarded in equal parts in cash and in financial instruments, i.e. the phantom shares (that are converted into cash based on the updated price of the Bank’s shares after the period of retention, and in the case of the deferred remuneration component – after a deferral period).
If the variable remuneration component for the particular year exceeds PLN 1 million, PLN 400 thousand plus 60% of the excess over the amount of PLN 1 million shall be deferred. Variable remuneration components cannot exceed 100% of the annual basic salary.
Each of the components of accrued variable remuneration may be reduced as a result of:
- breach of the obligations arising from the contract;
- lack of compliance with legal regulations or customer service standards;
- improper performance of professional duties;
- attitude towards other employees breaching social coexistence rules.
The bonus amount:
- for a member of the Management Board can be adjusted (decreased or increased ) by a certain ratio, depending on the results achieved by the Bank, specified in the Bank’s Annual Note (a set of key management indicators specified for a given calendar year);
- for an MRT, who is not a member of the Board, it can be adjusted (increased) by a certain ratio, depending on the results achieved by the Bank, specified in the Bank’s Annual Note.
In the case of:
- a significant deterioration in the Bank’s results;
- identifying a significant adverse change in equity;
- MRT breaching the law or making serious errors;
- adjustment of the achievement and degree of achievement of the results or targets of MRT;
- deterioration in the performance of the structures supervised or managed by the aforementioned persons;
- granting the variable remuneration component based on incorrect or misleading information or MRT fraud;
The Supervisory Board or the Management Board respectively my apply a malus solution reducing the amount of the variable remuneration component due, deferred to subsequent settlement periods.
Material Risk Takers (except Members of the Bank’s Management Board) may benefit from health care services financed by the Bank, the social benefits fund, and the Employee Pension Scheme (EPS).
In the case of severance pay related to dismissal (other than resulting from generally applicable laws), the amount reflects the performance assessment for the last three years of employment. At the same time, the Bank’s internal regulations stipulate the maximum amount of the severance pay.
A Member of the Management Board shall be entitled to severance pay subject to fulfilling the function of Member of the Bank’s Management Board for at least twelve months before termination of the aforementioned contract. A MRT can receive the severance pay subject to being employed as an MRT for at least twelve months before termination of the employment contract.
Members of the Management Board and certain MRTs are additionally subject to non-competition agreements. These agreements provide for payment of the compensation equivalent to 100% of the basic salary arising from the contract for refraining from employment in a competitive firm after the termination of employment with the Bank, for no more than six months.
Information on non-pay remuneration components due to individual Members of the Management Board and key non-finance managers
Since 1 July 2017, as a result of adjusting the principles for employment and remuneration of Members of the Bank’s Management Board to the provisions of the Act of 9 June 2016 on the terms of setting the remuneration of managers of certain companies (Journal of Laws of 2016, item 1202, as amended), Members of the Management Board are not entitled to non-pay remuneration components.
Principles for remunerating Members of the Supervisory Board
The monthly remuneration of Members of the Supervisory Board was set by resolution no. 3/2017 of the Extraordinary General Meeting of Shareholders of PKO Bank Polski Spółka Akcyjna of 13 March 2017, as a product of the average monthly remuneration in the enterprise sector without out of profit payments in the fourth quarter of the previous year, announced by the President of the Central Statistical Office, and the following ratios:
- for the Chairman of the Supervisory Board – 2.75;
- for the Deputy Chairman of the Supervisory Board – 2.5;
- for the Secretary of the Supervisory Board – 2.25;
- for the remaining Members of the Supervisory Board – 2.
The remuneration shall be increased by 10% if a Member of the Supervisory Board sits on at least one standing committee of the Supervisory Board.
In addition to their remuneration, Members of the Supervisory Board shall be entitled to reimbursement for the costs incurred in connection with their function, in particular travel costs from the place of residence to the location of the Supervisory Board’s meeting and back, costs of accommodation and food.
Remuneration of Members of the Supervisory Board (in thousands PLN).
| 2017 | 2016 | |
|---|---|---|
| Supervisory Board | ||
| Renumeration received due or potentially due from PKO Banku Polskiego SA | 1 315 | 1 268 |
| Renumeration received due or potentially due from related entities* | 0 | 0 |
| Total renumeration received, due or potentially due | 1 315 | 1 268 |
*Other than the State Treasury and related entities of the State Treasury
Full information on remuneration components and other benefits for individual Members of the Management Board of PKO Bank Polski SA and the Supervisory Board during the reporting period is published in the Financial Statements of PKO Bank Polski SA for the year ended 31 December 2017 (note 45).
Agreements concluded between the Bank and management members
In accordance with the definition included in § 2 section 1 point 30 letter a of the Regulation of the Minister of Finance of 9 February 2009 on current and periodical information submitted by issuers of securities and the conditions for recognising as equivalent the information required by the law of a non-member country (Journal of Laws No. 33, item 259, as amended), Members of the Management Board are persons managing the Bank.
In the period until 30 June 2017, two agreements were concluded with each Member of the Management Board of PKO Bank Polski SA, binding in 2017:
- employment contract;
- non-competition agreement.
After 1 July 2017, as a result of adjusting the principles for employment and remuneration of Members of the Bank’s Management Board to the provisions of the Act of 9 June 2016 on the terms of setting the remuneration of managers of certain companies (Journal of Laws of 2016, item 1202, as amended), every Member of the Bank’s Management Board has concluded a management agreement with the Bank, laying down, among other things, the remuneration terms and competition ban. Taking into account the above changes, the previously binding employment contracts were discharged.
Liabilities due to pensions for former supervisors and managers
Within the meaning of § 2 section 1 point 30 letter a of the Regulation of the Minister of Finance of 9 February 2009 on current and periodical information submitted by issuers of securities and the conditions for recognising as equivalent the information required by the law of a non-member state (Journal of Laws No. 33, item 259, as amended), in 2017, no liabilities due to pension and similar benefits for former managers, supervisors or former members of the administrative authorities and liabilities incurred in relation to these pensions occurred.
