Remuneration Information • Apr 29, 2022
Remuneration Information
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Dear Shareholders,
as Chairman of Poste Italiane's Remuneration Committee, I am pleased to present to you, along with my colleagues Daniela Favrin and Elisabetta Lunati, the Report on the 2022 Remuneration Policy and on the Amounts Paid in 2021 ("Report"), approved by the Board of Directors on April 13, 2022.
I would like to thank you for renewing your trust in the Group at the last Shareholders' Meeting, as evidenced by the level of consensus reached which - on the subject of remuneration - was among the highest in Italy.
Our constant commitment to directing remuneration policies towards the highest market standards and proactively seeking fruitful dialogue with you, our Shareholders, and with our proxy advisors, remains a priority for the Remuneration Committee and inspires the definition of the principles of Poste Italiane's Reward Strategy.
Fairness and moderation, merit recognition, a longterm focus, transparency, dialogue with investors and the concept of "no pay for failure" are the founding elements of Poste Italiane's remuneration strategy, defined in close alignment with the Group's values and strategic guidelines, and aimed at attracting, inspiring and retaining the best professional talents during this evolutionary stage of the business.
The Reward Strategy is part of the Group's broader People Strategy and represents a key enabler to effectively implement the "2024 Sustain & Innovate Plus" Strategic Plan, as illustrated to the market during the most recent Capital Markets Day on March 23, 2022.
Although the last two years have been impacted by the persistency of the Covid-19 pandemic, the Group has nevertheless succeeded in seizing and creating new opportunities thanks to the commitment and dedication of its people. As an "anti-fragile" player the Group reacted positively to this period of deep uncertainty and achieved the objectives set for 2021, thus confirming the commitments set in accordance with defined strategic guidelines despite the significant and extraordinary events that are taking place on the global stage. In any case, attention remains focused on all exceptional circumstances, which will be rigorously assessed in accordance with the process specifically defined for these occurrences, as described in this "Report".
In this context of extensive transformation and innovation, the "2024 Sustain & Innovate Plus" Strategic Plan confirms "People Development" as one of the key pillars of the Group's strategy to achieve long-term sustainable results. Moreover, to further illustrate the consistency of the remuneration policy with the Group's strategic guidelines, this year the Report includes a specific section on "People Strategy".
Poste Italiane has always put the wellbeing and success of its people at the centre of its interests, promoting the commitment to occupational health and safety, cultivating and enhancing talent through training and professional development programmes, investing in inclusive collaboration through its welfare strategy and promoting a healthy work-life balance, while always maintaining its commitment to rewarding merit. These are the key elements that connect the People Strategy with the remuneration policy and the Group's sustainability strategy, contributing to the creation of shared value.
In line with the direction taken in the last few years, the remuneration policy further strengthens the link between variable short term and long-term remuneration and the priorities defined in the Group's sustainability strategy, where an inclusive, "gender-neutral" corporate culture is taking an increasingly central role. As a result, this year particular attention has been devoted to the analysis of the gender pay gap, which we are proud to say has revealed the general alignment of pay between women and men with similar roles and skills. These results were achieved also thanks to the actions of effectively monitoring, pursuing and ensuring the gender neutrality of the remuneration policy over time.
As a matter of fact, the new "Performance Share 2022- 2024" long-term incentive plan (LTIP) for the CEO-GM and for other managers includes a "Diversity and Inclusion" KPI aimed at promoting a greater female representation in key managerial positions.
In conclusion, the Remuneration Committee believes that this Report, which is aimed at promoting meritbased rewarding and achieving long-term objectives, in line with the principles of transparency, moderation and fairness and enriched by the feedback received by proxy advisors and our Shareholders, confirms the approach towards continuous improvement and presents an effective and balanced remuneration strategy able to support the Group in the pursuit of its goals to create sustainable value for all stakeholders.
I would like to thank Daniela Favrin and Elisabetta Lunati for their significant contribution and constant commitment towards the activities of the Committee. In this particularly complex, challenging and evolving situation, I sincerely hope that the improvements presented in the "Report on the 2022 Remuneration Policy and on the Amounts Paid in 2021" will once again receive positive feedback and contribute to consolidating the virtuous journey that confirms and reflects the deep commitment of Poste Italiane.
Sincerely,
Chairman of the Remuneration Committee Poste Italiane S.p.A.
The Board of Directors for the 2020-2022 term is made up of 7 non-executive directors, the Chairperson (nonexecutive and independent) and the Chief Executive Officer, for a total of 9 members.
The Remuneration Committee is responsible for providing advice and making recommendations regarding remuneration and incentive schemes. The composition, mandate, powers and operating procedures of the Committee are governed by specific regulations approved by Poste Italiane's Board of Directors.
Confirming that sustainability is an approach promoted by Poste Italiane, a new board committee exclusively dedicated to Sustainability issues (Sustainability Committee) was set up, following the renewal of the Board of Directors for the 2020-2022 term. Until May 2020 these issues were supervised by the Control, Risk and Sustainability Committee (opportunely renamed the Control and Risk Committee in May 2020).
CHAIRWOMAN Maria Bianca Farina1 2 CEO AND GENERAL MANAGER Matteo Del Fante
Non-Executive Director.
Independent director under the terms of the Consolidated Law on Finance and of the Corporate Governance Code of Listed Companies.
Strong track record in delivering financial targets
€ bn unless otherwise stated
| 2018 Deliver22 |
2018 Actual |
2019 Guidance 2019 |
2019 Actual |
2020 Deliver22 |
2020 Actual |
202 24S |
||
|---|---|---|---|---|---|---|---|---|
| REVENUES | 10.7 | $10.82 \, \text{m}$ | 11.0 | 10.96 | 10.9 | 10.53 | 11.2 | |
| EBIT | 1.4 | $1.50 \bullet$ 1.01 excl. one- |
1.6 | 1.77 1.23 excl. one- |
1.6 | 1.52 | 1.7 1.11 excl. one- |
|
| NET PROFIT | 1.0 | offs 1 1.40 |
1.1 | offs 2 1.34 |
1.1 | 1.21 | offs 3 1.4 |
Strategic focus and key 2021 divisional achievements
| Fully-automated parcel hubs | 3 |
|---|---|
| Daily automated parcel | $2x$ vs |
| capacity | 2019 |
| TFA $(\epsilon)$ | 586 bn $(+3.1\%$ Y/Y) |
|---|---|
| Multiclass GWP (%) | 58% |
24SI Plus: on a sustainable growth path with key factors securing 24SI execution and further value creating initiatives
| € bn unless otherwise stated | 2021 | 2022 Original 24SI target 2 |
2022 GUIDANCE UPGRADE3 |
|
|---|---|---|---|---|
| REVENUES | 11.22 | 11.6 | 11.7 | |
| EBIT | 1.85 | 1.9 | 2.0 | |
| NET PROFIT | 1.33 1 | 1.3 | 1.4 |
Upgraded dividend policy: 2021 DPS +21% Y/Y, +7% yearly growth over 24SI plan horizon
Unmatched physical and digital footprint integration to enable omnichannel interaction
Key partners supporting growth, embedding potential upside
Key Achievements across the 8 strategic pillars
Transition journey towards carbon neutrality by 2030
With a view to continuous improvement, considering the voting results at the 2021 Shareholders' Meeting and the outcome of the engagement activities with institutional investors and proxy advisors, the key changes introduced on the 2022 Remuneration Policy are described below.
The aim is to represent a point of reference on the market, as recognised by investors and proxy advisors, in terms of comprehensive and extensive disclosure.
Introduction in the 2022-2024 LTIP of a KPI on "Equal gender representation in succession plans"
All of the components of the remuneration strategy are inspired and developed organically, in line with the strategic vision and the values of the Group, based on the five principles presented at the Capital Markets Day 2022, with relative details.
The remuneration policy is aimed at supporting the implementation of the business strategy, with reference to economic/financial and ESG performance. The key indicators are set at challenging levels, the achievement of which guarantees, in particular, the self-financing of all the incentive systems. It is standard practice in Poste Italiane's remuneration policy to set the threshold values of the economic/ financial indicators during the budget and Strategic Plan activities. In addition, to ensure financial sustainability over time, the variable incentive schemes are subject to strict malus and clawback clauses and lock-up/deferral/retention periods.
Virtuous conduct to support long-term and sustainable growth can only emerge in a context where merit and individual contribution are rewarded, regardless of gender, age and/or other personal
characteristics.
At the same time, and without compromising on competitiveness, the various remuneration components are centred around a fair and moderate approach with levels of remuneration that are usually aligned with the market median.
Among its stakeholders, Poste Italiane is considered a partner in the pursuit of sustainable value. The adoption of a long-term vision characterises the strategic business decisions, including in terms of ESG, as well as the Reward Strategy that includes variable long-term incentive plans with a time horizon up to 10-years term, guaranteeing the link between the incentives and the Group's results.
Poste Italiane is the largest employer in Italy and the most important challenge is to enhance and making the most out of the talent and skills of the four different generations that work in the Group. Encouraging the exchange of these skills and experiences between the different generations represents the cornerstone on which Poste Italiane's People Strategy is based.
The organisation achieves its strategic targets when people feel a strong sense of belonging and develop, in a condition of well-being, their creativity. To do this, it is necessary to ensure a work environment in which people fulfil their expectations and their aspirations.
Poste Italiane has always placed the well-being of its employees at the centre of its interests with the aim of constantly improving their condition and that of their families. To do so Poste Italiane promotes its commitment to occupational health and safety, provides support for active parenting, focuses on training people, safeguarding their well-being and conciliating working and private life. Modern and flexible work tools and models are also offered with the aim of responding to specific personal and professional working needs.
People represent the key element for achieving Group's targets: human capital, respect for each person, the working conditions, caring, professional development, skills are all crucial elements for creating competitive advantage which generates sustainable and shared value.
The enhancement most of people's distinctive skills, in all forms and manifestations, at the various levels of the organisation represents another strategic lever of the People Strategy, fundamental for supporting the Group's growth.
17
Equal remuneration, for the same role played, represents for Poste Italiane one of the significant elements of the remuneration policy, offering to all of its resources equal access to Company opportunities.
In the context of the Report on the 2022 remuneration policy, the subject of Diversity and Inclusion is expressed in two ways:
Assessing the pay gap, which is calculated weighing the spread measured for uniform population bands (that is with the same degree of complexity and level of responsibility associated with the role) for the relative weight of the gender more represented in Poste Italiane (female) it is noted, as represented in the figure, an extremely limited gap, of 0.7%.
In this context, in 2020 Poste Italiane's Board of Directors adopted the Company Policy on Diversity and Inclusion.
of our people are men -0.7%
Overall weighted Pay Gap (Average gross annual fixed pay)
In order to ensure competitiveness and effectiveness, in accordance with the principle of fairness and moderation, the Remuneration Policy must be consistent with long-term sustainable performance.
A valid reference for assessing the adequacy of remuneration, and its alignment with the expectations of all stakeholders, is the "pay for performance", which measures the degree of alignment between the Company's performance and the remuneration levels paid, also with respect to a reference peer group that includes numerous companies, comparable in size, active in the same businesses in which the Company operates, as well as showing similar composition of the shareholders base.
The chart shows the relative positioning of the CEO-GM Annual Direct Remuneration (fixed remuneration and short/ medium/long-term variable remuneration) at 12/31/2021, compared to the Total Shareholder Return (TSR) over a three-year period (2019-2021).
Poste Italiane has guaranteed its shareholders a Total Shareholder Return of 93.9% between 2019 and 2021 and is positioned within the high performance segment, with an annual direct remuneration level of the CEO-GM (at 12/31/2021) that is below the median for the reference peer group.
The overall remuneration levels of the CEO-GM are moderate, in keeping with the guiding principles of the Reward Strategy, as reflected in the remuneration benchmarks conducted annually and, in particular, with respect to the performance achieved.
Allianz, AXA, Banco BPM, Bpost, CTT - Correios de Portugal, Deutsche Post, Enel, Eni, Generali Assicurazioni, Intesa Sanpaolo, Leonardo, Nexi (listed from April 15, 2019), PostNL, Snam, Terna, TIM, UniCredit, Unipol and Poste Italiane. Processing of data from Bloomberg and WTW. Total Shareholder Return (TSR) from January 1, 2019 to December 31, 2021. Annual direct remuneration (ADR): latest available figure.
Ranking in percentage range of Annual Direct Remuneration (over achievement)
and 2031
Pay-Mix
From 2021, as resolved by the Shareholders' Meeting of May 28, 2021, the maximum ratio of variable remuneration to fixed remuneration is 2:1.
The gross annual fixed remuneration, with reference to the 2020-2022 term, has not changed compared to the previous term of office and is therefore confirmed at €1,255,000, while the value of the overall incentive schemes (both short and medium/long-term) cannot be more than twice the same fixed amount (unchanged compared to 2021).
To be disbursed between 2024 8.4% 91.6% 69.7% To be disbursed in 2023 Timing of recognition of newly-assigned variable remuneration for 2022 over-achievement
The variable remuneration of the CEO-GM consists of the short-term variable incentive scheme ("MBO" STI), the "2022-2024 Performance Share LTIP" and the "Deliver 2022 LTIP" (the latter approved in 2018). The "MBO" STI scheme rewards the achievement of targets on an annual basis, the "Performance Share LTIP" on a three-year basis and the "Deliver 2022 LTIP" over a five-year period.
Furthermore, the Chief Executive Officer and General Manager receives the Share Ownership Guidelines.
The structure of the payout over time involves the award of variable remuneration over a total period through to 2031, including performance, deferral and retention periods. Given the performance achieved, less than 10% of the newly defined variable remuneration for 2022 will be effectively paid out in 2023, following approval of the financial statements for 2022, whilst the remaining portion is spread out over time. Each payment is subject to, at least, verification of BancoPosta RFC's capital and liquidity requirements.
The remuneration policy is developed over a multi-year time frame with a strong focus on long-term value creation, and it combines financial and non-financial objectives to support the company's key strategic drivers.
EBIT, a key objective of the incentive schemes since it guarantees their sustainability, is the summary indicator of the results common to all Group businesses and is measured annually and multi-annually.
Correlated to long-term sustainability of the business, risk adjusted earnings is considered. This year, the 2024 Sustain & Innovate Plus Strategic Plan aims to bundle, within the MBO 2022 scheme, the cost discipline approach with a close attention on the revenues generated by new businesses and developing markets (for example, energy, P&C, motor, fibre, parcels, electronic money).
Both the "MBO" short-term variable incentive scheme and the 2022-2024 Performance Share LTIP include specific ESG indicators among the overall objectives.
The relative Total Shareholder Return (TSR) of Poste Italiane compared with the FTSE MIB index was identified as the representative indicator of our multi-business company, firmly-rooted in Italy.
Application of Malus and Clawback mechanisms is envisaged for the up-front and deferred portions.
The term Key Management Personnel, within the context of the Company, refers, in general, to the heads of the various functions reporting directly to the CEO-GM, as well as the Manager Responsible for Financial Reporting.
The gross annual fixed pay for KMP is coherent with the role held, the scope of the responsibilities assigned, the experience and skills required for each position, the degree of excellence demonstrated and the overall quality of the individual's contribution to the Company's performance, also taking into account specific market benchmarks.
The variable remuneration component for KMP is awarded in accordance with their specific business segments and with the responsibilities of the roles compared to the reference market.
Pay Mix for KMP is calculated on the basis of the median for both gross annual fixed pay and the variable components (short and medium/long-term), assuming achievement of the performance targets set (with reference to the "Deliver 2022 LTIP", the annualised value of the assignment is taken into account).
The following chart shows a summary of the incentive schemes applicable to KMP, highlighting the payment criteria defined in accordance with the sector regulations if identified as among BancoPosta's Material Risk Takers ("MRTs").
Furthermore, the KMP receive the Share Ownership Guidelines.
KMP (MRTs BP)
KMP (MRTs BP)
The performance targets for 2022 are linked to the objectives set in the new "2024 Sustain & Innovate Plus" Strategic Plan.
With regard to the "MBO" short-term incentive plan, the function specific targets are set out e.g. net inflows, volumes, launch of new business and organisational and management efficiency targets.
ESG objectives represent 2/3 targets differentiated by function to be identified within the KPIs of the Group's ESG strategy, summarised in 8 pillars, also on the basis of the results of the materiality analysis. The beneficiaries, by way of example but not limited to, may be assigned ESG KPIs related to Green Transition, Customer Experience, and Diversity & Inclusion, also within the scope of the priorities that emerged from the materiality analysis.
Application of Clawback mechanism is envisaged.
The document "Report on the 2022 remuneration policy and on the amounts paid in 2021", drawn up according to the Issuer Regulations for Listed Companies, is available on the Company's website at the following link https://www.posteitaliane.it/en/remuneration.html
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