Remuneration Information • Apr 27, 2018
Remuneration Information
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Remuneration Report 2018
Poste Italiane SpA
1
This document has been translated into English solely for the convenience of the international reader. In the event of inconsistency between the terms used in the Italian version of the Report and the English version, the Italian version shall prevail, as the Italian version constitutes the sole official document.
| Statement from the Chairman of the Remuneration Committee | 3 |
|---|---|
| Introduction | 5 |
| Executive Summary 2018 | 7 |
| Section I |
15 |
| Section II | 52 |
| Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018 |
68 |
Dear Shareholders,
Together with the Directors, Giovanni Azzone and Roberto Rossi, whom i would like to thank for their invaluable contribution, I am pleased to present Poste Italiane SpA's Remuneration Report for 2018, my first as Chairman of the Company's Remuneration Committee.
In view of the positive results achieved last year, the Remuneration Committee, thanks to the excellent work of our predecessors, Filippo Passerini, Elisabetta Fabri and Mimi Kung, to whom we should like to express our sincere gratitude, has focused on consolidating and further improving Poste Italiane's remuneration and incentive policies, in accordance with the related statutory requirements and in line with market practices.
In particular, the Remuneration Committee, after careful consideration, decided to introduce new elements into the remuneration policy, to support the Company's response to the many challenges facing Poste Italiane over the medium to long term.
During the "Capital Markets Day" event, the Company presented its new five-year Strategic Plan, "Deliver 2022", to analysts and investors. The Plan marks the start of the Poste Italiane Group's transformation, with the aim of anticipating and meeting the needs of its customers, whilst at the same time maximising the potential offered by Italy's largest distribution network across all its lines of Business.
On this basis, the Remuneration Committee has worked hard to ensure that the remuneration policy is fit for purpose with respect to the Company's strategy and the specific nature of the Group.
The aim of this reshaping of the reward strategy was to recognise the performance and professionalism of personnel in successfully pursuing the Poste Italiane Group's strategic and business objectives. The cornerstones of the remuneration strategy are designed to ensure that the Company's interests are aligned with those of its shareholders and that personnel are engaged in achieving the Strategic Plan objectives and focused on the creation of sustainable value.
From this starting point, the Remuneration Committee worked towards the proposed introduction of a new long-term variable incentive scheme, the "Deliver 2022 LTIP". The Plan is open to a large number of beneficiaries and the performance period is aligned with the strategic guidelines in the "Deliver 2022" Plan. The resulting bonus will be paid in cash, but is convertible. The Board of Directors, in consultation with the Remuneration Committee, has given itself the possibility to ask the General Meeting of Shareholders for the authority to convert the full amount of the bonus, or a part thereof, into Poste Italiane's ordinary shares.
In order to more closely engage management in efforts to achieve the challenging objectives set out in the Strategic Plan, short- and medium/long-term incentive schemes have thresholds matching the targets announced during the "Capital Markets Day". This means that the various incentive schemes will be funded by the resulting over-performance.
The revised short-term MBO incentive scheme is designed to support the achievement of targets relating to financial performance, quality of service and the customer experience, in part thanks to the simpler structure of the scheme itself, and in line with best market practices. The other changes to the short –term incentive MBO scheme regard the impact on the bonus awarded of the new "180° appraisal process", which also involves colleagues at the same level in the Company, acting as internal customers.
In addition, in response to suggestions from shareholders, with the dual aim of making the Report easier to read and providing a rapid overview of its key elements, its structure has been simplified, a large number of graphics have been added and an executive summary has been included, in line with best market practices.
Finally, the Remuneration Committee has increased the level of market disclosure, providing greater information on the KPIs linked to short- and medium/long-term variable incentives.
On behalf of all the Remuneration Committee, I wish to thank all stakeholders for their willingness to engage in dialogue, making an invaluable contribution to the continuous improvement of the remuneration policies.
In 2018, Poste Italiane will continue its commitment to implementing remuneration and incentive systems designed to support the business strategy, attract, develop and reward our "people", further improve the focus on our "customers" and, in so doing, respond to "your" highest expectations.
Best regards,
Carlo Cerami Chairman of the Remuneration Committee Poste Italiane SpA
4
This document has been prepared by Poste Italiane SpA ("Poste Italiane", "the Parent Company" or "the Company") in accordance with Legislative Decree 58/1998 ("CLF") – art. 114-bis and 123-ter – and the Regulations for Issuers – art. 84-quater. It is divided into two sections:
The two sections begin with a summary of the main information, prepared in order to provide the market and investors with an immediate overview of the key elements of the remuneration and incentive policies for 2018 and the initiatives adopted in order to drive achievement of the objectives set out in the "Deliver 2022" Strategic Plan.
As regards personnel identified as working for Patrimonio BancoPosta ("BancoPosta Ring-Fenced Capital" or "BancoPosta RFC" ) and, in particular, those classified as Material Risk Takers, details are provided in the Annex, "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018", prepared in accordance with Bank of Italy Circular 285 of 17 December 2013 (as amended) and article 450 of EU Regulation 575 issued by the European Parliament and Council on 26 June 2013 (the so-called Capital Requirements Regulation, or "CRR").
Poste Italiane's remuneration and incentive policies are based on the statutory requirements from time to time in effect and comply with the recommendations of the Corporate Governance Code, which the Company adopted by Board of Directors' resolution of 31 July 2015.
The policies described apply to Poste Italiane SpA and its subsidiaries ("the Group" or "Poste Italiane Group"). The policies are to be used as guidance in the case of subsidiaries subject to specific regulatory requirements (such as, for example, Poste Vita SpA) that adopt remuneration policies compliant with those regulatory requirements.
In preparing this document and the Annex, Poste Italiane was supported by the consulting firm, Willis Towers Watson.
On 19 April 2018, Poste Italiane's Board of Directors, on the recommendation of the Remuneration Committee, decided to submit "Section I" of the Remuneration Report 2018 to a non-binding vote by the Annual General Meeting of shareholders, called to approve the financial statements for the year ended 31 December 2017. At the same meeting, Poste Italiane's Board of Directors, on the recommendation of the Remuneration Committee, decided to submit the "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018" to a binding vote by the Annual General Meeting of shareholders, called to approve the financial statements for the year ended 31 December 2017.
The text of this Report will be made available for inspection at the Company's registered office, and in the Remuneration section of the Company's website at www.posteitaliane.it, at least twenty-one days prior to the Annual General Meeting of shareholders, called to approve the financial statements for the year ended 31 December 2017, in line with statutory requirements.
The information circulars regarding equity-based incentive plans can be found in the same section of the Company's website at https://www.posteitaliane.it/en/remuneration.html
The principal changes for 2018 regard:
| A five-year | |||
|---|---|---|---|
| strategic vision… | |||
…. including the strategy for developing our key competencies
…. and the contribution of each operating segment to the Group's results
Source: Capital Markets Day Presentation – 27 February 2018
During the presentation of the new "Deliver 2022" Strategic Plan to analysts and investors, which took place during the Capital Markets Day on 27 February 2018, the Chief Executive Officer and General Manager (CEO-GM), Matteo Del Fante, announced changes to the remuneration strategy in order to support delivery of the Plan.
The cornerstones on which all the remuneration and incentive schemes are based as follows:
The representation of the pay-mix for the CEO-GM and Key Management Personnel (KMP) describes the way in which the management team's interests are aligned with those of shareholders:
The Annual General Meeting of 27 April 2017 confirmed the positive result achieved in 2016:
The Remuneration Committee ensures continuous oversight over the Company's remuneration and incentive schemes:
In line with the policy cornerstones, remuneration consists of:
The variable component represents a balance between annual schemes and long-term incentive plans. The following chart shows a summary of the key incentive schemes for the CEO-GM, KMP and BancoPosta RFC's material risk takers:
The overall remuneration strategy aims to reward short-, medium- and long-term performance.
In addition, the combination of the performance hurdle (below which the incentives are not payable) linked to the targets set out in the Strategic Plan (presented during the "Capital Markets Day"), and the pay-out curve means that the cost of incentive schemes is covered by the resulting improvements in operating performance.
The following chart shows the alignment for KMP not included among BancoPosta personnel:
11
Pay-for-performance links the annual direct remuneration of the CEO-GM with the Company's performance in terms of Total Shareholder Return, starting from Poste Italiane's IPO (27 October 2015), through to the latest available data prior to preparation of this Report (17 April 2018).
As the following chart shows, Poste Italiane is positioned at the top towards the left, having recorded a positive Total Shareholder Return and above the 75th percentile, compared with annual direct remuneration of the CEO-GM around the 25th percentile, with respect to the peer group used.
Based on data from info providers Bloomberg and Willis Towers Watson. The Total Shareholder Return (TSR) refers to the period from 27 October 2015 to 17 April 2018. Annual direct remuneration: latest available figure.
| € bn unless otherwise stated | 2017 | 2018 + 2020 | ۰ | 2022 | ||
|---|---|---|---|---|---|---|
| REVENUE | 10.6 | 10.7 | 10.9 | 11.2 | ||
| Ordinary HR costs / revenue |
53% | 53% | 50% | 49% | ||
| Early retirement incentives |
6.1 0.5 |
6.0 $0.4 -$ |
5.9 $0.4 -$ |
5.6 $-0.1$ |
||
| HR COSTS | Ordinary HR costs | 5.6 | 5.6 | 5.5 | 5.5 |
The "Deliver 2022 LTIP" is based on the strategic goals and KPIs described in the Strategic Plan:
"Deliver 2022" Strategic Plan
The "Deliver 2022 LTIP", presented during the Capital Markets Day, has the following characteristics:
Source: Capital Markets Day Presentation – 27 February 2018
The "Deliver 2022 LTIP" is aimed at a larger number of beneficiaries than the 2018-2020 cycle of the "Phantom Stock LTIP": key players in achievement of the Plan Strategic goals.
The objectives assigned to the CEO-GM reflect the above strategy. The structure of pay-outs is designed to be fully aligned with progressive consolidation of the results expected from implementation of the "Deliver 2022" Strategic Plan:
| KPI | WEIGHTING | LEVELS | ||
|---|---|---|---|---|
| Threshold = Minimum | ||||
| Levels | 25% | Budget | ||
| Banco Posta RORAC | 25% | Risk Tolerance | ||
| 2018 | MPD quality | 15% | Improvement on 2017 | |
| STI "MBO" 2018 | Group operating costs | 15% | Budget | |
| Customer Experience | 10% | Improvement on 2017 | ||
| Poste Vita Insurance Group RORAC |
10% | Risk Tolerance | ||
| 2020 | "PHANTOM | Group EBIT | 60% | TSR Poste Italiane > TSR FTSE MIB |
| STOCK" LTIP 2018-2020 |
TSR | 40% | TSR Posteltaliane > TSR FTSE MIB | |
| 2022 | "DELIVER 2022" | Revenue | 60% | Strategic Plan |
| LTIP 2018-2022 | HR Costs | 40% | Piano Strategico |
In addition, during the "Capital Markets Day", the CEO-GM gave a commitment to the market that, to the extent compatible with existing statutory requirements, he will reinvest all the variable cash remuneration received over his term of office through to 2019 in the Poste Italiane's shares.
14
Remuneration Report 2018
| incentive policies | ||
|---|---|---|
| SECTION I | ||
|---|---|---|
| 1.1 General Meeting of Shareholders 17 | ||||||
|---|---|---|---|---|---|---|
| 1.2 Board of Directors 18 | ||||||
| 1.3 Remuneration Committee 19 | ||||||
| 1.4 Board of Statutory Auditors 21 | ||||||
| 1.5 Other entities 21 | ||||||
| 2 Remuneration and incentive policies: purposes and general principles 23 | ||||||
| 3 Market practices 25 | ||||||
| 4 Remuneration and incentive policies for 2018 26 | ||||||
| 4.1 Board of Directors 28 | ||||||
| 4.1.1. Directors without delegated powers 29 |
||||||
| 4.1.2. Chairwoman of the Board of Directors 29 |
||||||
| 4.1.3. Chief Executive Officer and General Manager (CEO-GM) 30 |
||||||
| 4.2 Board of Statutory Auditors 41 | ||||||
| 4.3 Key Management Personnel (KMP) 41 | ||||||
| 4.4 Clawback provisions 48 | ||||||
| 4.5 Specific arrangements for regulated sectors 49 | ||||||
| 5 Definitions 51 |
| Introduction 53 | |
|---|---|
| 6 Remuneration paid in 2017 54 |
The process of drawing up Poste Italiane's remuneration and incentive policies involves a number of different entities in line with the requirements established by law, the By-laws and the Company's organisational and governance model.
With regard to Poste Italiane's Board of Directors, the related remuneration policy is defined:
In line with the recommendations of the Corporate Governance Code, in making decisions about matters relating to remuneration, the Board of Directors is supported by the Remuneration Committee, whose members are non-executive Directors (most of them, including the Chair, independent), and which provides advice and makes recommendations regarding such matters.
Information on the corporate governance processes applicable to the remuneration and incentive policies adopted for BancoPosta RFC, is provided in the Annex "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018".
With regard to the subsidiaries subject to supervision by the Bank of Italy or the insurance regulator (IVASS), reference should be made to the remuneration and incentive policies drawn up and approved in keeping with the subsidiaries' own corporate governance processes.
With regard to remuneration, the General Meeting of Shareholders ("General Meeting"):
The second Annual General Meeting, following the listing of Poste Italiane SpA's ordinary shares on Italy's screen-based trading system (Mercato Telematico Azionario or "MTA"), was held on 27 April 2017. Section I of the Remuneration report was again approved by a significant majority, as happened in 2016 (including the shares held by Cassa depositi e prestiti and the Ministry of Economy and Finance), with the number of votes in favour well above the average for the FTSE MIB panel group. The number of minority shareholders who voted in favour was up on the previous year.
With regard to remuneration, the Board of Directors, with the support of the Remuneration Committee:
Matters relating to the implementation of remuneration policies were dealt with in 8 Board of Directors' meetings in 2017. In particular, at the meeting of 15 March 2017, the Board was called on to approve the Remuneration Report for 2017 (including the Annex "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2017"), and the Information Circular prepared in accordance with Art. 84-bis of the Regulations for Issuers regarding the equity-based plan for BancoPosta RFC personnel. Finally, on 22 June 2017, the structure of the remuneration of the Chief Executive Officer and General Manager was approved, on the recommendation of the Remuneration Committee. As required by law, the CEO-GM abstains during votes regarding decisions on his remuneration and does not take part in discussions on this matter.
The Remuneration Committee is responsible for providing advice and making recommendations regarding remuneration and incentive schemes. Its composition, term of office, powers and procedures are governed by specific terms of reference approved by the Board of Directors of Poste Italiane SpA at their meeting of 22 September 2015, and then amended at the meeting of 19 February 2018.
In general, Poste Italiane's Remuneration Committee consists of at least three non-executive Directors, one of whom with the role of Chair. The majority of members, including the Chair, must meet the independence requirements provided for in art. 148, paragraph 3 of Legislative Decree 58 of 24 February 1998 and art. 3 of the Corporate Governance Code. In addition, at least one Committee member must have appropriate expertise and experience in financial matters or remuneration policies and risk, capital and treasury management. This is assessed by the Board of Directors at the time of appointment to the Committee.
Committee meetings are attended by the Board of Statutory Auditors and, by invitation, other competent corporate bodies and functions. As a rule, meetings are also attended by the Head of BancoPosta's Risk Management function when the Committee is to discuss matters relating to BancoPosta's activities.
The following figure shows changes in membership of the Committee in 2017:
In terms of the current composition, all the Directors are non-executive and meet the related independence requirements. This composition ensures that the Committee has the right number of members in possession of the specific expertise and experience required by both supervisory regulations and the Corporate Governance Code. It should be noted that two of the three members of the Remuneration Committee were elected from the slate submitted by minority shareholders.
The Committee has been assigned the following advisory and consultative role:
The Committee, through its Chair, reports to the Board of Directors on the Committee's meetings at least once a year, and whenever he or she deems it necessary or appropriate.
The Committee has the right to access (within the limits of its assigned responsibilities) the information and corporate functions necessary in order to fulfil its role and may avail itself of external consultants or independent experts at the Company's expense, within the limits of the overall budget approved by the Board of Directors for all Board Committees. In 2017, the Committee was advised by the consulting firm, Mercer.
The Committee meets periodically and with sufficient frequency to enable it to carry out its duties, in accordance with an annual calendar that normally follows the cycle of activity shown below:
1 Also called Manager Responsible for Financial Reporting.
The Board of Statutory Auditors attends Remuneration Committee meetings, providing the opinions required by law and, with regard to the remuneration of Directors with delegated powers in accordance with art. 2389, paragraph 3 of the Italian Civil Code, also checking consistency with the general policies adopted by the Company.
Among the duties and responsibilities assigned, the Human Resources and Organisation function draws up proposed remuneration policies to submit to the Remuneration Committee, without prejudice to the need to comply with the specific requirements for BancoPosta RFC and those applicable to Group companies subject to supervision with regard to the related remuneration and incentive policies. At the request of the Remuneration Committee, Human Resources and Organisation also provides expert assistance in preparing the material necessary for the Committee to carry out its duties.
The Chief Financial Office contributes to the process of setting and assessing achievement of the financial indicators on which incentive schemes are based and assesses their sustainability.
Corporate Affairs function ensures compliance with Corporate Governance processes. The Head of "Affari Societari" function (within Corporate Affairs) is also the Secretary to the Remuneration Committee, with responsibility for assisting the Chair and the Committee in carrying out their roles and for minuting Committee meetings.
When required by internal regulations and corporate governance processes, specific issues relating to remuneration and incentives are discussed by the Audit, Risk and Sustainability Committee and/or the Related and Connected Parties Committee in order to provide an opinion. The committees may, if necessary, avail themselves of the relevant internal functions.
With regard to BancoPosta RFC, reference should be made to the Annex "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018" for information on the duties and responsibilities of the Head of BancoPosta RFC and the related control functions.
Poste Italiane's remuneration policies are designed to attract, motivate and retain high calibre professionals and management personnel capable of contributing to achievement of the primary goals of delivering sustainable results over time and creating value for stakeholders.
During the Capital Markets Day held on 27 February 2018, the CEO-GM presented the new "Deliver 2022" Strategic Plan and the key business objectives for the period 2018-2022.
The Group's expected growth over the next 5 years depends on the contribution from each business area and on exploitation the related synergies:
FIGURE 4. CONTRIBUTION OF OPERATING SEGMENTS TO EBIT GROWTH
Source: Capital Markets Day Presentation – 27 February 2018
The Strategic Plan sets out the basis on which to create sustainable value to be shared with all stakeholders:
The Plan also reflects the growing importance given to overall, financial and social sustainability in Poste Italiane's strategy (to cite just one example, the health plan for employees approved at the time of renewing the National Collective Labour Agreement, providing a tangible indication of the importance that Poste Italiane gives to the wellbeing of its personnel2 ).
In the light of these strategic guidelines and in order to drive achievement of the Company's medium- to long-term objectives, the remuneration strategy is based on the following cornerstones:
These remuneration and incentive policies, taking into account the specific characteristics of each role, are applicable to both the Board of Directors and the Board of Statutory Auditors and to Poste Italiane's Key Management Personnel.
2 Poste Italiane employs a total of 138,000 people at 31 December 2017.
The Company regularly monitors the market environment through salary benchmarking conducted by major international players and industry peers, with the aim of ensuring the competitiveness of its remuneration packages.
The peer group 2018, used to benchmark the remuneration of the Chief Executive Officer and General Manager, is as follows:
FIGURE 5. PEER GROUP
The above peer group has been selected from a larger sample of Italian and European companies comparable to Poste Italiane in nature.
In particular, with regard to "Size", the process took into account capitalisation, revenue and the number of employees. In terms of "Business & Complexity", the different sectors in which the Poste Italiane Group operates were considered (with a focus on the Italian banking sector, given that the CEO-GM is subject to banking regulations), in addition to the complexity of operations. Finally, with regard to "Governance", the peer group includes a number of companies who are investees of the Ministry of Economy and Finance and Cassa depositi e prestiti or who are regulated by AGCOM (the Italian Communications Authority).
The benchmarks for non-executive Directors, which are periodically revised, refers to different peer groups: companies included in Borsa Italiana's FTSE MIB index and direct or indirect investees of the Ministry of Economy and Finance.
Finally, the salary benchmarking process for Key Management Personnel is based on a group of companies operating in various sectors; where deemed significant, reference may be made to industry groupings (for example, for roles in financial services).
In general, total remuneration breaks down into fixed and variable pay, structured in such a way as to achieve a balance between the two, in addition to benefits and severance pay on termination of employment. The following chart summarises the various components of remuneration:
FIGURE 6. COMPONENTS OF THE REMUNERATION POLICY
In terms of fixed remuneration, the Company's benchmarking is conducted with reference to market median relating to the specific role and/or the complexity of the responsibilities assigned.
The pay-mix between fixed and variable remuneration is linked to the role held and the responsibilities assigned. In this regard, Poste Italiane uses a job evaluation framework for the various roles, certified periodically by an independent consulting firm.
Proposed adjustments to fixed remuneration follow a structured process, based on objective, nondiscretionary criteria.
Variable remuneration is directly linked to Company and individual performance, and is based on objective, transparent and verifiable criteria. Variable pay is capped depending on the category of beneficiary. With a view to ensuring sustainability and the creation of value over the short-, mediumand long-term, variable pay consist of the following components:
FIGURE 7. COMPONENTS OF VARIABLE REMUNERATION
All the incentive schemes are linked to the achievement of predetermined levels of performance and are subject to clawback provisions, as described in greater detail below. In exceptional circumstances, newly hired personnel may receive specific awards, including a signing bonus.
Beneficiaries of the "Deliver 2022 LTIP" include approximately 200 personnel selected from among the Poste Italiane Group's senior and middle managers. The annual value of awards for achieving assigned targets is between 15% and 30% of fixed remuneration. Section II of the Remuneration Report for 2019 will show the total amount awarded following approval of this document by the Annual General Meeting of shareholders.
In accordance with the Company's policies, it is possible to stipulate provisions/agreements governing aspects of termination of employment in line with the Company's strategies, values and long-term interests.
The final component of the remuneration package consists of additional benefits provided in accordance with the applicable statutory requirements and in line with market practices. Benefits3 are subject to specific guidelines, which require the application of common criteria depending on the uniform category of employee concerned.
3 Managers are not provided with insurance cover or pension schemes other than those envisaged in the National Collective Labour Agreement for the management personnel of companies producing goods and services (the "NCLA"). The General Manager and KMP are provided with supplementary health cover in addition to that provided under the NCLA. Directors are provided with personal health insurance and D&O cover.
The remuneration policy for members of the Board of Directors is differentiated as follows:
On a general basis and for all the members of the Board of Directors, the Annual General Meeting of shareholder held on 27 April 2017 determined the compensation payable to members of the Board of Directors in office in the period 2017-2019, as defined by art. 2389, paragraph 1 of the Italian Civil Code. No attendance fees are currently payable for participation in Board of Directors' meetings or the meetings of Board Committees.
On 10 May 2017, the Board of Directors, on the recommendation of the Remuneration Committee, introduced additional pay for Directors' participation in Board Committees, depending on the role assigned.
The following table shows the roles held by members of the Board of Directors at the date of approval of this Report:
| Role | Name and surname |
Remuneration Committee |
Nominations and Corporate Governance Committee |
Audit, Risk and Sustainability Committee |
Related and Connected Parties Committee |
|||
|---|---|---|---|---|---|---|---|---|
| Director | Giovanni Azzone $(1)$ $(2)$ |
$rac{1}{2}$ | ||||||
| Director | Carlo Cerami (1) (2) | $\frac{1}{8}$ | ||||||
| Director | Antonella Guglielmetti (1) (2) |
ă | $\frac{1}{2}$ | |||||
| Director | Francesca Isgrò $(1)$ $(2)$ |
|||||||
| Director | Mimi Kung (1) (2) | 30 30 30 | ||||||
| Director | Roberto Rao (1) (2) | $\frac{1}{2}$ | ||||||
| Director | Roberto Rossi $(1)$ $(2)$ |
|||||||
| Directors with delegated powers | ||||||||
| Chairwoman | Maria Bianca Farina (1) |
|||||||
| Chief executi- Matteo Del ve Officer and Fante General Manager |
||||||||
| (1) Non-executive Director (2) Independent Director as defined by the combined provisions of articles 147fer, paragraphs 4 and 148, paragraph 3 of the CLF and pursuant to article 3 of the Corporate Governance Code |
||||||||
| Chairman / Chairwoman C | Member |
The remuneration of Directors without delegated powers consist of a fixed component, determined by the Annual General Meeting of Shareholders and applicable for the full term of office. The Annual General Meeting of Shareholders held on 27 April 2017, with regard to the term of office 2017-2019, determined the compensation payable pursuant to art. 2389, paragraph 1 of the Italian Civil Code as €40,000.00 per annum. There are no forms of variable remuneration.
Directors are reimbursed for any out-of-pocket expenses incurred in carrying out the duties, within the limits established by the Board of Directors.
The additional pay for Directors' participation in Board Committees, approved by the Board of Directors, in consultation with the Board of Statutory Auditors and the Remuneration Committee, is as follows:
| COLLIDALISO | ||
|---|---|---|
| Remuneration Committee | Chairman | € 25,000 |
| Member | € 17,500 | |
| Nominations and Corporate | Chairman | € 25,000 |
| Governance Committee | Member | € 17.500 |
| Audit, Risk and Sustainability | Chairman | € 35,000 |
| Committee | Member | € 25,000 |
| Related and Connected Parties | Chairman | € 25,000 |
| Committee | Member | € 17.500 |
The remuneration of the Chairwoman of the Board of Directors consists of a fixed component, approved by the General Meeting of Shareholders in accordance with art. 2389, paragraph 1 of the Italian Civil Code and equal to €60,000.00 per annum.
In addition to the above, on 13 December 2017, the Board of Directors, on the recommendation of the Remuneration Committee and in consultation with the Board of Statutory Auditors, awarded further compensation to the Chairwoman of the Board of Directors (pursuant to art. 2389, paragraph 3 of the Italian Civil Code), in view of the non-executive powers assigned to her. This additional compensation amounts to €420,000.00 per annum. There are no forms of variable remuneration.
The Chairwoman is reimbursed for any out-of-pocket expenses incurred in carrying out her duties, within the limits established by the Board of Directors.
As required by law, the Chairwoman abstains during votes regarding decisions on her remuneration and does not take part in discussions on this matter.
The final component of the remuneration package consists of additional benefits provided in accordance with the applicable statutory requirements and in line with market practices.
The CEO-GM's remuneration package includes a fixed component, a short-term variable component and a medium/long-term variable component (2018-2020 cycle of the "Phantom Stock LTIP" and the "Deliver 2022 LTIP").
In the light of these elements, the following chart shows the CEO-GM's pay-mix for 2018 in the event of over-achievement ("Pay-mix CEO-GM over-achievement"):
FIGURE 10. PAY-MIX CEO-GM OVER-ACHIEVEMENT
This pay-mix has been calculated on the basis of awards under the short- and medium- to long-term incentive schemes in the event of over-achievement and considering the annual award under the "Deliver 2022 LTIP".
The weighting assigned to the variable component for the CEO-GM is capped at a ratio of 1:1 between variable (both short- and medium/long-term) and fixed pay, in keeping with the "Guidelines for BancoPosta RFC's remuneration and incentive policies", taking into account the regulatory framework for banks.
The final component of the remuneration package consists of additional benefits provided in accordance with the applicable statutory requirements and in line with market practices.
As a member of the Board of Directors, the Chief Executive Officer is also reimbursed for any out-of-pocket expenses incurred in carrying out the duties strictly related to his role, within the limits established by the Board of Directors.
The CEO-GM's fixed pay consists of a component relating to the position of Director and one relating to his position as a manager of the Company in his role as General Manager4 .
The CEO-GM receives a fixed pay of €1,255,000.00 per annum.
The variable remuneration, paid in relation to his position as a manager in his role as Poste Italiane's General Manager, consists of the short-term variable incentive scheme (STI "MBO"), the "Phantom Stock LTIP" and "Deliver 2022 LTIP".
The STI "MBO" schemes rewards the achievement of targets on an annual basis, the "Phantom Stock LTIP" over three years and the "Deliver 2022 LTIP" over five years.
The link between variable remuneration and medium/long-term performance has been further strengthened through the introduction of a long-term incentive plan called the "Deliver 2022 LTIP", linked to the objectives in the new "Deliver 2022" Strategic Plan.
All the management incentive schemes also include a hurdle related to Group's EBIT, designed to measure financial sustainability, with any bonuses awardable in relation to the assigned targets dependent on achievement of the targets set.
Variable remuneration is subject to ex post risk adjustments (malus and clawback provisions) that, based on individual performance or conduct, may result in a significant reduction in the amount payable (potentially to zero), and, under certain conditions, in the application of a clawback provision.
As a risk taker, within the scope of application of the "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018", the structure of the CEO-GM's remuneration envisages, among other things, the deferral of 60% of short-term variable pay ("MBO") and the payment of 50% in cash and 50% in phantom stocks, in addition to a cap on total variable remuneration based on a ratio of 1:1 between variable (both short- and medium/long-term) and fixed pay (as described in greater detail below).
4 The CEO-GM's position as General Manager is governed by the provisions of the National Collective Labour Agreement for the management personnel of companies producing goods and services (the "NCLA").
FIGURE 12. CEO-GM'S VARIABLE REMUNERATION
As mentioned above, the Board of Directors, on the recommendation of the Remuneration Committee, sets the performance targets linked to variable remuneration for the CEO-GM and assesses achievement of the performance targets, with the CEO-GM abstaining in any votes on the matter.
Short-term variable remuneration aims to strengthen the focus on the creation of value for stakeholders by linking the payment of annual bonuses with actual performance in the same period. The nature of the STI "MBO" scheme for the CEO-GM has been defined also in the light of the applicable statutory requirements.
The plan is based on a structured process for defining incentives and the associated objectives and is characterised by:
A maximum level of over performance has been set, above which the incentive remains constant, as has a hurdle, below which the incentives do not apply and there is, therefore, no payment due.
The STI "MBO" scheme envisages a hurdle represented by the Poste Italiane Group's target EBIT, achievement of which enables the CEO-GM to access the bonus linked to achievement of the objectives assigned. Moreover, in order to ensure the long-term sustainability of the businesses of BancoPosta RFC and the Poste Vita Insurance Group, the qualifying conditions for the STI "MBO" scheme also include the following provisions:
| BancoPosta's capital adequacy: CET 1 |
|||
|---|---|---|---|
| BancoPosta's short-term liquidity: LCR |
|||
| Solvency ratio for Poste Vita Insurance Group | |||
| Qualifying conditions |
The qualifying conditions are in keeping with the thresholds established in the Risk Appetite Framework ("RAF") adopted by BancoPosta RFC and the Poste Vita Insurance Group.
The performance targets for 2018 are linked to the objectives in the new "Deliver 2022" Strategic Plan:
FIGURE 13. MBO SCHEME PERFORMANCE TARGETS FOR THE CEO-GM in 2018
Award of the incentive relating to the STI "MBO" scheme is linked to the achievement of actual, lasting results and involves deferral of 60% of the variable component over a period of 5 years (pro rata) and the payment of 50% in cash and 50% in phantom stocks, for both the up-front and the deferred portions, as shown below:
Payment of the deferred portions is subject to compliance with predetermined thresholds for BancoPosta RFC's capital adequacy and liquidity.
The Phantom Stocks awarded are subject to retention periods of two years (for the up-front portion) or one year (for the deferred portions). At the end of the retention period, having verified compliance with BancoPosta RFC's capital and liquidity thresholds , the phantom stocks will be converted into a sum determined on the basis of the arithmetic average of the market value of Poste Italiane's shares in the thirty stock exchange trading days prior to the date of conversion.
It should be noted that, in view of the use of equity-based payments, the Company will ask the Annual General Meeting of Shareholders to be held on 29 May 2018 to approve the "Short-term equity-based incentive plan for material risk takers employed by BancoPosta RFC", in accordance with art. 114-bis of Legislative Decree 58 of 24 February 1998, as amended.
Medium/long-term incentive schemes (LTIPs) aim to strengthen the focus on the creation of value for stakeholders, in keeping with the Strategic Plan by linking the incentives awarded with long-term objectives (over 3-5 years) and effective performance over the same period. The nature of the following LTIPs has been defined also in the light of the applicable statutory requirements.
The CEO-GM is a beneficiary of the following medium/long-term incentive schemes:
The choice of performance indicator for the two plans is aligned with the responsibilities assigned to Poste Italiane's CEO-GM and is in line with the basic principles on which the medium/long-term incentive plans are based. The two plans are fully integrated and complement to each other in terms of duration and objectives, strengthening the performance-based variable component of remuneration, in addition to being aligned with the drivers of the new "Deliver 2022" Strategic Plan:
The 2018-2020 cycle of the "Phantom Stock LTIP" involves the award of phantom stocks granting the right to receive stock representing the value of Poste Italiane's shares at the end of a three-year vesting period. It is understood that the price of Poste Italiane's shares will have a significant impact on the value of the award, in that the more the share price rises, the greater the cash value of the phantom stocks awarded.
The "Phantom Stock LTIP" envisages a hurdle condition represented by the Poste Italiane Group's cumulative EBIT over a three-year period, with awards under the LTIP dependent on achievement of the gate.
In line with the statutory requirements applicable to BancoPosta RFC's business, in addition to the above hurdle condition, the CEO-GM must meet all the following qualifying conditions at the same time in order to qualify for the incentive:
TABLE 2. QUALIFYING CONDITIONS FOR THE "PHANTOM STOCK LTIP" FOR THE CEO-GM
CET 1, LCR and RORAC are in keeping with the threshold established in the Risk Appetite Framework ("RAF") adopted by BancoPosta RFC in accordance with the related regulatory requirements.
It should also be noted that, assessment of whether or not the risk tolerance level for the qualifying conditions, linked to BancoPosta RFC's capital adequacy and liquidity, have been met also takes place at the end of each retention period.
The performance targets for the 2018-2020 cycle of the "Phantom Stock LTIP" are as follows:
FIGURE 15. PERFORMANCE INDICATORS AND WEIGHTINGS FOR THE "PHANTOM STOCK LTIP" FOR THE CEO-GM
A maximum level of over performance has been set, above which the incentive remains constant, as has a threshold, below which the incentives do not apply and there is, therefore, no payment due.
The number of phantom stocks is quantified at the end of the three-year performance period within the cap to be determined at the time of the award, once achievement of the related objectives has been confirmed. The phantom stocks will be awarded at the end of a one-year retention period and will thus be converted into a sum, determined through the arithmetic average of the market value of the shares in the thirty stock exchange trading days prior to the date of conversion of the phantom stocks.
The new long-term incentive plan, named the "Deliver 2022 LTIP", envisages a single award and, on achievement of the related performance targets over a five-year period (2018-2022), the payment of a convertible cash sum (75% up-front and the remaining 25% deferred for two years). The Plan offers the Board of Directors, in consultation with the Remuneration Committee, and before the end of the performance period, the possibility to ask the General Meeting of shareholders to approve conversion of the full amount of the bonus, or a part thereof, into Poste Italiane's ordinary shares.
The "Deliver 2022 LTIP" envisages a hurdle condition, represented by EBIT over a five-year period, and qualifying conditions, based on CET 1 and LCR in 2022 (defined in keeping with the "Phantom Stock LTIP") as well as BancoPosta's RORAC in 2022, defined with reference to the risk appetite. The hurdle and the qualifying conditions must be met at the same time in order to qualify for the incentive.
The performance targets for the "Deliver 2022 LTIP" are as follows:
The above performance targets are assessed in the following way:
A maximum level of over performance has been set, above which the incentive remains constant, as has a hurdle, below which the incentives do not apply and there is, therefore, no payment due.
The combination of the performance hurdle linked to the targets set out in the Strategic Plan (presented during the "Capital Markets Day"), and the pay-out curve means that the cost of the "Deliver 2022 LTIP" is covered by the resulting improvements in operating performance.
The "Deliver 2022 LTIP" will, therefore, be funded from the resources deriving from over-achievement of the challenging Strategic Plan objectives and the related efficiencies.
The "Deliver 2022 LTIP" follows the method of award and payment shown in the figure below:
FIGURE 19. AWARD AND PAYMENT FOR THE "DELIVER 2022 LTIP" FOR THE CEO-GM
75% of the incentive payable at the end of the five-year performance period is paid up-front, with the remaining 25% deferred for 2 years. Payment of the deferred portion is subject to Poste Italiane's inclusion in internationally recognised sustainability indices, in addition to confirmation that BancoPosta RFC's capital adequacy and liquidity thresholds have been met.
FIGURE 20. PAY-OUT IN FORM OF VARIABLE REMUNERATION FOR THE CEO-GM
The structure of the pay-out over time involves the award of variable remuneration over a total period of 7 years, including performance, deferral and retention periods. In return for the performances achieved, about 10% of variable remuneration for 2018 will be effectively paid out in 2019, following approval of the financial statements for 2018, whilst the remaining portion is spread out over time.
In 2018, has been added a representation of pay-for-performance, which links the annual direct remuneration of the CEO-GM with the Company's performance in terms of Total Shareholder Return, starting from Poste Italiane's IPO (27 October 2015), through to the latest available data prior to preparation of this Report (17 April 2018).
As the following chart shows, Poste Italiane is positioned at the top towards the left, having recorded a positive Total Shareholder Return and above the 75th percentile, compared with annual direct remuneration around the 25th percentile, with respect to the peer group used. This position is primarily due to the performance of the Total Shareholder Return registered through to the first quarter of 2018.
In line with standard market practice, considering that the executive employment relationship is strictly connected to the office as CEO, in the event of early termination of the employment or in case of termination of the office as CEO, other than for just cause, a payment consisting of two years' annual global compensation and of an amount equal to the fixed pay due until the end of the office, would be payable to the CEO-GM within the context of a final settlement, in addition to the contractual period of notice.
The above does not affect the mandatory payments due in case of termination of employment under the Italian law or the applicable collective bargaining agreement.
In the light of the regulations governing payments, in the event of early termination of employment or in case of termination of the office as a CEO, the CEO-GM will be paid as follows:
60% of any remuneration payable on termination of employment is to be deferred over a period of 5 years pro-rata, in accordance with the following plan:
o after the first year of deferral, an amount equal to one third will be paid in cash;
The Statutory Auditors' remuneration is in no way linked to Poste Italiane's performance. The fees paid to Statutory Auditors consist solely of a fixed component, determined on the basis of the commitment required in order to carry out their duties.
The Board of Statutory Auditors was re-elected by the Annual General Meeting called to approve the Annual Report for 2015 and will remain in office for three years (2016-2018). When electing the Board of Statutory Auditors, the General Meeting of 24 May 2016 approved fees – for each year in office – for the Chair, amounting to €80,000.00, and for each standing Auditor, amounting to €70,000.00.
No attendance fees are payable for participation in meetings.
Statutory Auditors have the right to be reimbursed for any duly documented travel expenses incurred in carrying out their duties.
The term Key Management Personnel (KMP), within the context of the Company, refers to the heads of the various functions reporting directly to the CEO-GM, as well as the Manager Responsible for Financial Reporting.
The remuneration policy for KMP generally consists of the following components:
KMP with particular responsibilities benefit from remuneration policies in keeping with the related statutory requirements and the Group's corporate governance processes.
The final component of the remuneration package consists of additional benefits provided in accordance with the applicable statutory requirements and in line with market practices.
The following pay-mix for Key Management Personnel is calculated on the basis of the median for both fixed remuneration and the two variable components (short- and medium/long-term), assuming overachievement of all the performance targets set (with reference to the "Deliver 2022 LTIP", the annual amount of the award is taken into account):
The cap on the ratio between variable and fixed remuneration also applies to Key Management Personnel subject to specific regulatory requirements.
Fixed remuneration for Key Management Personnel consists of a gross annual salary and, in keeping 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.
The variable component for KMP usually involves participation in the short-term "MBO" plan, the "Phantom Stock LTIP" and the "Deliver 2022 LTIP".
The STI "MBO" scheme includes:
The plan is based on a structured process for defining objectives and the associated incentives. A maximum level of over performance has been set, above which the incentive remains constant, as has a hurdle, below which the incentives do not apply and there is, therefore, no payment due.
The performance gate is represented by the Poste Italiane Group's target EBIT, achievement of which enables access to the bonus linked to achievement of the objectives assigned. The bonus payable if the performance gate is achieved corresponds to 70% of the bonus payable. Outperformance if the target for EBIT results in payment of up to 110% of the bonus payable, as shown below:
For personnel subject to specific regulatory requirements, the qualifying conditions are aligned with the regulations in question.
The objectives assigned to KMP participating in the MBO plan are specifically defined and fall within the following macro-categories:
FIGURE 24. SUMMARY OF THE MBO SCHEME OBJECTIVES FOR KMP IN 2018
The theoretical bonus payable on achievement of the objectives assigned may be reduced (potentially to zero) if the overall individual performance, assessed using a 180° appraisal process, is deemed to be inadequate.
No variable component is paid to employees whose conduct, during the performance period, has breached Poste Italiane's Code of Ethics, amended and approved by the Board of Directors on 19 April 2018.
The targets assigned to KMP within the framework of the STI "MBO" scheme generally relate to the above areas, subject to compliance with specific regulatory requirements and the requirements of the remuneration and incentive policies and in the Group's corporate governance processes.
The individual bonus payable under the STI "MBO" scheme is paid according to different procedures in line with the related statutory requirements. Specifically:
Variable remuneration is in any event subject to clawback provisions.
KMP are usually beneficiaries of:
These incentive schemes, unless otherwise stated below, are aligned, in terms of purpose, objectives and principal characteristics, with those described above in relation to the CEO-GM.
In line with the information provided in relation to the CEO-GM, the "Phantom Stock LTIP" involves the award of phantom stocks granting the right to receive stock representing the value of Poste Italiane's shares at the end of a three-year vesting period. The maximum number of phantom stocks reflects the complexity and responsibilities involved in the beneficiary's role and their strategic importance.
The hurdle for the 2018-2020 cycle for KMP, as with the CEO-GM, is represented by the Poste Italiane Group's cumulative EBIT over a three-year period, with awards under the "Phantom Stock LTIP" dependent on achievement of the hurdle.
The performance targets for KMP under the 2018-2020 cycle of the "Phantom Stock LTIP" are the same as those assigned to the CEO-GM.
The 2018-2020 cycle for KMP follows the following method for award and payment:
FIGURE 25. AWARD AND PAYMENT FOR THE "PHANTOM STOCK LTIP" FOR KMP
The number of phantom stocks is quantified at the end of the three-year performance period within the cap to be determined at the time of the award. The phantom stocks will be awarded at the end of the three-year performance period and will be converted into a sum determined through the arithmetic average of the market value of the shares of Poste Italiane, in the thirty stock exchange trading days prior to the date of conversion of the phantom stocks.
KMP operating in roles subject to specific regulatory requirements also have to meet certain qualifying conditions, in addition to the performance gate, specific performance indicators and forms of payment required by the regulations, as described in the relevant remuneration and incentive policies (by way of example, the "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018").
The new long-term incentive plan, named the "Deliver 2022 LTIP", envisages a single award and, on achievement of the related performance targets over a five-year period5 (2018-2022), the payment of a convertible cash sum (75% up-front and the remaining 25% deferred for two years).
In line with the information provided in relation to the CEO-GM, the Plan offers the Board of Directors, before the end of the performance period, the possibility to ask the General Meeting of Shareholders to approve conversion of the full amount of the bonus, or a part thereof, into Poste Italiane's ordinary shares.
In line with the gate applicable to the CEO-GM, the "Deliver 2022 LTIP" envisages a gate represented by the Poste Italiane Group's EBIT, achievement of which enables access to the incentive linked to the incentive scheme in question.
5 For who are not beneficiaries of the "Phantom Stock LTIP" (2018-2020 cycle), the "Deliver LTIP" is related to a three-year performance period, with 25% of the award deferred for another two years. The performance targets are designed to drive the achievement of Group EBIT (a weighting of 60%) and the containment of HR Costs (a weighting of 40%).
The performance targets for the "Deliver 2022 LTIP" for KMP are the same as those for the CEO-GM.
The "Deliver 2022 LTIP" for KMP follows the same method of award and payment as applies to the CEO-GM:
The "Deliver 2022 LTIP" involves a five-year performance period, in line with the period covered by the "Deliver 2022" Strategic Plan, namely 2018-2022.
75% of the incentive payable at the end of the five-year performance period is paid up-front, with the remaining 25% deferred for 2 years. Payment of the deferred portion is subject to Poste Italiane's inclusion in internationally recognised sustainability indices.
KMP operating in roles subject to specific regulatory requirements also have to meet certain qualifying conditions, in addition to the hurdle.
In accordance with the Company's policies, it is possible to stipulate provisions/agreements governing ex-ante the aspects of the early termination of employment in line with the Company's strategies, values and long-term interests.
These provisions/agreements establish the applicable financial terms, based on individual situations and the reasons that have led to the termination of employment, with particular reference to the organisational role held, the risks assumed and the duties carried out. These agreements also take into account all the applicable statutory requirements, collective or individual contracts and market practices in the form of final settlement.
The above does not affect the mandatory payments due in case of termination of employment under the Italian law or the applicable collective bargaining agreement.
The amount resulting from application of these provisions/agreements may not, in any event, exceed the number of monthly salary payments due under the contractual period of notice, plus up to 24 months of effective global compensation, including gross annual salary, the average of the amount received in variable pay for the last three years (or for the period of employment, if shorter) and usually the value of any benefits awarded.
In the event of termination due to dismissal, the legislation from time to time in effect and the National Collective Labour Agreement apply.
The Company does not, as a rule, enter into non-competition agreements. In the case of managers in key roles, whose termination may expose the Company to certain risks, the Company reserves the right to enter into, on a case-by-case basis, non-competition agreements that provide for payment of a sum in respect of the duration and scope of the restrictions resulting from the agreement.
Payments for non-competition agreements are capped at the gross annual salary for each year covered by the agreement. Agreements generally have a duration of one year.
The above principles apply on termination of employment even if there have been no specific ex ante agreements.
In the case of certain personnel operating in roles subject to specific regulatory requirements, use is made of specific forms of payment required by the regulations, as described in the relevant remuneration and incentive policies. As described in the Annex to this Remuneration Report, 40% or 60% of remuneration payable to certain categories of BancoPosta RFC personnel on termination of employment must be deferred for a period of 3 or 5 years, with 50% of the amount due to be paid in the form of an equity-based payment subject to retention provisions. Such payments are also covered by clawback provisions.
In line with best market practices and applicable statutory requirements, variable remuneration is subject to clawback provisions on the occurrence of certain events.
Variable remuneration is subject to the achievement of predetermined performance targets linked to the Company's risk profile and is not, therefore, guaranteed.
On occurrence of the following situations, variable remuneration is subject to ex post risk adjustments that may entail a request for return of all or a part of the variable remuneration paid. Such provision applies to the beneficiaries of both short- and medium/long-term variable incentive plans.
The process of applying clawback provisions is carried out in accordance with the related internal procedure adopted by the Company. This procedure involves the interdisciplinary participation of multiple functions with different skills involved in the different stages of the process that are: activation, assessment, finalization of the information report, closure of the procedure and mandatory requirements. The bodies or functions responsible for the decision to proceed with the clawback of all or a part of the variable pay already disbursed vary according to the profile of the individual involved in the procedure. Any decision regarding the CEO-GM or Key Management Personnel is taken by the Board of Directors on the recommendation of the Remuneration Committee.
Clawback provisions are applied also taking into account the related legal, social security and tax considerations.
Without prejudice to the right to claim for any further damages, following disbursement of the bonus payable, and within the time limit set by the related statute of limitations, the Company may request repayment of any amounts disbursed, up to the entire amount paid. This applies, regardless of whether or not employment is ongoing or has been terminated, in the event of:
The remuneration and incentive schemes described are designed to meet the specific requirements of the sectors in which the Poste Italiane Group operates.
In particular, the specific requirements applicable to personnel who work within BancoPosta RFC, and who are, therefore, subject to the banking sector regulations issued by the Bank of Italy, are set out in the "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018", annexed to this document.
The specific requirements of the insurance sector (the Poste Vita Insurance Group), which is thus subject to the regulations issued by IVASS (the insurance regulator), are, in terms of solvency requirements and risk management policies, reflected in the remuneration and incentive policies drawn up and approved in accordance with the corporate governance processes of the relevant subsidiaries.
The specific nature of the asset management sector (BancoPosta Fondi SGR SpA) is taken into account in the remuneration and incentive policy drawn up and approved in accordance with the corporate governance processes of BancoPosta Fondi SGR SpA. This reflects the statutory and regulatory requirements established jointly by the Bank of Italy and the CONSOB, designed to ensure that the remuneration and incentive schemes adopted are consistent with the operating results and financial position of the manager and the UCITS managed.
The following definitions apply to Poste Italiane for the purposes of this document:
Board Committees: committees whose members are also members of the Board of Directors, in accordance with articles 4-7 of the Corporate Governance Code and, given the specific nature of the Company, Bank of Italy Circular 285 of 17 December 2013, as amended. The Committees' members must be independent Directors or, alternatively, 3 non-executive Directors, with a majority of them being independent, in which case the Chair must be independent. The specific Committees are the Remuneration Committee, the Nominations and Corporate Governance Committee, the Audit, Risk and Sustainability Committee and the Related and Connected Parties Committee.
Board of Directors: the collective body assigned responsibility for management of the Company. It is, among other things, the body with responsibility for approving the remuneration policies recommended by the Remuneration Committee, to be submitted for approval by the General Meeting.
Board of Statutory Auditors: the Company's oversight body, which has the role of overseeing compliance with the law, the Company's Bylaws and with correct corporate governance principles, also verifying the adequacy of the organisational structure and administrative and accounting systems adopted by the Company and their functionality.
Consolidated Law on Finance (CLF): the "Consolidated Law on Finance" or Legislative Decree 58 of 24 February 1998 (as amended).
Corporate Governance Code: as defined by Borsa Italiana in December 2011, and as amended in July 2015, the "Corporate Governance Code for listed companies". The document contains a series of recommendations on best practices for the organisation and governance of listed Italian companies, subject to the "comply or explain" principle, meaning that Poste Italiane, having adopted the Code, must inform the market of its degree of compliance with the Code.
Deferral: any form of postponement, over a predetermined period, of the payment of a portion of variable remuneration for a certain financial year.
Directors with delegated powers: Directors who play a particular role within the Board of Directors (for example, the Chairwoman of the Board of Directors).
Executive Directors: members of the Board of Directors with executive powers (for example, the Chief Executive Officer).
General Meeting of shareholders: a gathering at which the shareholders discuss and vote on matters relating to the Company. All the holders of voting rights can attend the meetings, either in person or via a proxy. The meeting has all the powers attributed to it by law and the Bylaws. In accordance with art. 123-ter of Legislative Decree 58 of 24 February 1998 (the "Consolidated Law on Finance" or "CLF"), the General Meeting holds a non-binding vote, within the context of the Company's remuneration policies, to approve Section I of the Remuneration Report.
Key Management Personnel (KMP): in accordance with the CONSOB Regulations for Related Party Transactions, these managers have the direct or indirect authority and responsibility for planning, managing and overseeing the Company's operations. As a rule, this category includes all first-line managers reporting to the CEO-GM and the Manager Responsible for Financial Reporting.
Manager Responsible for Financial Reporting: this role was introduced by savings protection legislation (Law 262 of 28 December 2005, as amended by Legislative Decree 303 of 29 December 2006, which introduced the new article 154bis) into the Consolidated Law on Finance.
Material Risk Takers (MRTs): staff, including personnel falling within the scope of application of BancoPosta's remuneration and incentive policies, whose activities have a material impact on the entity's risk profile, as identified by the Company in accordance with Delegated Regulation (EU) 604 of 4 March 2014 (see Annex: "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018").
Non-executive Directors: Directors who do not have executive powers.
Pay-mix: the mix of the various components of pay (fixed, short-term variable and long-term variable) that make up the total remuneration.
Regulations for Issuers: the CONSOB Regulations for Issuers (Regulation 11971 of 14 May 1999 (as amended), containing regulations for entities that issue financial instruments.
Remuneration Report 2018
This section describes the compensation paid in 2017 and to present quantitative disclosures in the form of tables in accordance with Annex 3A to the Regulations for Issuers, Forms 7-bis and 7-ter.
In particular, the remuneration paid to the Chairwoman of the Board of Directors, Directors without delegated powers, the CEO-GM and, on an aggregate basis, Key Management Personnel in 2017 is described below. The disclosures relate to the period in which they were in office (the variable shortterm pay shown in the tables is based on an estimate of the amount payable at the time of preparing this document, whilst awaiting approval of the Company's financial statements).
It provides a description of each component of remuneration, including any severance indemnity payable at the end of a term of office or on termination of employment, and a list of the shareholdings of members of the Board of Directors and Board of Statutory Auditors and Key Management Personnel.
Given that the Board of Directors was re-elected at the Annual General Meeting of Shareholders held on 27 April 2017, the remuneration paid to Directors in office throughout or for a part of the year is shown on a pro-rata basis.
The compensation described is in line with the Section I of the Remuneration report 2017 submitted to the vote of the Annual General Meeting of Shareholders held on 27 April 2017, in accordance with art. 123-ter, paragraph 6 of the CLF, which voted in favour of the policy. In this regard, during 2017 the Company implemented the 2017-2019 cycle of the medium/long-term incentive scheme called the "Phantom Stock LTIP".
The Remuneration Committee met on 12 occasions in 2017 and dealt with the following matters:
The Chairwoman of the Board of Directors, who was in office from 27 April 2017, was paid €324,166.67 gross (on a pro-rata basis), representing fixed remuneration approved by the Annual General Meeting of Shareholders of 27 April 2017, in accordance with art. 2389, paragraph 1 of the Italian Civil Code, and the remuneration payable in accordance with art. 2389, paragraph 3 of the Italian Civil Code, determined on the recommendation of the Remuneration Committee and in consultation with the Board of Statutory Auditors, dated 13 December 2017.
With regard to the 2014-2016 term of office, the Chairwoman of the Board of Directors was paid €77,350.00 for 2017 (on a pro-rata basis), representing the sum of remuneration determined by the Annual General Meeting of Shareholders of 2 May 2014, in accordance with art. 2389, paragraph 1 of the Italian Civil Code, and the remuneration payable in accordance with art. 2389, paragraph 3 of the Italian Civil Code approved by the Board of Directors on 22 July 2014.
Directors without delegated powers in office from 27 April 2017 received pro-rata payment of the remuneration determined by the Annual General Meeting of Shareholders in accordance with art. 2389, paragraph 1 of the Italian Civil Code, amounting to €40,000.00 gross per annum. Additional fees were also paid on a pro rata basis in return for membership of Board Committees.
With regard to the 2014-2016 term of office, the Directors received pro-rata payment of the remuneration determined by the Annual General Meeting of Shareholders of 2 May 2014, in accordance with art. 2389, paragraph 1 of the Italian Civil Code, amounting to €40,000.00 gross per annum and the additional fees payable on a pro rata basis in return for membership of Board Committees, as decided by the Board of Directors' meetings of 11 December 2015 and 11 October 2016.
The Board of Statutory Auditors in office was elected by the Annual General Meeting of Shareholders of 24 May 2016, which also determined the related remuneration for the full term of office, that is until approval of the financial statements for 2018. The Chairman was paid remuneration of €80,000 gross per annum, with each of the standing Auditors receiving €70,000 gross per annum.
The CEO-GM, who was in office from 27 April 2017, was paid €845,387.76 gross (on a pro-rata basis). Details of annual pay are provided in Section I of this Report.
With regard to the 2014-2016 term of office, the Chief Executive Officer and General Manager received pro-rata payment of fixed annual remuneration of €358,860.03 gross for 2017.
The CEO-GM currently in office, participated in the following variable incentive schemes in 2017:
In terms of the short-term incentive plan (STI"MBO") for the 2017 performance period, the level of achievement of the objectives set by the Board of Directors is shown below.
In particular, the hurdle and the qualifying conditions for the short-term incentive scheme (STI "MBO") in 2017 were met, thereby triggering the payment in full of the incentives payable under the Plan (Table 1).
| Condition | Achievement | ||
|---|---|---|---|
| Group EBIT | |||
| Capital adequacy: Capital Ratio (CET 1) | |||
| Short-term liquidity (LCR) | |||
| Achieved | Not achieved |
The following table, on the other hand, shows the level of achievement of each objective assigned with regard to the short-term incentive scheme STI "MBO" for 2017.
| Objective | Weighting | Level of achievement of objective |
|---|---|---|
| Group EBIT | 25% | $\geq$ |
| BancoPosta RFC's RORAC | 25% | $\geq$ |
| Total Net Retail Deposits | 20% | $\geq$ |
| Controllable Group costs | 20% | $\geq$ |
| Customer Experience | 10% | $\lt$ |
| $\leq$ Rolow target | Ahove target $=$ On target $\rightarrow$ |
With regard to the long-term incentive scheme, the Phantom Stock LTIP, in accordance with the Information Circular approved by the Annual General Meeting of Shareholder of 24 May 2016, at meetings held on 22 June 2017 and 30 September 2017, the Board of Directors, on the recommendation of the Remuneration Committee, decided on the awards for the second cycle of the scheme in favour of the CEO-GM. The award conditions and the related objectives are described in the above information circular and refer to the performance period 2017 - 2019.
The CEO-GM received additional benefits in line with market practices for similar roles and in compliance with the applicable statutory requirements.
Following the termination of employment of Francesco Caio, the Chief Executive Officer and General Manager for the period 2014-2016, on 2 August 2017, the Board of Directors approved payment of an indemnity of €1,578,638.77, and other severance pay, in addition to the sum of €425,958.23 in relation to a non-competition pact and €80,000.00 as compensation for specific rights waived connected with the termination of employment.
The aforementioned pay-outs are made within the limits of the law and in line with the supervisory banking regulation on deferred remuneration and payments in the form of financial instruments, and in compliance with the Company Remuneration Report. This policy is described in the "Remuneration Report" prepared in accordance with art. 123-ter of the CLF, approved by the Board of Directors on 15 March 2017 and by the Annual General Meeting of Shareholders held on 27 April 2017.
A portion of this compensation was paid up-front, with the remaining deferred portion payable as follows:
The fixed remuneration payable to existing Key Management Personnel was subject to selective adjustments in 2017, above all with regard to certain personnel, whose pay was below market medians, taking into account the strategic nature and complexity of their roles.
The tables (Form 7-bis Table 1, Table 3A and Table 3B) show amounts for the short-term bonuses paid to Key Management Personnel for the 2017 performance period. As noted in last year's Remuneration Report and without prejudice to compliance with the existing statutory requirements, the MBO plan envisages a number of objectives that are common to all KMP: "Total net retail deposits", "Controllable Group costs" and "Customer Experience". These objectives, as noted previously, were also assigned to the CEO-GM and, therefore, reference should be made to Table 2 for an assessment of their achievement.
The stocks relating to the second cycle (2017-2019) of the "Phantom Stock LTIP" were awarded to Key Management Personnel in 2017, in accordance with the provisions of the Information Circular approved by the Annual General Meeting of Shareholders of 24 May 2016.
The following tables show the fair value of the phantom stocks awarded for 2017, relating to the two cycles (2016-2018 and 2017-2019) of the Phantom Stock LTIP, as required by international accounting standards.
The methods of payment applicable to personnel subject to specific regulatory requirements are described in the relevant remuneration and incentive policies.
Key Management Personnel received additional benefits in line with market practices for similar roles.
| Vari able ity non -equ ents paym |
Sev eran ce |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AA | Nam d s u cate e an rnam e or gory |
Pos ition |
Peri od i n off ice |
Expi ry of term of offic e (a val o f ppro fina ncia l s ta teme for) |
Fixe d pa y nts |
Fee for d Boar mitt Com ee bers hip mem |
and Bon uses othe r ince ntive s |
Prof it s har ing |
efits Ben in kind |
Oth er ti o remu nera n |
Tota l |
Fair Val f ue o equi ty-ba sed ents paym |
i nde mnit y ble a d of t en paya of o ffice term or rmin atio n of on te loym ent emp |
|
| (A) | (B) | (C) | (D) | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | |||
| 1 | M aria Bian ca Fa rina |
Chai rwom an |
27/0 4/20 17 - 31/1 2/20 17 |
2019 | ||||||||||
| (I) R from the tion emu nera com pany pre |
ng th e fin al s t pari anci atem ents |
€ | 324.1 67 |
€ 1.586 |
€ 325.7 52 |
|||||||||
| (II) R tion from s ub sidi a ries emu nera |
and ciate as s o s |
(1) | ||||||||||||
| (l lI) Tota l Note |
€ | 324.1 67 |
€ 1.586 |
€ 325.7 52 |
||||||||||
| s: (1) R tion ble f or th e rol e of Direc nd s pecif ic po sitio ns h eld i n Gr ies, a ved in ac cord with 2389 of t he It alian Civi l Cod ing t otal of €5 0.96 4 an d pa id en tirely to P Itali SpA tor a art. ount o a t oste emu nera paya oup com pan ppro ance e, am ane |
||||||||||||||
| 2 | L uisa Todi ni |
Chair wom an |
01/0 1/20 27/0 4/20 17 - 17 |
2016 | ||||||||||
| (I) R from the tion emu nera com pany pre |
ng th e fin al s t pari anci atem ents |
€ | 77.35 0 |
€ 371 |
€ 77.72 1 |
|||||||||
| (II) R tion from s ub sidi a ries emu nera |
and ciate as s o s |
|||||||||||||
| (l lI) l Tota |
€ | 77.35 0 |
€ 371 |
€ 77.72 1 |
||||||||||
| 3 | M Del Fant atteo e |
Chief Offi Exec utive nd G al cer a ener Man ager |
27/0 4/20 31/1 2/20 17 - 17 |
2019 | ||||||||||
| (I) R tion from the emu nera com pany pre |
pari ng th e fin anci al s t atem ents |
€ | 845.3 88 |
€ 55.03 6 |
€ 4.825 |
€ 905.2 48 |
€ 137.5 56 |
|||||||
| (II) R from tion s ub sidi a ries emu nera |
and ciate as s o s |
(1) | ||||||||||||
| (l lI) l Tota |
€ | 845.3 88 |
€ 55.03 6 |
€ 4.825 |
€ 905.2 48 |
€ 137.5 56 |
||||||||
| Note s: |
||||||||||||||
| (1) R tion ble f or th e rol e of emu nera paya |
Direc nd s pecif ic po sitio ns h eld i n Gr tor a |
ies, a ved in ac oup com pan ppro |
cord with 2389 art. ance |
of t he It |
alian | Civi l Cod e, am |
ing t ount o a t |
otal of €1 3,06 8 an |
d pa id en tirely |
Itali to P oste |
SpA ane |
|||
| 4 | aio F sco C rance |
Chief Exec utive Offi nd G al cer a ener Man ager |
01/0 1/20 27/0 4/20 17 - 17 |
2016 | ||||||||||
| (I) R tion from the emu nera com pany pre |
pari ng th e fin anci al s t atem ents |
€ | 358.8 60 |
€ 82.53 5 |
€ 5.534 |
€ 446.9 28 |
€ 67.99 |
6 € 2.084 .597 |
||||||
| (II) R tion from s ub sidi a ries emu nera |
and ciate as s o s |
|||||||||||||
| (l lI) Tota l |
€ | 358.8 60 |
€ 82.53 5 |
€ 5.534 |
€ 446.9 28 |
€ 67.99 6 |
||||||||
| 5 | G iovan ni Az zone |
Dire ctor |
01/0 1/20 31/1 2/20 17 - 17 |
2019 | ||||||||||
| (I) R tion from the emu nera com pany pre |
pari ng th e fin anci al s t atem ents |
€ | 40.00 | 0 € 40.06 2 |
€ 455 |
€ 80.5 18 |
||||||||
| (II) R tion from s ub sidi a ries emu nera |
and ciate as s o s |
|||||||||||||
| (l lI) l Tota |
€ | 40.00 | 0 € 40.06 2 |
€ 455 |
€ 80.5 18 |
|||||||||
| 6 | C arlo Cera mi |
Dire ctor |
27/0 4/20 31/1 2/20 17 - 17 |
2019 | ||||||||||
| (I) R tion from the emu nera com pany pre |
pari ng th e fin anci al s t atem ents |
€ | 27.11 | 1 € 28.68 7 |
€ 309 |
€ 56.10 7 |
||||||||
| (II) R tion from s ub sidi a ries emu nera |
and ciate as s o s |
|||||||||||||
| (l lI) Tota l |
€ | 27.11 | 1 € 28.68 7 |
€ 309 |
€ 56.10 7 |
6 The amounts included in the tables are computed on an accruals basis in respect of fixed remuneration and the short-term incentive plan ("MBO"). The variable pay shown in the tables is based on an estimate of the amount payable at the time of preparing this document, whilst awaiting approval of the Company's financial statements.
| Vari able paym |
ity non -equ ents |
Sev eran ce |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AA | d s u Nam cate e an rnam e or gory |
Pos i tion |
iod ffice Per in o |
ry of of Expi term offic e (a val o f ppro fina ncia l sta tem ents for) |
d pa Fixe y |
for Fee rd Boa Com mitt ee bers hip mem |
and Bon uses othe r ince nti v es |
fit Pro sha ring |
efits i n Ben kind |
Oth er ratio rem une n |
al Tot |
Fai r Va l ue of ity-b d equ as e ents paym |
inde mni ty ble nd o f at e paya of o ffi ce term or of on t inat ion erm loym ent emp |
| (A) | (B) | (C) | (D) | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | ||
| A 7 |
ella lielm nton Gug etti |
D irect or |
/04/ /12/ 27 2017 - 31 2017 |
2019 | |||||||||
| (I) R tion from the emu nera com pan y pre |
pari he f inan cial ng t s tat nts eme |
€ 27.1 78 |
€ 35.5 27 |
€ 62.7 05 |
|||||||||
| (II) R tion from bsid iarie emu nera |
d as s oci ates s u s an |
||||||||||||
| (l lI) T otal |
€ 27.1 78 |
€ 35.5 27 |
€ - |
€ 62.7 05 |
| F 8 |
Isgr ò ranc esca |
D irect or |
/04/ /12/ 27 2017 - 31 2017 |
2019 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (I) R tion from the emu nera com pan y pre |
pari he f inan cial ng t s tat nts eme |
€ | 27.1 78 |
€ | 33.8 35 |
€ 61.0 |
13 | ||||||
| (II) R from bsid tion iarie emu nera s u s an |
d as s oci ates |
||||||||||||
| (l lI) T otal |
€ | 27.1 78 |
€ | 33.8 35 |
€ - |
€ 61.0 |
13 |
| 9 | M imi K ung |
D irect or |
/01/ 1/12 /201 01 2017 - 3 7 |
2019 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (I) R tion from the emu nera com pan y pre |
pari he f inan cial ng t s tat nts eme |
€ | 40.0 00 |
€ | 33.3 75 |
€ | 455 | € | 73.8 30 |
|||||
| (II) R from bsid tion iarie emu nera s u s an |
d as s oci ates |
|||||||||||||
| (l lI) T otal |
€ | 40.0 00 |
€ | 33.3 75 |
€ | 455 | € | 73.8 30 |
| 10 R |
ober to R ao |
D irect or |
/01/ 1/12 /201 01 2017 - 3 7 |
2019 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (I) R tion from the emu nera com pan y pre |
pari he f inan cial ng t s tat nts eme |
€ | 40.0 00 |
€ | 46.5 62 |
€ | 455 | € | 87.0 18 |
|||||
| (II) R from bsid tion iarie emu nera s u s an |
d as s oci ates |
|||||||||||||
| (l lI) T otal |
€ | 40.0 00 |
€ | 46.5 62 |
€ | 455 | € | 87.0 18 |
| 11 | ober ossi R to R |
irect D or |
/04/ /12/ 27 2017 - 31 2017 |
2019 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (I) R from the tion emu nera com pan y pre |
he f cial pari ng t inan s tat nts eme |
€ | 27.1 78 |
€ | 28.7 60 |
€ 55.9 38 |
||||||
| (II) R tion from bsid iarie emu nera s u s an |
d as s oci ates |
|||||||||||
| (l lI) T otal |
€ | 27.1 78 |
€ | 28.7 60 |
€ - |
€ 55.9 38 |
| lisab Fabr i 12 E etta |
irect D or |
/01/ /04/ 01 2017 - 27 2017 |
2016 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (I) R from the tion emu nera com pan y pre |
he f cial pari ng t inan s tat nts eme |
€ | 13.0 00 |
€ | 4.87 5 |
€ | 148 | € | 18.0 23 |
||||
| (II) R tion from bsid iarie emu nera s u s an |
d as s oci ates |
||||||||||||
| (l lI) T otal |
€ | 13.0 00 |
€ | 4.87 5 |
€ | 148 | € | 18.0 23 |
| ry of of term |
for Fee |
abl e Vari paym |
ity non -equ ents |
Sev eran ce inde mni yabl |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AA | Nam d su cate e an rnam e or gory |
Pos ition |
Per iod in o ffice |
Expi e (a offic val o f ppro fi na ncia l for) stat nts eme |
Fixe d pa y |
Boa rd Com mitt ee bers hip mem |
Bon and uses othe r ince ntive s |
Pro fit sha ring |
Ben efits in kind |
Oth er ratio rem une n |
Tot al |
lue of Fai r Va ity-b d equ ase ents paym |
ty pa e nd o f ter m of at e offic e or on of inat ion term loym ent emp |
| (A) | (B) | (C) | (D) | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | ||
| 13 U |
mbe arlo Mari a Nic odan rto C o |
Dire ctor |
01/0 1/20 27/ 04/2 17 - 017 |
2016 | |||||||||
| (I) R tion from the emu nera com pan y pre |
pari he f inan cial ng t s tat nts eme |
€ 12.2 82 |
€ 9.61 4 |
€ 21.8 96 |
|||||||||
| (II) R from sub sidi tion arie emu nera |
d as soci ates s an |
||||||||||||
| (llI) Tota l |
€ 12.2 82 |
€ 9.61 4 |
€ - |
€ 21.8 96 |
| 14 | Ch Palm iara ieri |
Dire ctor |
01/0 1/20 27/ 04/2 17 - 017 |
2016 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (I) R from the tion emu nera com pan y pre |
he f cial pari ng t inan s tat nts eme |
€ | 13.0 00 |
€ | 11.3 75 |
€ | 148 | € | 24.5 23 |
|||||
| (II) R tion from sub sidi arie emu nera s an |
d as soci ates |
|||||||||||||
| (llI) l Tota |
€ | 13.0 00 |
€ | 11.3 75 |
€ | 148 | € | 24.5 23 |
| 15 Fi lippo Pas serin i |
Dire ctor |
01/0 1/20 27/ 04/2 17 - 017 |
2016 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (I) R tion from the emu nera com pan y pre |
pari he f inan cial ng t s tat nts eme |
€ | 13.0 00 |
€ | 13.0 00 |
€ | 148 | € | 26.1 48 |
||||
| (II) R tion from sub sidi arie emu nera s an |
d as soci ates |
||||||||||||
| (llI) l Tota |
€ | 13.0 00 |
€ | 13.0 00 |
€ | 148 | € | 26.1 48 |
| Key nnel Man ent P agem erso e (1) (23 p eopl ) |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (I) R tion from the emu nera com pan y pre |
pari he f inan cial ng t s tat nts eme |
€ 4.51 2.15 1 |
€ 1 .632 .629 |
€ | 89.9 77 |
€ 6 | .234 .757 |
€ | 536. 097 |
€ 6.23 1.09 6 |
| (II) R tion from sub sidi arie emu nera s an |
(2) d as soci ates |
€ 9.49 3 |
€ | 9.49 3 |
||||||
| (llI) Tota l |
€ 4.52 1.64 4 |
€ 1 .632 .629 |
€ | 89.9 77 |
€ 6 | .244 .251 |
€ | 536. 097 |
€ 6.23 1.09 6 |
|
Notes:
(1) There is no requirement, under existing regulations, for disclosure on an individual basis, given that, in 2017, none of the Key Management Personnel received total compensation in excess of the highest amount of total compensation paid to members of management and oversight bodies or general managers. There were 14 Key Management Personnel at 31 December 2017.
(2) Compensation paid for directorships and specific positions at Group companies, as defined by art. 2389 of the Italian Civil Code, amounting to a total of €337.385, is paid entirely to Poste Italiane SpA.
60
| Vari able pay |
ity non -equ ts men |
Sev eran ce inde mni ty |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Nam d s u cat e an rnam e or ego ry |
Pos itio n |
n of fice Peri od i |
Expi ry of f ter m o offi ce (a val of ppro fina l ncia for) stat nts eme |
Fixe d pa y |
Fee for rd Boa Com mitt ee bers hip mem |
Bon d use s an othe r ince ntiv es |
Pro fit hari s ng |
efit s in Ben kind |
Othe r rem ratio une n |
al Tot |
lue of Fai r Va ity-b d equ ase ents paym |
ble at paya end of t erm of o ffice or on inat ion term of |
|
| (A) | (B) | (C) | (D) | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | ||
| Mau ro Lo nard o |
Chai n of the rd of Boa Sta tuto rma ry Aud itors |
01/0 1/20 31/ 12/2 17 - 017 |
2018 | ||||||||||
| ( 1 |
I) Re from the ion erat mun com pan y pr |
the fina l s ta ring ncia tem ents epa |
€ 80.0 00 |
€ 80.0 00 |
|||||||||
| (II) Rem ratio n fro bsid iarie une m su s an |
d as soci ates |
||||||||||||
| (llI) Tot al |
€ 80.0 00 |
€ 80.0 00 |
|||||||||||
| Ales sia B astia ni |
Stan ding Aud itor |
01/0 1/20 17 - 31/ 12/2 017 |
2018 | ||||||||||
| 2 | (I) R tion fro m th emu nera e co mpa ny p |
ring the fina ncia l s ta tem ents repa |
€ 70.0 00 |
€ 70.0 00 |
|||||||||
| (II) n fro bsid Rem ratio iarie une m su s an |
d as soci ates |
||||||||||||
| (llI) al Tot |
€ 70.0 00 |
€ 70.0 00 |
|||||||||||
| Mau rizio Bas toni |
Stan ding Aud itor |
01/0 1/20 31/ 12/2 17 - 017 |
2018 | ||||||||||
| 3 | (I) R tion fro m th emu nera e co mpa ny p |
ring the fina ncia l s ta tem ents repa |
€ 70.0 00 |
€ 70.0 00 |
|||||||||
| (II) Rem ratio n fro bsid iarie une m su s an |
d as soci ates |
||||||||||||
| (llI) al Tot |
€ 70.0 00 |
€ 70.0 00 |
| Finan cial in strum ents a that d id not vest |
ward ed in previ ous ye ars g the durin year |
Finan cial in |
ward ed du strum ents a |
ring t he ye ar |
Finan cial in strum ents vestin g dur ing th e yea r and n ot aw arded |
Finan cial in strum the y ear an |
esting durin ents v g rdabl d awa e |
Finan cial instru ment s attrib utabl he e to t year |
|||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name and s urnam e |
Posit ion |
Plan | e of finan Numb d typ er an cial in strum ents |
Vesti riod ng pe |
Numb d typ e of fin er an ancia l instru ment s |
alue a Fair v t date grant |
Vesti riod ng pe |
Gran t date |
Mark et pri ce on grant date |
e of finan Numb d typ er an cial in strum ents |
Numb d typ e of fin er an l instru ancia ment s |
Valu e at g rant date |
Fair v alue |
| (A) | (B) | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) | (11) | (12) |
| l Fan Matt eo De te |
ral M Gene er (emp anag loym ct) ent c ontra |
||||||||||||
| (I) Re from ration mune finan cial s tatem ents |
the c g the parin ompa ny pre |
Short tive " MBO" -term incen for B RFC's 2017 Posta anco rial R isk Ta kers Mate Share holde lution of 27 r reso April 2017 |
1 8.542 Pha n tom Stock |
(1) € 137.5 89 |
5 yea rs |
19/0 4/20 18 |
(2) € 7,420 3 |
(3) 7.417 |
€ 55.03 |
6 € 55.03 6 |
|||
| (I) Re ration from mune finan cial s tatem ents |
the c parin g the ompa ny pre |
Phan tock L cond tom S TIP se 2017 - 201 9 cyc le Share holde lution of 24 r reso May 2 016 |
6 2.201 Pha n tom Stock |
(1) 381.3 56 € |
3 yea rs |
20/0 9/20 17 |
(2) 6,131 0 € |
82.52 0 € |
|||||
| (II) Re ratio n from mune |
subs idiari d ass ociat es an es |
||||||||||||
| (llI) To tal |
€ 518.9 45 |
€ 55.03 |
6 € 137.5 56 |
||||||||||
| Note s: (1) Co onds to th rresp (2) A lcula nt ca mou (3) Fi ial in strum nanc |
e val ue of the Phan Stock tom ted b venti on, b ased on t y con subje ents ct to a 2-y eten ear r |
he g date s at t rant ; he a rithm etic a e of the m verag d. tion perio |
arke t valu e of Post |
e Ital iane 's sha res in the |
thirty k exc stoc |
hang ding day e tra |
s prio he g r to t |
date rant ; |
|||||
| Franc Caio esco |
ral M Gene er (emp anag loym ct) ent c ontra |
||||||||||||
| (I) Re from ration mune finan cial s tatem ents |
the c g the parin ompa ny pre |
Short tive " MBO" -term incen for B RFC's 2017 Posta anco Mate rial R isk Ta kers Share holde lution of 27 r reso April 2017 |
1 0.980 Pha n tom Stock |
(1) € 66.56 0 |
5 yea rs |
31/0 7/20 17 |
(2) € 6,062 5 |
(3) 4.392 |
€ 26.62 |
7 € 23.76 8 |
|||
| (I) Re ration from mune finan cial s tatem ents |
the c parin g the ompa ny pre |
Phan tock L TIP fir tom S st le 2016 - 201 8 cyc Share holde lution of 24 r reso May 2 016 |
(4) 31.00 1 Phan tom Stock |
3 yea rs |
€ 44.22 8 |
||||||||
| (II) Re ratio n from mune |
subs idiari d ass ociat es an es |
||||||||||||
| (llI) To tal |
€ 66.56 0 |
€ 26.62 |
7 € 67.99 6 |
||||||||||
| Note s: (1) Co to th onds rresp (2) A lcula nt ca mou (3) Fi ial in strum nanc (4) A ward on a pro- |
e val ue of the Phan Stock tom ted b venti on, b ased on t y con subje a 2-y ents ct to eten ear r basis , wit hout prej udice rata to a |
he g s at t rant date ; he a rithm etic a e of the m verag tion perio d; t of a chiev ssess men emen |
arke t valu e of Post t of t he p erfor man ce ga |
e Ital iane 's sha res in the ualif ying cond ition te, q |
thirty k exc stoc s and the level |
hang ding day e tra of a chiev emen |
s prio he g r to t t of t he p erfor man |
date rant ; assi ce ta rgets |
gned |
| cial i Finan nstru ts aw men that did n ot ve |
arde d in p revio us ye ars st du ring t he ye ar |
Finan cial i nstru |
arde d du ts aw men |
ring t he ye ar |
Finan cial i nstru ts men vesti ng du ring t he ye ar and n arde d ot aw |
cial i Finan nstru men the y ear a |
duri ts ve sting ng nd aw arda ble |
Fina ncial instr ume attrib utab year |
nts le to the |
|||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Nam e and surn ame |
Posi tion |
Plan | Num ber a nd ty pe of finan cial i nstru ts men |
Vest ing p eriod |
Num ber a nd ty pe of fin ancia l instr nts ume |
Fair valu e at t dat gran e |
Vest ing p eriod |
Gran t dat e |
Mar ket p rice o n gran t dat e |
Num ber a nd ty pe of finan cial i nstru ts men |
Num ber a nd ty pe of fin l instr ancia nts ume |
Valu e at g rant date |
Fair v alue |
|
| (A) | (B) | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) | (11) | (12) | |
| Key Man ent P agem |
nnel erso |
|||||||||||||
| (I) Re ion fr erat om t mun finan cial s tate ts men |
he co ing t he mpa ny pr epar |
Shor m inc entiv e "M BO" t-ter for B 's 2017 Post a RFC anco Mate rial R isk Ta kers of 27 Shar ehol der r esol ution April 201 7 |
3 1.40 0 Pha n tom Stoc k |
(1) € 222. 919 |
3 / 5 yea rs |
/04/ 19 2018 |
(2) € 7,42 03 |
(3) 13.3 33 |
€ 94.9 06 |
€ | 92.9 72 |
|||
| (I) Re ion fr erat om t mun finan cial s tate ts men |
he co ing t he mpa ny pr epar |
Phan k LTI ond tom Stoc P sec 2017 - 201 9 cyc le Shar ehol der r esol ution of 24 May 2016 |
19 2.37 3 Pha n tom k Stoc |
(1) € 1.17 9.44 0 |
3 ye a rs |
/09/ 20 2017 |
(2) € 6,13 10 |
€ | 266. 005 |
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| (I) Re ion fr erat om t mun finan cial s tate ts men |
he co ing t he mpa ny pr epar |
Phan k LTI P firs tom Stoc t 2016 - 201 8 cyc le Shar ehol der r esol of 24 ution May 2016 |
112. 412 Phan tom k Stoc |
3 ye ars |
€ | 177. 119 |
||||||||
| (II) Re ion f erat mun rom |
subs idiar ies a nd as socia tes |
|||||||||||||
| (llI) T otal |
€ 1.40 2.35 9 |
€ 94.9 06 |
€ | 536. 097 |
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| Not es: (1) C ds to orre spon (2) A lcula nt ca mou |
the valu e of the P han tom Sto ted b tion, bas ed o n th y co nven |
cks a t the nt d ate; gra e ari thm etic of th aver age |
rket valu e of Post e ma |
lian e's s hare s in the t e Ita |
hirty k ex stoc |
chan adin g da ge tr |
rior to th ys p e gra |
nt d ate; |
(3) Financial instruments subject to a 2-year retention period.
| A | B | (1) | (2) | (3) | (4) | ||||
|---|---|---|---|---|---|---|---|---|---|
| d su d Nam e an rnam e an cate gory |
Posi tion |
Plan | s of the y Bonu ear |
us fo viou Bon r pre s ye ars |
Oth er bo nuse s |
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| (A) | (B) | (C) | (A) | (B) | (C) | ||||
| /Pai Pay able d |
Defe rred |
Defe rral peri od |
No l ble ong er p aya |
ble/ Paya Paid |
def Still d erre |
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| Mat Del Fant teo e |
eral Gen Man ager (em t) ploy t con trac men |
||||||||
| (I) R fro tion m th emu nera s tat nts eme |
fina ring the ncia l e co mpa ny p repa |
MBO 201 7 |
€ 55.0 36 |
€ 82.5 53 |
5 ye ars |
||||
| (II) n fro Rem ratio une m s |
ubs idia ries and iate ass oc s |
||||||||
| (llI) al Tot |
€ 55.0 36 |
€ 82.5 53 |
€ - |
€ - |
| Fran o Ca io cesc |
eral Gen Man ager (em ploy t) t con trac men |
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|---|---|---|---|---|---|---|---|---|---|
| (I) R tion fro m th emu nera s tat nts eme |
ring the fina ncia l e co mpa ny p repa |
MBO 201 7 |
€ 26.6 24 |
€ 39.9 36 |
5 ye ars |
||||
| (I) R tion fro m th emu nera s tat nts eme |
ring the fina ncia l e co mpa ny p repa |
MBO 201 6 |
€ 31.9 49 |
€ 95.8 47 |
|||||
| (I) R tion fro m th emu nera s tat nts eme |
ring the fina ncia l e co mpa ny p repa |
MBO 201 5 |
€ 23.9 62 |
€ 23.9 62 |
|||||
| (I) R fro m th tion emu nera s tat nts eme |
the fina l ring ncia e co mpa ny p repa |
IPO Bon us 2 015 |
€ 74.0 26 |
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| (II) ratio n fro Rem une m s |
ubs idia ries and iate ass oc s |
||||||||
| (llI) Tot al |
€ 26.6 24 |
€ 39.9 36 |
€ 74.0 26 |
€ 55.9 11 |
€ 119. 809 |
| Key Man Pers l ent agem onne |
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|---|---|---|---|---|---|---|---|---|
| (I) R fro m th the fina l tion ring ncia emu nera e co mpa ny p repa s tat nts eme |
MBO 201 7 |
€ 1.49 3.53 |
3 € 128. 013 |
3 / 5 yea rs |
||||
| (I) R tion fro m th ring the fina ncia l emu nera e co mpa ny p repa s tat nts eme |
MBO 201 6 |
€ 97.4 66 |
€ 29.5 85 |
€ 88.7 55 |
||||
| (I) R tion fro m th ring the fina ncia l emu nera e co mpa ny p repa s tat nts eme |
MBO 201 5 |
€ 48.1 54 |
€ 18.7 11 |
€ 18.7 11 |
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| (I) R fro m th the fina l tion ring ncia emu nera e co mpa ny p repa s tat nts eme |
IPO Bon us 2 015 |
€ 10.8 00 |
€ 10.8 00 |
|||||
| (I) R fro m th the fina l tion ring ncia emu nera e co mpa ny p repa s tat nts eme |
MBO 201 4 |
€ 11.5 05 |
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| (II) n fro ubs idia and Rem ratio ries iate une m s ass oc s |
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| (llI) Tot al |
€ 1.49 3.53 |
3 € 128. 013 |
€ 157. 125 |
€ 59.0 96 |
€ 118. 266 |
€ 80.0 00 |
| Name and surname | Position | Company invested in | No. of shares held at end of 2016 |
No. of shares purchased in 2017 |
No. of shares sold in 2017 |
No. of shares held at end of 2017 |
Title |
|---|---|---|---|---|---|---|---|
| Maria Bianca Farina | Chairwoman of the Board of Directors |
POSTE ITALIANE SPA | 5.255 | 0 | 0 | 5.255 | Ownership |
| DIRECTORS WITH REGARD TO THE TERM OF OFFICE | |||||||
| Luisa Todini | Chairwoman of the Board of Directors |
POSTE ITALIANE SPA | 2.100 | 0 (1) | 0 (1) | 2.100 (1) | Ownership |
| Francesco Caio | Chief Executive Officer and General Manager |
POSTE ITALIANE SPA | 5.255 | 0 (1) | 0 (1) | 5.255 (1) | Ownership |
| Elisabetta Fabri | Director | POSTE ITALIANE SPA | 10.000 | 0 (1) | 0 (1) | 10.000 (1) | Ownership |
| Filippo Passerini | Director | POSTE ITALIANE SPA | 3.691 (2) | 0 (1) | 0 (1) | 3.691 (1) (2) | Ownership |
| Notes: | (1) Figure at 27 April 2017, as the person in question was terminated on that date. |
(2) Shares held through a spouse, following their purchase by an asset management company, without any instruction from the interested party.
| No. of Key Ma na gement Pers onnel |
Pos i ti on | Company i nvested in | No. of s ha res hel d at end of 2016 |
No. of s ha res purchas ed in 2017 |
No. of s ha res s old in 2017 |
No. of s hares held at end of 2017 |
Ti tl e |
|---|---|---|---|---|---|---|---|
| 14 | Key Management Personnel |
POSTE ITALIANE SPA | 33.535 | 0 | 6.205 | 27.330 | Ownership |
| CHA RT 1 |
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|---|---|---|---|---|---|---|---|---|---|---|---|
| ial Fin inst anc |
her tha ent s ot n st rum |
ock tion op s |
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| and Nam ae su rna me ate or c gor y |
Pos itio n |
Sec tion 1 lati din lan d o n th e b asis of vio har eho lde sol utio Inst ent to o uts tan rum s re ng g p s a ppr ove pre us s r re ns |
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| f sh Dat hol der e o are olu tion res |
f fi Typ cia l e o nan inst ent rum |
of fina Num ber ncia l inst ent rum s |
Gra nt d ate |
Eve al p has ntu urc e pric f in stru nts e o me |
Ma rke ice t pr t dat at g ran e |
Ves ting riod pe |
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| Ma De l Fa tteo nte |
Ge al M ger (em ner ana t) loy nt c ont p me rac |
24/ 05/ 201 6 |
Pha m S k nto toc |
62. 201 |
20/ 09/ 201 7 |
(1) € 6,1 310 |
3 ye ars |
||||
| l (1 0) Key Ma ent Pe nag em rso nne |
24/ 05/ 201 6 |
Pha k nto m S toc |
192 .37 3 |
20/ 09/ 201 7 |
(1) € 6,1 310 |
3 ye ars |
|||||
| Oth eni er s or m ana gem |
(2)) (44 wi thin the Gr ent oup |
24/ 05/ 201 6 |
Pha k m S nto toc |
354 .91 7 |
20/ 09/ 201 7 |
(1) € 6,1 310 |
3 ye ars |
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| No tes : |
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| (1) A lcul d b n, b d o n th rith e of the rke lue of tali 's s har n th e th ck e xch adi day he nt d ntio tic Pos te I es i irty ior unt ate t va sto e tr to t ate mo ca y co nve ase e a me ave rag ma ane ang ng s pr gra |
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| (2) In clud ing 3 s eni or m |
t Po Vit a Sp A. ste ana ger s a |
| CHA RT 1 |
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|---|---|---|---|---|---|---|---|---|---|---|---|
| Fin ial inst her tha ock tion ent s ot n st anc rum op s |
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| and Nam ae su rna me ate or c gor y |
Pos itio n |
Sec tion 1 Inst lati din lan d o n th e b asis of vio har eho lde sol utio ent to o uts tan rum s re ng g p s a ppr ove pre us s r re ns |
|||||||||
| f sh hol der Dat e o are olu tion res |
f fi l Typ cia e o nan inst ent rum |
ber of fina l Num ncia inst ent rum s |
nt d Gra ate |
al p has Eve ntu urc e pric f in stru nts e o me |
rke Ma ice t pr t dat at g ran e |
riod Ves ting pe |
|||||
| l Fa Ma De tteo nte |
al M Ge ger (em ner ana loy t) nt c ont p me rac |
27/ 04/ 201 7 |
Pha k m S nto toc |
18. 542 |
19/ 04/ 201 8 |
(1) € 7,4 203 |
5 ye ars |
||||
| Ca io Fra nce sco |
Ge al M ger (em ner ana loy t) nt c ont p me rac |
27/ 04/ 201 7 |
Pha m S k nto toc |
10. 980 |
31/ 07/ 201 7 |
(1) € 6,0 625 |
5 ye ars |
||||
| (1) l (4 ) 27/ 04/ Pha k 19/ 04/ 3 / Key Ma Pe 201 7 m S 31. 400 201 8 € 7,4 203 5 ye ent nto toc nag em rso nne ars |
|||||||||||
| Oth eni er s or m ana gem |
(9 ) wi thin the Gr ent oup |
27/ 04/ 201 7 |
Pha m S k nto toc |
37. 188 |
19/ 04/ 201 8 |
(1) € 7,4 203 |
3 / 5 ye ars |
||||
| No tes : (1) A lcul d b n, b d o n th rith e of the rke lue of tali 's s har n th e th ck e xch adi day the nt d ntio tic Pos te I es i irty rior unt ate t va sto e tr to ate mo ca y co nve ase e a me ave rag ma ane ang ng s p gra |
Annex: Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018
| Introduction 70 | ||
|---|---|---|
| 1 Statutory and regulatory framework and scope of application 71 | ||
| 1.1 | Preamble – Aim of this document 71 | |
| 1.2 | Statutory and regulatory framework 71 | |
| 1.3 | Definitions 72 | |
| 1.4 | Scope of application 73 | |
| 2 Implementation and oversight of remuneration and incentive policies 74 | ||
| 2.1 | Role of the General Meeting of Shareholders 74 | |
| 2.2 | Role of the Board of Directors 74 | |
| 2.3 | Role of the Remuneration Committee 74 | |
| 2.4 | Duties and responsibilities of the other functions involved 76 | |
| 2.5 | Process for determination and oversight of remuneration policies: summary 76 | |
| 3 Guidelines for remuneration and incentives 78 | ||
| 3.1 | Principles and objectives of the remuneration and incentive policies 78 | |
| 3.2 | Identification of Material Risk Takers 78 | |
| 3.3 | Components of Material Risk Takers' remuneration 79 | |
| 3.3.1. | Fixed remuneration 80 | |
| 3.3.2. 3.3.3. |
Variable remuneration 80 Benefits 82 |
|
| 3.4 | Severance payments on termination of employment 82 | |
| 3.5 | Ex post adjustments (malus and clawback provisions)84 | |
| 4 BancoPosta RFC's remuneration and incentive schemes 86 | ||
| 4.1 | Board of Directors 86 | |
| 4.1.1 | Directors without delegated powers 87 | |
| 4.1.2 | Chairwoman of the Board of Directors 88 | |
| 4.1.3 | Chief Executive Officer and General Manager (CEO-GM) 88 | |
| 4.1.3.1 Short-term incentive scheme (STI "MBO") 91 |
||
| 4.1.3.2 Medium/long-term incentive schemes (LTIPs)…………………………………………………………………………………. 93 |
||
| 4.2 | Board of Statutory Auditors 98 | |
| 4.3 | Material Risk Takers 99 | |
| 4.3.1 Short-term incentive scheme ("MBO") 99 |
||
| 4.3.2 Medium/long-term incentive schemes (LTIPs) 102 |
||
| 4.4 | The company's control functions 105 | |
| 4.5 | Remuneration for other BancoPosta personnel (non-Risk Takers) 106 | |
| 5 Implementation of the remuneration policy for 2017 107 | ||
| 5.1 | Governance of the remuneration process 107 | |
| 5.2 | Ex post disclosures 108 |
Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018
This document - in line with the first section of the Remuneration Report published by Poste Italiane SpA ("Poste Italiane", "the Parent Company" or "the Company") – describes the remuneration and incentives for the Company's personnel who work for Patrimonio BancoPosta ("BancoPosta Ringfenced Capital" or "BancoPosta RFC") and who therefore fall within the scope of application described in greater detail below. The above remuneration and incentives are aligned with: (i) BancoPosta RFC's organisational and management model; (ii) the existing organisational structure; and (iii) the Company's By-laws and the BancoPosta RFC Regulation. Part IV, Chapter 1 "Bancoposta" of Bank of Italy Circular 285 of 17 December 2013 requires application of the regulations for banks in respect of "remuneration and incentive policies and practices", as contained in the same Bank of Italy Circular 285/2013 (Part I, Title IV, Chapter 2) and in the EBA guidelines and EBA Regulatory Technical Standard (RTS) from time to time in effect, to personnel falling within the above scope.
In keeping with the Poste Italiane Group's remuneration policy for 2018, changes to which are described in Section I of the Remuneration Report for 2018, and taking into account the applicable regulatory requirements, a new long-term incentive plan, "Deliver 2022 LTIP", was introduced in 2018 and a number of changes were made with a view to continually ensuring a sound and prudent approach to the management of risk and the achievement of sustainable growth.
Existing statutory requirements1 state that the General Meeting of Shareholders (General Meeting) must be annually provided with a clear and full description of the remuneration and incentive policies and practices to be adopted, with the aim of explaining: the rationale, purposes and procedures for implementing the remuneration policies, the relevant controls, the nature of the pay structure, the policies' consistency with the established guidelines and objectives, their compliance with the applicable statutory requirements, any changes with respect to previously approved policies, developments with regard to pay, including in relation to industry trends. The General Meeting of Shareholders must also be provided, on at least an annual basis, with a report on the procedures by which the remuneration policies have been implemented.
1 Bank of Italy Circular 285 of 17 December 2013, Title IV, Chapter 2, Section II.
This document, in keeping with statutory requirements and the relevant regulatory framework in effect and with Section I of Poste Italiane's Remuneration Report, describes the remuneration and incentives for BancoPosta RFC personnel, as defined below, in accordance with the Company's long-term strategies, strategic objectives and performance. In this regard, the following provisions require, above all, that the variable component of remuneration is sustainable in respect of BancoPosta RFC's financial position and does not limit its ability to maintain and achieve adequate levels of capital and liquidity.
Poste Italiane SpA conducts BancoPosta's operations – as governed by Presidential Decree 144 of 14 March 2001, as amended – through an entity with ring-fenced capital, called BancoPosta RFC, created by the General Meeting of Shareholders held on 14 April 2011, in implementation of art. 2, paragraphs 17-octies et seq. of Law Decree 225 of 29 December 2010, converted with amendments into Law 10 of 26 February 2011. The same General Meeting also approved the BancoPosta RFC Regulation, containing the rules governing its organisation, management and control. BancoPosta RFC, which has been separated from Poste Italiane's capital outside the ring-fence, constitutes a collection of assets and contractual rights to be used exclusively to meet obligations arising as a result of the operations of BancoPosta RFC and representing the scope of application for the Bank of Italy's relevant prudential supervisory standards.
On 27 May 2014, the Bank of Italy issued specific Supervisory Standards for BancoPosta RFC (Part IV, Chapter I, "Bancoposta" including in Circular 285 of 17 December 2013 "Prudential supervisory standards for banks") which, in taking into account BancoPosta RFC's specific organisational and operational aspects and those of Poste Italiane SpA, has extended application of the prudential standards for banks to include BancoPosta. This includes the standards relating to the corporate governance of banks (Part I, Section IV, Chapter I "Corporate governance" in the above Circular 285) and matters relating to remuneration and incentive policies (Part I, Section IV, Chapter 2 "Remuneration and incentive policies and practices" in the above Circular 285).
The remuneration and incentive policy has, therefore, been drawn up in keeping with supervisory standards governing "remuneration and incentive policies and practices" for banks and banking groups set out in Circular 285 of 17 December 2013 ("Circular 285/2013"), revised by the Bank of Italy on 18 November 2014 in order to apply the provisions of EU Directive 2013/36/EU ("CRD IV") and the international guidelines issued from time to time by the EBA and FSB. With regard to the latter, Delegated Regulation (EU) 604/2014 contains new Regulatory Technical Standards (RTS), setting out revised qualitative and quantitative criteria for identifying categories of personnel whose activities have a material impact on the entity's risk profile (so-called "Material Risk Takers") and Regulation (EU) 575/2013 of the European Parliament and Council of Europe, setting out prudential requirements and specific disclosure rules for reporting on the implementation of remuneration policies.
The above regulations should be viewed as an integral part of the rules governing organisational arrangements and corporate governance, forming part of a much broader regulatory framework that also includes specific regulations for listed companies and investment services and activities.
In drawing up this policy, BancoPosta has also taken into account the EBA's "Guidelines on sound remuneration policies", effective from January 2017, and in response to which, on 14 March 2018, the Bank of Italy published a consultation document containing proposed changes to the supervisory standards governing "remuneration and incentive policies and practices" in order to cover aspects that have not so far been fully addressed. The proposed amendment, among other aspects, makes reference to the "Guidelines on remuneration policies and practices related to the provision and sale of retail banking products and services" (ABE/GL/2016/06), issued by the EBA on 13 December 2016, and the "Supplementary Guidance to the FSB Principles and Standards on sound compensation practices" in relation to "misconduct" published on 9 March 2018. The adoption of these standards will take place in line with the final versions of the regulations and the related implementation guidelines.
The following definitions apply to BancoPosta RFC for the purposes of this document:
285/2013 (as amended) the Meeting approves the remuneration and incentive policies for members of the management and oversight bodies and all other personnel.
In view of the particular nature of BancoPosta RFC and its relations with Poste Italiane functions, the remuneration and incentive policies described in this document apply to the following entities, insofar as their activities relate to BancoPosta RFC:
The process of drawing up BancoPosta RFC's remuneration and incentive policies involves a number of different entities, as follows:
The Ordinary General Meeting, with regard to BancoPosta RFC, in keeping with what has been determined with reference to Poste Italiane, approves:
Poste Italiane's Board of Directors, with regard to BancoPosta RFC, on the recommendation of the Remuneration Committee:
The Board of Directors, on the recommendation of the Remuneration Committee and in accordance with the Committee's terms of reference, determines the remuneration payable to the CEO-GM, the Head of the BancoPosta function and the Manager Responsible for Financial Reporting.
The membership, duties, powers and related procedures of the Committee in question are governed by specific terms of reference, in keeping with the requirements contained in the Supervisory Standards.
Poste Italiane's Remuneration Committee currently consists of three non-executive Directors, all of whom meet the independence requirements provided for in article 148 and paragraph 3 of the CLF and article 3 of the Corporate Governance Code. In addition, the Committee has the required number of members with appropriate expertise and experience in financial matters or remuneration policies and risk, capital and treasury management. This is assessed by the Board of Directors at the time of appointment to the Committee.
Committee meetings are attended by the Board of Statutory Auditors and, as a rule, also by the Head of BancoPosta's Risk Management function when the Committee is to discuss matters relating to BancoPosta's activities.
By invitation of the Chair, meetings may also be attended by other members of the Board of Directors, the Head of BancoPosta and external parties, where their presence is designed to enable the Committee to carry out its role in the best possible manner.
In keeping with these requirements, Poste Italiane's Board of Directors has established the Remuneration Committee with responsibility for providing advice and making recommendations regarding remuneration and incentive plans.
In addition to its responsibilities in respect of Poste Italiane, with regard to those relating to BancoPosta RFC, the Committee:
The Committee, through its Chair, reports to the Board of Directors on the Committee's meetings at least once a year, and whenever he or she deems it necessary or appropriate, with the aim of establishing a suitable channel for communication with shareholders and investors.
The Committee has the right to access, within the limits of its assigned responsibilities, the information and corporate functions necessary in order to fulfil its role and may avail itself of external consultants or independent experts at the Company's expense, within the limits of the overall budget approved by the Board of Directors for all Board Committees.
In accordance with their respective responsibilities, the following BancoPosta RFC functions contribute to the process of determining the remuneration and incentive policies and to the process of identifying Material Risk Takers. They are tasked with ensuring ongoing compliance with the related regulatory requirements and the correct functioning of the policies and practices adopted.
In keeping with the guidelines issued by Poste Italiane, the Head of the BancoPosta function, with the agreement of the CEO-GM, establishes, if necessary with the support of the HR Business Partner function and other internal functions, the guidance to be applied in determining the remuneration and incentive policies for BancoPosta personnel, which are then presented to the Remuneration Committee.
This does not affect the role of the Board of Directors in determining, on the recommendation of the Remuneration Committee and in accordance with the Committee's terms of reference, the remuneration payable to the CEO-GM, the Head of the BancoPosta function and the Manager Responsible for Financial Reporting.
The Head of the BancoPosta function also ensures oversight and implementation of the "Guidelines for BancoPosta RFC's remuneration and incentive policies", in keeping with those of the Company, via the following support.
The HR Business Partner function is responsible for recommending the "Guidelines for BancoPosta RFC's remuneration and incentive policies" and ensuring their alignment with the Company's remuneration and incentive policies.
The Compliance function checks the consistency and suitability of the "Guidelines for BancoPosta RFC's remuneration and incentive policies" and of the objectives assigned in respect of the relevant regulatory requirements and the BancoPosta RFC Regulation.
The Risk Management function, with the support of BancoPosta's Administration, Planning and Control, contributes to determining the risk-adjusted financial indicators to which incentive plans are linked, in line with BancoPosta RFC's capital and liquidity position, the risks assumed as part of its operations and the resulting levels of performance achieved. The Risk Management function also, therefore, provides the Remuneration Committee with the information that the Committee deems necessary in order to ensure consistency with BancoPosta RFC's Risk Appetite Framework (RAF). The Head of the Risk Management function is thus invited to Remuneration Committee meetings when matters having an impact on BancoPosta RFC's risk management and capital and liquidity position are dealt with.
The Internal Auditing function assesses, at least once a year, the conformity of remuneration practices with the Company's policies, the policies approved and the relevant regulatory requirements. It is responsible for reporting any critical issues to the corporate bodies and the competent functions, so as to enable the necessary corrective action to be taken. The results of the assessment conducted must be reported on, at least once a year, to the General Meeting of Shareholders.
The decision-making process involved in determining the remuneration and incentive policies for BancoPosta personnel takes the following form:
BancoPosta's remuneration and incentive policies – which must be aligned with those of the Company - play a key role in pursuit of the objectives contained in the Strategic Plan.
In order to drive achievement of the Company's medium- to long-term objectives, the remuneration strategy is based on the following cornerstones:
In pursuing the objectives of profitability and financial stability over the medium to long term, BancoPosta RFC is committed to adopting remuneration policies based on the principles of transparency and the sound and prudent management of risk, effectively managing any potential conflicts of interest and its capital and liquidity positions.
For the purposes of these policies, within the above-defined scope of application, certain persons have been identified as Material Risk Takers ("MRTs"), whose activities have or may have a material impact on BancoPosta RFC's risk profile.
The process of identifying MRTs is based on an exact assessment of the position held by each individual within the organisation, used to assess the importance of each person in terms of the assumption of risk. Identification follows a structured assessment process, based on qualitative and quantitative criteria, in line with the regulatory requirements introduced by the EBA's Regulatory Technical Standards (RTS).
Identification of BancoPosta RFC's MRTs is coordinated by the Head of the BancoPosta function, with the assistance of the HR Business Partner, Risk Management and Compliance functions.
Combined application of the qualitative and quantitative requirements of Delegated Regulation (EU) 604/2014, as part of the process introduced for 2018, has led to the identification of 66 MRTs, which include the following:
• other personnel have a material impact on the entity's operational risks.
The results of the identification process may be reviewed during the year, in line with the EBA guidelines, in order to ensure that the list includes anyone whose role has a material impact on BancoPosta RFC's risks over a period of at least three months.
Total remuneration is determined in order to reflect the effective degree of responsibility and performance, in the certainty that correct remuneration and incentive policies generally have a positive impact on the conduct of personnel and align individual goals with strategic and risk management objectives.
The following chart summarises the key components of Material Risk Takers' remuneration.
FIGURE 1. CHART SHOWING COMPONENTS OF MATERIAL RISK TAKERS' REMUNERATION
BancoPosta personnel identified as MRTs, in accordance with the Supervisory Standards issued by the Bank of Italy, are required not to take out personal insurance, income protection or any other form of cover that may modify or affect the impact of risk alignment in variable pay plans. The above is confirmed via specific agreements with BancoPosta personnel.
Specific provisions are described in section "4. BancoPosta RFC's remuneration and incentive schemes" for the various persons identified in each paragraph.
In line with the Company's policies, fixed pay is aligned with the role held and the scope of the responsibilities assigned, reflecting the experience and skills required for each position, the degree of excellence demonstrated and the overall quality of the individual's contribution to BancoPosta RFC's performance. The adequacy of fixed pay is also assessed with reference to relevant market benchmarks.
Given that BancoPosta RFC's remuneration and incentive policies are approved by the General Meeting of Poste Italiane's shareholders, fixed remuneration is determined as follows:
In line with the Group's policies, variable pay is directly linked to Company and individual performance, taking into account the risks assumed in conducting operations (it may, therefore, be significantly reduced, potentially to zero); variable remuneration is awarded or disbursed provided that the Company has not failed to meet its capital adequacy and liquidity requirements after the cost of the variable remuneration itself.
The forms of variable remuneration used are described below.
Short-term incentive scheme ("MBO"), which, in respect of BancoPosta RFC, applies to the following persons:
The aim of the MBO plan is to link the variable component of remuneration with the Company's short-term results and those of the various functions and individuals. In addition, the plan is closely linked to performance, including with regard to required standards of conduct. The plan is based on a structured process for defining incentives and the associated objectives. The theoretical bonus payable on achievement of the objectives
.
assigned may be reduced (potentially to zero) if the overall individual performance, assessed using a 180° appraisal process, is deemed to be inadequate.
A maximum level of over performance has been set, above which the incentive remains constant, as has a hurdle, below which the incentives do not apply and there is, therefore, no payment due.
Where the incentive is greater than the materiality threshold (€50,000), the short-term MBO scheme envisages award of 50% of the incentive in the form of phantom stocks representing the value of Poste Italiane's shares. 60% of the award is deferred for a 5-year period on a pro-rata basis (in line with the prudential approach that distinguishes BancoPosta RFC's remuneration and incentive policies, in the case of Material Risk Takers who are beneficiaries of both the short-term incentive scheme ("MBO") and the third cycle 2018-2020 of the "Phantom Stock LTIP", with regard to maximum percentages under the "MBO" plan, stricter deferral criteria are applied) or 40% of the award is deferred for a 3-year period on a pro-rata basis (for the remaining Material Risk Takers). Components that take the form of phantom stocks are subject to a two-year retention period with regard to the up-front components and a one-year retention period in the case of deferred components.
Retention periods are defined in accordance with the related regulatory framework, based on the most stringent approaches applied by major intermediaries.
Except for application of the good leaver / bad leaver clauses defined in the terms and conditions of the incentive scheme, the accrued bonus will be normally paid on condition that employment is ongoing at the time of actual payment of the bonus and the contractual period of notice is not being served.
It should be noted that, in view of the use of equity-based payments, the Company will ask the Annual General Meeting of Shareholders to be held on 29 May 2018 to approve the "Short-term equity-based incentive plan for material risk takers employed by BancoPosta RFC", in accordance with art. 114-bis of Legislative Decree 58 of 24 February 1998, as amended.
Long-term incentive scheme, the Phantom Stock LTIP, based solely on equity-based payments, which, in respect of BancoPosta RFC, applies to the following persons:
The purpose of the scheme is to encourage the Group's management:
Finally, the plan aims to ensure management continuity over the long term through retention. Under the plan, beneficiaries are awarded "phantom stocks" granting them the right to receive stock representing the value of Poste Italiane's shares at the end of a three-year performance period and a retention period of one year.
Long-term incentive scheme, the Deliver 2022 LTIP, which, in respect of BancoPosta RFC, applies to the following persons:
The purpose of the scheme is to strengthen incentives for the Group's management to deliver the long-term strategy, with particular regard to the objectives set out in the "Deliver 2022" Strategic Plan. The Plan sets the following objectives:
The nature of the scheme reflects the specific regulatory requirements to which BancoPosta RFC's variable remuneration schemes are subject, including the qualifying conditions, defined in line with the risk-adjusted earnings, liquidity and capital indicators contained in the Risk Appetite Framework, and in keeping with the cap on variable remuneration based on a ratio of 1:1 between variable and fixed pay for personnel falling within the scope of application of the "Guidelines for BancoPosta RFC's remuneration and incentive policies".
The scheme involves the award – following confirmation of the achievement of objectives over a 5-year period (in the case of top and key managers who are beneficiaries of the 2018-2020 cycle of the Phantom Stock LTIP) and a 3-year period (with regard to the other owners of strategic projects) – of a convertible cash sum, 75% up-front and the remaining 25% deferred for two years, and subject to additional malus provisions. During the performance period, the Board of Directors has the possibility to ask the General Meeting of Shareholders to approve conversion of the full amount of the bonus, or a part thereof, payable to all beneficiaries into Poste Italiane's ordinary shares.
In view of the relevant regulatory requirements, the three-year "Deliver 2022 LTIP" envisages payment of 50% in cash (convertible) and 50% in phantom stocks (convertible), with the latter subject to a retention period.
Short- and medium/long-term variable remuneration is, in any event, subject to clawback provisions, as described in greater detail in paragraph 3.5.
Signing bonuses are payable, in exceptional circumstances, to newly hired personnel in line with best market practices; the bonus is not payable more than once to the same person, it may be deferred and is included when determining the cap on the ratio of variable to fixed remuneration for the first year of hiring.
One-off payments, permitted in exceptional cases and limited solely to specific situations, such as the management of major projects, the achievement of extraordinary results or the need to retain key personnel. No such payments are made to Directors or Key Management Personnel. These payments must comply with the statutory requirements in effect (for example, but not limited to, the pay-mix) and the guidelines for remuneration and incentives.
The final component of remuneration for BancoPosta RFC personnel consists of additional benefits in line with the Company's policies. Benefits are subject to specific guidelines, which require the application of common criteria based on both the complexity of the role held and the specific category of employee.
In accordance with the Company's policies, it is possible to stipulate provisions/agreements governing ex-ante the aspects of the early termination of employment in line with the Company's strategies, values and long-term interests.
These provisions/agreements establish the applicable financial terms, based on individual situations (for example, seniority and individual performance) and the reasons that have led to the termination of employment, with particular reference to the organisational role held, the risks assumed and the duties carried out. These agreements also take into account all the applicable statutory requirements, collective or individual contracts and market practices in the form of final settlement.
The above does not affect the mandatory payments due in case of termination of employment under the Italian law or the applicable collective bargaining agreement.
The amount resulting from application of these provisions/agreements may not, in any event, exceed the number of monthly salary payments due under the contractual period of notice, plus up to 24 months of effective global compensation, including gross annual salary, the average of the amount received in variable pay for the last three years (or for the period of employment, if shorter) and the value of any benefits awarded.
In the event of termination due to dismissal, the legislation from time to time in effect and the National Collective Labour Agreement apply.
The Company does not, as a rule, enter into non-competition agreements. In the case of managers in key roles, whose termination may expose the Company to certain risks, the Company reserves the right to enter into, on a case-by-case basis, non-competition agreements that provide for payment of a sum in respect of the duration and scope of the restrictions resulting from the agreement.
Payments for non-competition agreements are capped at the gross annual salary for each year covered by the agreement. Agreements generally have a duration of one year.
All payments linked to the early termination of employment are made in accordance with the procedures for short-term variable remuneration with regards to deferral, equity-based payments and assessment of compliance with BancoPosta RFC's capital and liquidity thresholds.
In the case of Material Risk Takers with a high level of variable remuneration, being personnel who are beneficiaries of both the short-term incentive scheme ("MBO) and the third cycle 2018—2020 of the "Phantom Stock LTIP" plan, taking into account the caps with regard to maximum percentages under the STI "MBO" plan, the following conditions apply:
Severance payments to other Material Risk Takers, not included among the recipients of high variable remuneration, on termination of employment follow the 3-year deferred payment procedure used for the MBO incentive plan, including the use of equity-based payments for 50% of the amount payable.
In application of the Supervisory Standards relating to remuneration, regarding determination of severance payments linked to the early termination of employment of Material Risk Takers, any compensation payable to an individual on termination of employment, as described above, is capped at €4.5 million, based on the highest level of the pay scale2 . This payment is calculated on the basis of the maximum pay for personnel falling within the scope of application of these guidelines, applying the maximum amount due for all the possible components of remuneration payable in the event of early termination.
The process of determining the amounts payable on termination of employment is structured in such a way as to ensure the economic sustainability of a contemporaneous early termination of a number of individuals "in key roles".
The amount resulting from application of the above principles may lead to payments linked to the overall remuneration paid to the person concerned in proportion to the role held and the scope of the responsibilities assigned, reflecting the experience and skills required for each position, the individual's performance and the overall quality of their contribution to the Company's performance.
Severance payments payable on early termination of the CEO-GM, the Head of the BancoPosta function and the Manager Responsible for Financial Reporting is reviewed by the Board of Directors, on the recommendation of the Remuneration Committee.
Severance payments to other Material Risk Takers on early termination of employment are reviewed by the CEO-GM and the Head of the BancoPosta function in accordance with the policies agreed with the Remuneration Committee.
Both the Board of Directors, on the one hand, and the CEO-GM, on the other, in agreement with the Head of the BancoPosta function, within the cap determined by the General Meeting of Shareholders, evaluate the above in view of the individual's performance in the various roles held over time and having particular regard to BancoPosta RFC's capital and liquidity position.
No amount is payable under one or more of the circumstances provided for in paragraph 3.5 with regard to ex post adjustments. In particular, the Company may request return of the entire amount paid within the time limit set by the existing statute of limitations.
The above principles apply on termination of employment even if there have been no specific ex ante agreements.
In line with best market practices and applicable statutory requirements, variable remuneration is not guaranteed, but is subject to the achievement of predetermined performance targets linked to BancoPosta RFC's
2 The following example is described only to comply with the regulatory requirement introduced by the Bank of Italy in its VII revision of Circular 285. The Circular requires banks to set a cap for severance payment, also in terms of the number of years of fixed compensation as well as an absolute amount. In this case, BancoPosta RFC applies the maximum 1:1 ratio between variable and fixed remuneration. In the theoretical event that a person, in the three years prior to termination, has always received an amount of variable pay equal to 100% of his or her fixed remuneration, and that, all the provisions of this policy regarding severance are applied to this person to the maximum, they might receive severance pay equal to the theoretical maximum of 5.5 years of annual fixed component. The value of the severance payment, thus determined, will not in any case exceed €4.5 million, as specified above.
risk profile, there are a number of specific circumstances, described below, in which ex post risk adjustments to variable pay are applicable. Such provisions apply to the beneficiaries of both the short- and long-term incentive plans ("MBO" and LTIPs) and also, where applicable, to personnel not included among Material Risk Takers.
In line with best market practices and applicable statutory requirements, variable remuneration is subject to clawback provisions on the occurrence of certain events.
The process of applying clawback provisions is carried out in accordance with the related internal procedure adopted by the Company. This procedure involves the interdisciplinary participation of multiple functions with different skills involved in the different stages of the process that are: activation, assessment, finalization of the information report, closure of the procedure and mandatory requirements. The functions responsible for the decision are differentiated according to the profile of the individual involved in the procedure.
Clawback provisions are applied taking into account the related legal, social security and tax considerations.
Without prejudice to the right to claim for any further damages, following disbursement of the bonus payable, and within the time limit set by the related statute of limitations, the Company may request repayment of any amounts disbursed, up to the entire amount paid. This applies, regardless of whether or not employment is ongoing or has been terminated, in the event of:
Occurrence of one or more of the above circumstances also results in the application of malus provisions to any deferred portions of incentives yet to be paid. This applies to both cash and equity-based payments.
The malus provisions result in the reduction of any deferred portion of incentives, potentially to zero, including in the event of failure to meet the capital adequacy and liquidity requirements determined in compliance with BancoPosta RFC's Risk Appetite Framework ("RAF") from time to time in effect.
Occurrence of one or more of the above four circumstances (fraud or gross misconduct on the part of the beneficiary to the detriment of, the Company, including BancoPosta RFC or another Group company, etc.), results in non-payment of the portions subject to retention periods. The theoretical bonus payable on achievement of the objectives assigned may be reduced (potentially to zero) if the overall individual performance, assessed using a 180° appraisal process, is deemed to be inadequate.
No variable component is paid to employees whose conduct, during the performance period, has breached Poste Italiane's Code of Ethics.
The following remuneration and incentive policies for Directors without delegated powers, the Chairwoman of the Board of Directors, the Chief Executive Officer and General Manager and the Board of Statutory Auditors coincide with those described in Poste Italiane's Remuneration Report, of which this document, "Guidelines for BancoPosta RFC's remuneration and incentive policies", is an Annex. The above bodies are responsible for the management, strategic oversight and control of BancoPosta RFC, without receiving any further remuneration in addition to that received as Directors or Statutory Auditors of Poste Italiane SpA.
The General Meeting of Shareholders continues to have the power to determine the remuneration, as defined by art. 2389, paragraph 1 of the Italian Civil Code, payable to members of the Board of Directors on their election. The Company's By-laws also grant the Board of Directors responsibility for determining a remuneration package for executive Directors, as defined by art. 2389, paragraph 3 of the Italian Civil Code, on the recommendation of the Remuneration Committee and in consultation with the Board of Statutory Auditors.
As required by law, Directors with delegated powers must abstain during votes regarding decisions on their remuneration and not take part in discussions on this matter.
It is the sole responsibility of the Ordinary General Meeting of Shareholders to approve the "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018" or any changes thereto.
The remuneration policy for members of the Board of Directors is differentiated as follows:
On a general basis and for all the members of the Board of Directors, the Annual General Meeting of shareholder held on 27 April 2017 determined the compensation payable to members of the Board of Directors in office in the period 2017-2019, as defined by art. 2389, paragraph 1 of the Italian Civil Code. No attendance fees are currently payable for participation in Board of Directors' meetings or the meetings of Board Committees.
On 10 May 2017, the Board of Directors, on the recommendation of the Remuneration Committee, introduced additional pay for Directors' participation in Board Committees, depending on the role assigned.
The following table shows the roles held by member of the Board of Directors at the date of approval of this Report:
| Role | Name and surname |
Remuneration Committee |
Nominations and Corporate Governance Committee |
Audit, Risk and Sustainability Committee |
Related and Connected Parties Committee |
|---|---|---|---|---|---|
| Director | Giovanni Azzone (1) (2) |
||||
| Director | Carlo Cerami (1) (2) | $\frac{1}{8}$ | |||
| Director | Antonella Guglielmetti (1) (2) |
$\frac{1}{\sqrt{2}}$ | |||
| Director | Francesca Isgrò $(1)$ $(2)$ |
Q | |||
| Director | Mimi Kung (1) (2) | $\frac{1}{2}$ | |||
| Director | Roberto Rao (1)(2) | $\check{w}$ | |||
| Director | Roberto Rossi $(1)$ $(2)$ |
||||
| Directors with delegated powers | |||||
| Chairwoman | Maria Bianca Farina (1) |
||||
| Chief executi- ve Officer and General Manager |
Matteo Del Fante |
The remuneration of Directors without delegated powers consists of a fixed component, determined by the Annual General Meeting of Shareholders and applicable for the full term of office. The Annual General Meeting of Shareholders held on 27 April 2017, with regard to the term of office 2017-2019, determined the compensation payable pursuant to art. 2389, paragraph 1 of the Italian Civil Code as €40,000.00 per annum. There are no forms of variable remuneration.
Directors are reimbursed for any out-of-pocket expenses incurred in carrying out the duties, within the limits established by the Board of Directors.
The additional pay for Directors' participation in Board Committees, approved by the Board of Directors, in consultation with the Board of Statutory Auditors and the Remuneration Committee, is as follows:
| Compenso | ||
|---|---|---|
| Remuneration Committee | Chairman | € 25,000 |
| Member | € 17.500 | |
| Nominations and Corporate | Chairman | € 25,000 |
| Governance Committee | Member | € 17.500 |
| Audit, Risk and Sustainability | Chairman | € 35,000 |
| Committee | Member | € 25,000 |
| Related and Connected Parties Committee |
Chairman | € 25,000 |
| Member | € 17.500 |
The remuneration of the Chairwoman of the Board of Directors consists of a fixed component, approved by the General Meeting of Shareholders in accordance with art. 2389, paragraph 1 of the Italian Civil Code and equal to €60,000.00 per annum.
In addition to the above, on 13 December 2017, the Board of Directors, on the recommendation of the Remuneration Committee and in consultation with the Board of Statutory Auditors, awarded further compensation to the Chairwoman of the Board of Directors (pursuant to art. 2389, paragraph 3 of the Italian Civil Code), in view of the non-executive powers assigned to her. This additional compensation amounts to €420,000.00 per annum. There are no forms of variable remuneration.
The Chairwoman is reimbursed for any out-of-pocket expenses incurred in carrying out her duties, within the limits established by the Board of Directors.
As required by law, the Chairwoman abstains during votes regarding decisions on her remuneration and does not take part in discussions on this matter.
The final component of the remuneration package consists of additional benefits provided in accordance with the applicable statutory requirements and in line with market practices.
The CEO-GM's remuneration package includes a fixed component, a short-term variable component and a medium/long-term variable component (2018-2020 cycle of the "Phantom Stock LTIP" and the "Deliver 2022 LTIP").
In the light of these elements, the following chart shows the CEO-GM's pay-mix for 2018 in the event of overachievement ("Pay-mix CEO-GM over-achievement").
FIGURE 4. PAY-MIX CEO-GM OVER-ACHIEVEMENT
This pay-mix has been calculated on the basis of awards under the short- and medium- to long-term incentive schemes in the event of over-achievement and considering the annual award under the "Deliver 2022 LTIP".
The weighting assigned to the variable component for the CEO-GM is capped at a ratio of 1:1 between variable (both short- and medium/long-term) and fixed pay, in keeping with the "Guidelines for BancoPosta RFC's remuneration and incentive policies", taking into account the regulatory framework for banks.
The final component of the remuneration package consists of additional benefits provided in accordance with the applicable statutory requirements and in line with market practices.
As a member of the Board of Directors, the Chief Executive Officer is also reimbursed for any out-of-pocket expenses incurred in carrying out the duties strictly related to his role, within the limits established by the Board of Directors.
The CEO-GM's fixed pay consists of a component relating to the position of Director and one relating to his position as a manager of the Company in his role as General Manager3 .
The CEO-GM receives afixed pay of €1,255,000.00 per annum.
3 The CEO-GM's position as General Manager is governed by the provisions of the National Collective Labour Agreement for the management personnel of companies producing goods and services (the "NCLA").
The variable remuneration, paid in relation to his position as a manager in his role as Poste Italiane's General Manager, consists of the short-term variable incentive scheme (STI "MBO") and the "Phantom Stock LTIP" and "Deliver 2022 LTIP".
The STI "MBO" schemes rewards the achievement of targets on an annual basis, the "Phantom Stock LTIP" over three years and the "Deliver 2022 LTIP" over five years.
The link between variable remuneration and medium/long-term performance has been further strengthened through the introduction of a long-term incentive plan called the "Deliver 2022 LTIP", linked to the objectives in the new "Deliver 2022" Strategic Plan.
All the management incentive schemes also include a hurdle related to Group's EBIT, designed to measure financial sustainability, with any bonuses awardable in relation to the assigned targets dependent on achievement of the targets set.
Variable remuneration is subject to ex post risk adjustments (malus and clawback provisions) that, based on individual performance or conduct, may result in a significant reduction in the amount payable (potentially to zero), and, under certain conditions, in the application of a clawback provision.
As a risk taker, within the scope of application of the "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2018" the structure of the CEO-GM's remuneration envisages, among other things, the deferral of 60% of short-term variable pay ("MBO") and the payment of 50% in cash and 50% in phantom stocks, in addition to a cap on total variable remuneration based on a ratio of 1:1 between variable (both short- and medium/long-term) and fixed pay (as described in greater detail below).
FIGURE 5. CEO-GM'S VARIABLE REMUNERATION
As mentioned above, the Board of Directors, on the recommendation of the Remuneration Committee, sets the performance targets linked to variable remuneration for the CEO-GM and assesses achievement of the performance targets, with the CEO-GM abstaining in any votes on the matter.
Short-term variable remuneration aims to strengthen the focus on the creation of value for stakeholders by linking the payment of annual bonuses with actual performance in the same period. The nature of the "MBO" scheme for the CEO-GM has been defined also in the light of the applicable statutory requirements. The plan is based on a structured process for defining incentives and the associated objectives and is characterised by:
A maximum level of over performance has been set, above which the incentive remains constant, as has a hurdle, below which the incentives do not apply and there is, therefore, no payment due.
The STI "MBO" scheme envisages a hurdle represented by the Poste Italiane Group's target EBIT, achievement of which enables the CEO-GM to access the bonus linked to achievement of the objectives assigned. Moreover, in order to ensure the long-term sustainability of the businesses of BancoPosta RFC and the Poste Vita Insurance Group, the qualifying conditions for the MBO scheme also include the following provisions:
| Hurdle | Qualifying conditions |
|---|---|
| Group EBIT | BancoPosta's capital adequacy: CET 1 |
| BancoPosta's short-term liquidity: LCR |
|
| Solvency ratio for Poste Vita Insurance Group | |
The qualifying conditions are in keeping with the thresholds established in the Risk Appetite Framework ("RAF") adopted by BancoPosta RFC and the Poste Vita Insurance Group.
The performance targets for 2018 are linked to the objectives in the new "Deliver 2022" Strategic Plan:
Award of the incentive relating to the "MBO" scheme is linked to the achievement of actual, lasting results and involves deferral of 60% of the variable component over a for a period of 5 years (pro rata) and the payment of 50% in cash and 50% in phantom stocks for both the up-front and the deferred portions, as shown below:
FIGURE 8. METHOD OF PAYMENT UNDER MBO SCHEME FOR THE CEO-GM
Payment of the deferred portions is subject to compliance with predetermined thresholds for BancoPosta RFC's capital adequacy and liquidity.
The Phantom Stocks awarded are subject to retention periods of two years (for the up-front portion) or one year (for the deferred portions). At the end of the retention period, having verified compliance with BancoPosta RFC's capital and liquidity thresholds, the phantom stocks will be converted into a sum determined on the basis of the arithmetic average of the market value of Poste Italiane's shares in the thirty stock exchange trading days prior to the date of conversion.
It should be noted that, in view of the use of equity-based payments, the Company will ask the Annual General Meeting of Shareholders to be held on 29 May 2018 to approve the "Short-term equity-based incentive plan for material risk takers employed by BancoPosta RFC", in accordance with art. 114-bis of Legislative Decree 58 of 24 February 1998, as amended.
Medium/long-term incentive schemes (LTIPs) aim to strengthen the focus on the creation of value for stakeholders, in keeping with the Strategic Plan by linking the incentives awarded with long-term objectives (over 3-5 years) and effective performance over the same period. The nature of the following LTIPs has been defined also in the light of the applicable statutory requirements.
The CEO-GM is a beneficiary of the following medium/long-term incentive schemes:
The choice of performance indicator for the two plans is aligned with the responsibilities assigned to Poste Italiane's CEO-GM and is in line with the basic principles on which the medium/long-term incentive plans are based. The two plans are fully integrated and complement each other in terms of duration and objectives, strengthening the performance-based variable component of remuneration, in addition to being aligned with the drivers of the new "Deliver 2022" Strategic Plan:
The 2018-2020 cycle of the "Phantom Stock LTIP" involves the award of phantom stocks granting the right to receive stock representing the value of Poste Italiane's shares at the end of a three-year vesting period. It is understood that the price of Poste Italiane's shares will have a significant impact on the value of the award, in that the more the share price rises, the greater the cash value of the phantom stocks awarded.
The "Phantom Stock LTIP" envisages a hurdle represented by the Poste Italiane Group's cumulative EBIT over a three-year period, with awards under the LTIP dependent on achievement of the hurdle.
In line with the statutory requirements applicable to BancoPosta RFC's business, in addition to the above hurdle, the CEO-GM must meet all the following qualifying conditions at the same time in order to qualify for the incentive:
TABLE 2. QUALIFYING CONDITIONS FOR THE "PHANTOM STOCK LTIP" FOR THE CEO-GM
| Qualifying conditions | |
|---|---|
| BancoPosta's capital adequacy: CET 1 |
|
| BancoPosta's short-term liquidity: LCR |
|
| BancoPosta's RORAC: RORAC |
|
CET 1, LCR and RORAC are in keeping with the thresholds established in the Risk Appetite Framework ("RAF") adopted by BancoPosta RFC in accordance with the related regulatory requirements.
It should also be noted that, assessment of whether or not the risk tolerance level for the qualifying conditions, linked to BancoPosta RFC's capital adequacy and liquidity, have been met also takes place at the end of each retention period.
The performance targets for the 2018-2020 cycle of the "Phantom Stock LTIP" are as follows:
FIGURE 6. PERFORMANCE INDICATORS AND WEIGHTINGS FOR THE "PHANTOM STOCK LTIP" FOR THE CEO-GM
A maximum level of over performance has been set, above which the incentive remains constant, as has a hurdle, below which the incentives do not apply and there is, therefore, no payment due.
The number of phantom stocks is quantified at the end of the three-year performance period within the cap to be determined at the time of the award, once achievement of the related objectives has been confirmed. The phantom stocks will be awarded at the end of a one-year retention period and will thus be converted into a sum determined through the arithmetic average of the market value of the shares of Poste Italiane in the thirty stock exchange trading days prior to the date of conversion of the phantom stocks.
The new long-term incentive plan, named the "Deliver 2022 LTIP", envisages a single award and, on achievement of the related performance targets over a five-year period (2018-2022), the payment of a convertible cash sum (75% up-front and the remaining 25% deferred for two years). The Plan offers the Board of Directors, in consultation with the Remuneration Committee, and before the end of the performance period, the possibility to ask the General Meeting of Shareholders to approve conversion of the full amount of the bonus, or a part thereof, into Poste Italiane's ordinary shares.
The "Deliver 2022 LTIP" envisages a hurdle, represented by EBIT over a five-year period, and qualifying conditions, based on CET 1 and LCR in 2022 (defined in keeping with the "Phantom Stock LTIP") as well as BancoPosta's RORAC in 2022, defined with reference to the risk appetite. The hurdle and the qualifying conditions must be met at the same time in order to qualify for the incentive.
The performance targets for the "Deliver 2022 LTIP" are as follows:
FIGURE 8. PERFORMANCE INDICATORS AND WEIGHTINGS FOR THE "DELIVER 2022 LTIP" FOR THE CEO-GM
The above performance targets are assessed in the following way:
A maximum level of over performance has been set, above which the incentive remains constant, as has a hurdle, below which the incentives do not apply and there is, therefore, no payment due.
The combination of the performance hurdle linked to the targets set out in the Strategic Plan (presented during the "Capital Markets Day"), and the pay-out curve means that the cost of the "Deliver 2022 LTIP" is covered by the resulting improvements in operating performance.
The "Deliver 2022 LTIP" will, therefore, be funded from the resources deriving from over-achievement of the challenging Strategic Plan objectives and the related efficiencies.
The "Deliver 2022 LTIP" follows the method of award and payment shown in the figure below:
75% of the incentive payable at the end of the five-year performance period is paid up-front, with the remaining 25% deferred for 2 years. Payment of the deferred portion is subject to Poste Italiane's inclusion in internationally recognised sustainability indices, in addition to confirmation that BancoPosta RFC's capital adequacy and liquidity thresholds have been met.
FIGURE 15. PAY-OUT IN FORM OF VARIABLE REMUNERATION FOR THE CEO-GM
The structure of the pay-out over time involves the award of variable remuneration over a total period of 7 years, including performance, deferral and retention periods. In return for the performances achieved, about 10% of variable remuneration for 2018 will be effectively paid out in 2019, following approval of the financial statements for 2018, whilst the remaining portion is spread out over time.
In line with standard market practice, considering that the executive employment relationship is strictly connected to the office as CEO, in the event of early termination of the employment or in case of termination of the office as CEO, other than for just cause, a payment consisting of two years' annual global compensation and of an amount equal to the fixed pay due until the end of the office, would be payable to the CEO-GM within the context of a final settlement, in addition to the contractual period of notice.
The above does not affect the mandatory payments due in case of termination of employment under the Italian law or the applicable collective bargaining agreement.
In the light of the regulations governing payments, in the event of early termination of employment or in case of termination of the office as a CEO, the CEO-GM will be paid as follows:
The Statutory Auditors' remuneration is in no way linked to Poste Italiane's performance. The fees paid to Statutory Auditors consist solely of a fixed component, determined on the basis of the commitment required in order to carry out their duties.
The Board of Statutory Auditors was re-elected by the Annual General Meeting called to approve the Annual Report for 2015 and will remain in office for three years (2016-2018). When electing the Board of Statutory Auditors, the General Meeting of 24 May 2016 approved fees – for each year in office – for the Chair, amounting to €80,000.00, and for each standing Auditor, amounting to €70,000.00.
No attendance fees are payable for participation in meetings.
Statutory Auditors have the right to be reimbursed for any duly documented travel expenses incurred in carrying out their duties.
In addition to fixed pay and benefits, BancoPosta RFC's Material Risk Takers also participate in the short-term incentive plan ("MBO").
A number of managers classed as Material Risk Takers may be included among the beneficiaries of the medium/long-term incentive schemes, the "Phantom Stock LTIP" and/or the "Deliver 2022 LTIP".
In compliance with existing statutory requirements and the Company's policies, the variable component for Material Risk Takers has the following characteristics:
The variable component awarded to Material Risk Takers may not exceed a ratio of 1:1 with the fixed component (0.33:1 for the Company's control functions), as described in the relevant paragraph).
In keeping with the Company's policies, short-term variable remuneration for Material Risk Takers is based on objective, transparent and verifiable criteria. The objectives pursued when deciding on remuneration policies, with particular regard to the determination of variable pay, are as follows:
These criteria also aim to provide the maximum in customer satisfaction.
Below, the qualifying conditions applied:
(I) Performance gate: participation in management incentive schemes is tied to the achievement of specific financial targets determined annually at Group level and follows the same mechanism described in Section I of Poste Italiane's Remuneration Report.
(II) Compliance with the risk appetite framework: the conditions set by existing regulatory requirements are based on the financial sustainability of the variable component of remuneration and take the form, therefore, of an assessment of the "quality" of the risk adjusted measures of profitability achieved and of compliance with the capital adequacy and liquidity requirements established within the context of the Risk Appetite Framework ("RAF").
| Capital adequacy | Risk tolerance level approved by Poste Italiane's Board |
|---|---|
| Common Equity Tier 1 | of Directors for inclusion in BancoPosta RFC's RAF |
| Operational liquidity | Risk tolerance level approved by Poste Italiane's Board |
| Liquidity Coverage Ratio | of Directors for inclusion in BancoPosta RFC's RAF |
(III) Individual objectives: having met the two previous conditions, payment of the individual bonus is linked to the degree to which the assigned performance targets have been achieved and, in any event, is subject to the absence of any conduct in breach of Poste Italiane's Code of Ethics. On assessment, the incentive is paid if the overall percentage achievement of the objectives assigned is at least equal to the hurdle.
The individual bonus may also increase up to the cap in the event of over-achievement. This arrangement ensures a strong link between the performances of Poste Italiane and BancoPosta RFC and the payment of variable remuneration based on those performances.
The theoretical bonus payable on achievement of the objectives assigned may be reduced (potentially to zero) if the overall individual performance, assessed using a 180° appraisal process, is deemed to be inadequate.
Calculation of the bonus is usually adjusted to reflect the effective period of time in which the role to which the incentive relates has been held.
50% of both up-front and deferred payments are equity-based. The chosen instruments are phantom stocks, with each stock representing the value of a Poste Italiane SpA share. The phantom stocks awarded are subject to retention periods of two years (for the up-front portion) or one year (for the deferred portions). At the end of the retention period, having verified compliance with BancoPosta RFC's capital and liquidity thresholds the phantom stocks will be converted into a sum determined through the arithmetic average of the market value of the shares of Poste Italiane, in the thirty stock exchange trading days prior to the date of conversion.
It should be noted that, in view of the use of equity-based payments, the Company will ask the Annual General Meeting of Shareholders to be held on 29 May 2018 to approve the "Short-term equity-based incentive plan for material risk takers employed by BancoPosta RFC", in accordance with art. 114-bis of Legislative Decree 58 of 24 February 1998, as amended.
There are two alternative forms of deferral for Material Risk Takers.
60% of the short-term variable component is deferred for a 5-year period in the case of Material Risk Takers with a high level of variable remuneration, being personnel who are beneficiaries of both the short- and medium/longterm third (2018-2020) cycle of the "Phantom Stock LTIP", incentive plans, taking into account the caps with regard to maximum percentages under the "MBO" plan. This is done to take into account the evolution of the risks assumed by the Company over time. The variable portion of remuneration is thus subject to the same form of deferral as applied to the CEO-GM (see figure 8 in this annex).
In the case of the remaining Material Risk Takers, where the incentive is above the materiality threshold, 40% of the award is deferred for a 3-year period, so as to take into account the evolution of the risks assumed by the Company over time. The following chart shows the timing of deferrals:
Payment of the deferred portion will take place each year, provided that payment of the deferred portion is sustainable in respect of BancoPosta RFC's financial position, without limiting its ability to maintain or achieve the capital and liquidity thresholds in relation to the risks assumed; moreover the deferred portion is paid if there is no reason to apply the malus provisions.
The same conditions are necessary for the payment of portions subject to retention.
The deferral provisions and equity-based payments will be applied for variable pay in excess of €50,000 (otherwise referred to as the "materiality threshold").
4 This refers to Material Risk Takers who are beneficiaries if the "MBO" plan and not included among the beneficiaries of the Phantom Stock LTIP (2018- 2020) . The selection process takes into account the caps with regard to maximum percentages under the "MBO" plan.
The medium/long-term incentive plans, set up in line with market practices, aim to link a portion of the variable component of remuneration to the achievement of earnings targets, structural cost savings, risk-adjusted earnings and the creation of sustainable value for shareholders.
The medium/long-term incentive schemes are:
The beneficiaries of the plan are a small number of senior managers at BancoPosta RFC. Under the plan, beneficiaries are awarded "phantom stocks" granting them the right to receive stock representing the value of Poste Italiane's shares at the end of a vesting period. The number of phantom stocks is determined at the time of the award (when, that is, the beneficiary is included in the long-term incentive plan) and is linked to performance indicators over a three-year period (2018-2020).
The number of phantom stocks will be quantified at the end of the performance period within the cap to be determined at the time of the award. The phantom stocks will be awarded at the end of a one-year retention period, which is in addition to the three-year performance period, in line with the applicable regulatory requirements. They will be converted into a sum defined through the arithmetic average of the market value of the shares of Poste Italiane, in the thirty stock exchange trading days prior to the date of conversion of the phantom stocks.
The potential maximum individual bonus reflects, for each cycle, the complexity and responsibilities involved in the beneficiary's role and their strategic importance.
Implementation of the plan is closely linked to meeting the specific qualifying conditions for BancoPosta RFC, designed to ensure the stability of BancoPosta RFC's capital and liquidity position, in compliance with the limits in the RAF.
The plan also includes a hurdle for the Poste Italiane Group as a whole. Achievement of the hurdle, effectively grants participants the right to benefit from the long-term incentive plan, provided that it is, as a whole, sustainable. The Hurdle and Qualifying Conditions are summarised in the following table:
TABLE 4. HURDLE AND QUALIFYING CONDITIONS FOR THE "PHANTOM STOCK LTIP" FOR MATERIAL RISK TAKERS
| BancoPosta's capital adequacy: CET 1 BancoPosta's short-term liquidity: LCR BancoPosta's RORAC: |
|---|
| RORAC |
5 Personnel belonging to the Company's control functions are not included among the beneficiaries of the medium/long-term incentive plans.
The performance targets for the "Phantom Stock LTIP" are as follows:
TABLE 5. PERFORMANCE INDICATORS FOR THE "PHANTOM STOCK LTIP"
| Earnings Indicator | Indicatore creazione di valore per gli azionisti |
|---|---|
| BancoPosta RFC's RORAC | Total Shareholder Return (TSR) |
| The three-year RORAC is used for the LTIP with the aim of taking into account the continuity and sustainability of the long-term performance after appropriately adjusting for risk |
TSR is used to measure performance based on the value created for Poste Italiane's shareholders compared with other FTSE MIB-listed companies |
| Welahtina | |
| 60% of the stocks awarded (at target) | 40% of the stocks awarded (at target) |
The choice of performance indicator is aligned with the responsibilities of the personnel falling within the scope of BancoPosta RFC. The risk-adjusted earnings indicator reflects the contribution of capital to the achievement of overall objectives over a determinate period.
The incentive curve, as regards BancoPosta RFC's average three-year RORAC, provides for the following links between the performance delivered and the number of phantom stocks awarded:
FIGURE 16. INCENTIVE CURVE BASED ON BANCOPOSTA RFC'S AVERAGE RORAC OVER A THREE-YEAR PERIOD
Poste Italiane's Total Shareholder Return (TSR) will be compared with the TSR for the FTSE MIB index over the relevant period; only if the value of Poste Italiane's TSR is equal to or higher than the TSR for the FTSE MIB index will the target be considered to have been achieved. TSR measures the effective shareholder return. It serves to develop a common identity across the Group and motivate personnel to work together as a team in order to increase the overall value of the Company.
The "Deliver 2022 LTIP" for personnel who are already beneficiaries of the "Phantom Stock LTIP" (2018-2020 cycle) is a five-year plan with the same characteristics as apply to the CEO-GM.
For Material Risk Takers who are not beneficiaries of the "Phantom Stock LTIP" (2018-2020 cycle), the "Deliver 2022 LTIP" relates to a three-year performance period, with the aim of incentivising personnel to achieve medium-term targets, and providing for deferral of a portion for another two years.
The "Deliver 2022 LTIP", with a five- or a three-year performance period, is subject to the same hurdle and qualifying conditions as apply to the CEO-GM:
| Hurdle | Qualifying conditions |
|---|---|
| Poste Italiane Group EBIT | BancoPosta's capital adequacy: CET 1 |
| BancoPosta's short-term liquidity: LCR |
|
| BancoPosta's RORAC: RORAC |
The qualifying conditions for CET 1 and LCR are based on the thresholds at the end of the period. Risk-adjusted earnings ("BancoPosta's RORAC") is based on the risk appetite at the end of the period.
With regard to the performance targets, the five-year "Deliver 2022 LTIP" envisages the same indicators as apply to the CEO-GM; for beneficiaries of the three-year "Deliver 2022 LTIP", on the other hand, the performance targets are as follows:
| Target | Weighting |
|---|---|
| Group EBIT | 60% |
| HR Costs | 40% |
The method of payment for the five-year "Deliver 2022 LTIP" is the same as applies to the CEO-GM.
On achievement of the targets assigned for the three-year "Deliver 2022 LTIP", 50% of the award is paid "convertible" cash form and the remaining 50% in "convertible" phantom stock. At the end of the three-year performance period, 75% is paid up-front and 25% is deferred for two years. Both the up-front and deferred portions paid in phantom stock are subject to a retention period.
The method of payment for the three-year "Deliver 2022 LTIP" for BancoPosta RFC's Material Risk Takers is shown below.
FIGURE 17. METHOD OF SETTLEMENT OF THE THRRE-YEAR DELIVER 2022 LTIP FOR MATERIAL RISK TAKERS
Settlement of the deferred portion will take place, provided that payment of the deferred portion is sustainable in respect of BancoPosta RFC's financial position, without limiting its ability to maintain or achieve adequate levels of capital and liquidity in relation to the risks assumed; moreover the deferred portion is paid if there is no reason to apply the malus provisions. As for the Group's other beneficiaries, payment of the deferred portion is subject to Poste Italiane's inclusion in internationally recognised sustainability indices.
Confirmation that BancoPosta RFC's capital adequacy and liquidity requirements have been met also takes place prior to the payment of portions subject to retention.
BancoPosta RFC will ask the Annual General Meeting of Shareholders to be held on 29 May 2018 to approve the "Equity-based incentive plan for material risk takers employed by BancoPosta RFC", in accordance with art. 114 bis of Legislative Decree 58 of 24 February 1998, as amended.
The annual award under the "Deliver 2022 LTIP" contributes to definition of the materiality threshold (€50,000.00).
In line with the Company's policies, Material Risk Takers in the control functions have:
personnel belonging to the Company's control functions may not, therefore, exceed one third of the fixed component.
Personnel belonging to the Company's control functions do not participate in the long-term incentive plans ("Phantom Stock" and "Deliver 2022" LTIPs). The nature of the plans is not compatible with the need to determine incentive schemes in keeping with the responsibilities assigned and not linked to BancoPosta RFC's operating performance and financial position. In addition, the need to ensure that the variable component of remuneration does not exceed one third of the fixed component represents a very tight restriction, given that these personnel are included among the beneficiaries of the short-term incentive plan ("MBO").
In line with the Company's policies, fixed pay is aligned with the role held and the scope of the responsibilities assigned, reflecting the experience and skills required for each position, the degree of excellence demonstrated and the overall quality of the individual's contribution to BancoPosta RFC's performance. The adequacy of fixed pay is also assessed with reference to relevant market benchmarks.
In line with the Group's policies, variable pay is directly linked to Company and individual performance, taking into account the risks assumed in conducting operations (it may, therefore, be significantly reduced, potentially to zero). The following forms of variable pay are used:
Specific incentive plans may also apply to non-Risk Takers, among professionals, based on the fulfilment of objectives and the payment of bonuses with the aim of helping to retain personnel and to reward outperformance by personnel in certain positions based on qualitative and quantitative measures.
6 In 2018, no potential beneficiary included among BancoPosta's non-Risk Takers,, has access to maximum potential incentives above the materiality threshold established.
This section provides a description of the methods adopted in implementing the remuneration and incentive policy for 2017 during 2017, including the decision-making process involving the various corporate functions and bodies, and the compensation paid in 2017 to the Chairwoman and members of the supervisory board, the Chief Executive Officer and General Manager, the Company's control functions and the remaining Material Risk Takers (the variable pay shown in the tables is based on an estimate of the amount payable at the time of preparing this document, whilst awaiting approval of the Company's financial statements). In addition, quantitative disclosures of the remuneration paid to personnel falling within the scope of application of BancoPosta's remuneration and incentive policies are provided.
The "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2017" were defined at the Board of Directors' meeting of 15 March 2017, in consultation with the Remuneration Committee, and approved by the Annual General Meeting of Shareholders on 27 April 2017.
The Guidelines are available on the Company's website at www.posteitaliane.it (in the section, Governance – Remuneration).
Assessments of the method of the implementing remuneration and incentive policies and practices for BancoPosta RFC personnel in 2017 have revealed a general level of adequacy.
The Compliance and Risk Management functions conducted a prior assessment of the "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2017", respectively confirming their compliance with the related internal and external requirements and risk policies.
In particular, the Compliance function conducted appropriate checks to ensure the consistency and suitability of the "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2017" and of the objectives assigned in respect of the relevant regulatory requirements and the BancoPosta RFC Regulation.
With the support of BancoPosta's Administration, Planning and Control, the Risk Management function contributed to determining the risk-adjusted financial indicators to which the incentive plans were linked, in line with BancoPosta RFC's capital and liquidity position, the risks assumed as part of its operations and the resulting levels of performance achieved. The Risk Management function also, therefore, provided the Remuneration Committee with the information that the Committee required in order to ensure consistency with BancoPosta RFC's Risk Appetite Framework (RAF). The Head of the Risk Management function was invited to Remuneration Committee meetings when matters having an impact on BancoPosta RFC's risk management and capital and liquidity position were dealt with.
The Compliance and Risk Management functions also contributed, insofar as they are responsible, to the process of identifying Material Risk Takers, coordinated by the HR Business Partner in support of the Head of the BancoPosta function. The number of Material Risk Takers during 2017 (at 31 December 2017) was established as 83.
The Internal Auditing function also assessed the conformity of remuneration practices with BancoPosta's policies and the relevant regulatory requirements.
In accordance with the disclosure requirements regarding the method by which the remuneration and incentive guidelines for 2017 were applied and the requirements of Circular 285 of 17 December 2013, VII, as amended on 18 November 2014, and art. 450 of Regulation 575 of 26 June 2013 (the so-called CRR), key data regarding the incentive schemes implemented in 2017 and the relevant tables are provided below.
In particular, in accordance with the guidelines, in addition to the second (2017-2019) cycle of the Phantom Stock LTIP, the variable remuneration schemes implemented were as follows:
Neither the CEO-GM nor Key Management Personnel are included among the beneficiaries of the performancerelated bonus, one-off payments or signing bonuses.
The performance gates and qualifying conditions for the MBO scheme were all met and the related incentives were thus implemented.
The aggregated amounts shown in the following tables reflect BancoPosta RFC's organisational structure at 31 December 2017.
Table A (as per art. 450, paragraph 1, letter g): Aggregate quantitative disclosure of remuneration by role
| Role | Number of beneficiaries | Total remuneration for year ended 31 December 2017 |
|---|---|---|
| Members of supervisory board | 13 | € 967.117 |
| Members of management board | 2 | € 1.612.546 |
| Marketing functions | 182 | € 10.748.777 |
| Company functions | 1288 | € 41.516.134 |
| Control functions | 219 | € 11.012.218 |
| Other | 7 | € 696.933 |
Total remuneration indicates the sum of:
The Annual General Meeting of Shareholders held on 27 April 2017 re-elected the Company's Board of Directors. As a result, amounts relating to "Members of the supervisory board" and "Members of the management board" have been included on a pro-rata basis for all Directors in office throughout or for a part of the financial year.
In terms of roles:
Table B (as per art 450, paragraph 1, letter h, I-II): Aggregate quantitative disclosure of remuneration for senior management and personnel whose activities have a material impact on the entity's risk profile
| Forms of variable component divided into | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Category | Number of beneficiaries |
Fixed pay | Variable pay | Cash | Shares | Equity-based instruments |
Other instruments |
|||||
| Executive Directors | 2 | € | 1.204.248 € | 408.298 € | 204.149 | € | 204.149 | |||||
| Non-executive Directors | 13 | € | 967.117 | |||||||||
| Senior management | 10 | € | 2.002.263 € | 574.262 € | 332.343 | € | 241.919 | |||||
| Control functions | 26 | € | 2.732.624 € | 614.099 € | 549.329 | € | 64.770 | |||||
| Other Material Risk Takers |
38 | € | 3.770.755 € | 822.871 € | 797.369 | € | 25.502 |
Details of fixed and variable remuneration are provided in the notes to Table A. Above all, in keeping with the "Guidelines for BancoPosta RFC's remuneration and incentive policies for 2017" and the information circular on the "Short-term equity-based incentive plan for 2017 material risk takers employed by BancoPosta RFC" approved by the Annual General Meeting of Shareholders on 27 April 2017, regarding the method of payment for the shortterm incentive scheme ("MBO"), the item, "Equity-based instruments" shows the best estimate, at the time of preparation of this document whilst awaiting approval of the Company's financial statements, of the face value of the phantom stocks linked to the MBO scheme for 2017.
The category "senior management" includes the Head of the BancoPosta function, the Manager responsible for financial reporting and the managers reporting directly to the Head of BancoPosta at 31 December 2016, whilst the heads of the "Control functions" are included in the specific category together with their control teams.
The beneficiaries of the "Phantom Stock LTIP" (2017-2019 cycle) include the CEO-GM and 5 senior managers. The rights attaching to the phantom stocks have yet to vest. To provide full disclosure, the fair value of the portion recognised in the financial statements for 2017 for the CEO-GM amounts to €82,520, whilst the amount for beneficiaries in the senior management team is €47,789.
| Total deferred | Of which | Deferred remuneration awarded during the year | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Category | remuneration | Vested | Unvested | Target | Paid and reduced through performance conditions * |
|||||
| Executive Directors | € | 494.723 € | 55.911 € | 438.813 € | 55.911 € | 55.911 | ||||
| Non-executive Directors | ||||||||||
| Senior management | € | 400.471 € | 37.540 € | 362.930 € | 37.540 € | 37.540 | ||||
| Control functions | € | 106.494 € | 13.669 € | 92.824 € | 13.669 € | 13.669 | ||||
| Other Material Risk Takers |
€ | 40.877 € | 5.119 € | 35.758 € | 5.119 € | 5.119 |
*The performance conditions were verified in previous periods. Compliance with BancoPosta RFC's capital adequacy and liquidity requirements was assessed during the year.
"Total Deferred Remuneration" means all components of deferred variable remuneration, including amounts for previous years.
Table D (as per art 450, paragraph 1, letter h, V-VI): Aggregate quantitative disclosure of remuneration for senior management and personnel whose activities have a material impact on the entity's risk profile
| Signing bonus | Severance indemnities | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Category | New payments | New payments made during the year |
Payments awarded during the year | ||||||||
| Number of beneficiaries |
made during the year |
Number of beneficiaries |
Amount | Number of beneficiaries |
Amount | Largest amount awarded per person |
|||||
| Executive Directors | 1 € 2.084.597 € |
2.084.597 | |||||||||
| Non-executive Directors | |||||||||||
| Senior management | |||||||||||
| Control functions | |||||||||||
| Other Material Risk Takers |
Notes to Table D:
"Signing bonus" means the signing bonuses paid during the year, including any deferred portions.
"Severance pay" means the payments awarded on termination paid during the year linked to severance.
Following the termination of employment of Francesco Caio, the Chief Executive Officer and General Manager for the period 2014-2016, on 2 August 2017, the Board of Directors approved payment of an indemnity of €1,578,638.77, and other severance pay, in addition to the sum of €425,958.23 in relation to a non-competition pact and €80,000.00 as compensation for specific rights waived connected with the termination of employment,.
The aforementioned pay-outs are made within the limits of the law and in line with the supervisory banking regulation on deferred remuneration and payments in the form of financial instruments, and in compliance with the Company Remuneration Report. This policy is described in the "Remuneration Report" prepared in accordance with art. 123-ter of the CLF, approved by the Board of Directors on 15 March 2017 and by the Annual General Meeting of Shareholders held on 27 April 2017.
A portion of this compensation was paid up front, with the remaining deferred portion payable as follows:
• 40% payable as follows: 50% in cash and the remaining 50% in the form of an equity-based payment, subject to a two-year retention period;
• 60% deferred over a period of 5 years pro-rata, with 50% payable in cash and the remaining 50% in the form of an equity-based payment, subject to a one-year retention period.
| Number of benefi ci aries | Total remunerati on | ||||
|---|---|---|---|---|---|
| 1 | ≥ €1 million per annum; | ||||
| Between €1 and 5 million divided into tranches of €500 thous and | |||||
| 1 | Between €1 and €1.5 milli on | ||||
| Between €1.5 and €2 milli on | |||||
| Between €2 and €2.5 milli on | |||||
| 0 ≥ €5 million divided into tranches of €1 million |
"Total remuneration" ("Total") is described in the notes to Table A.
This refers to the CEO-GM, Matteo Del Fante, whose total remuneration is in excess of €1 million and, in particular, is between €1 and 1.5 million, as shown in Table F.
| Total remuneration | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Category | No. | Fixed component | Variable component | Total | |||||||
| Chair of supervisory board - Maria Bianca Farina from 27/04/2017 to 31/12/2017 |
1 | € 324.167 |
€ 324.167 |
||||||||
| Chair of supervisory board - Luisa Todini from 01/01/2017 to 27/04/2017 |
1 | € 77.350 |
€ 77.350 |
||||||||
| Each member of management board: | |||||||||||
| Chief Executive Officer and General Manager - Matteo Del Fante from 27/04/2017 to 31/12/2017 |
1 | € 845.388 € |
275.178 € | 1.120.566 | |||||||
| Chief Executive Officer and General Manager - Francesco Caio dal 01/01/2017 al 27/04/2017 |
1 | € 358.860 € |
133.120 € | 491.980 | |||||||
| General Manager | |||||||||||
| Joint General Managers | |||||||||||
| Deputy General Managers |
"Total remuneration" ("Total") is described in the notes to Table A.
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