Remuneration Information • Mar 10, 2017
Remuneration Information
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"Please note that this is a convenient translation of an Italian document provided for information purposes only. Therefore, the Italian version of such document shall prevail in all respects on the English translation."
We have called this ordinary Shareholders' Meeting to request your approval of the "2017 FinecoBank Compensation Policy" (hereinafter, also "2017 Compensation Policy"), set out in the attached document which forms an integral part of the present Report, in compliance with the requirements set by the Bank of Italy Circular n. 285 of December 17th, 2013 providing the "Supervisory Provisions concerning Banks" (hereinafter, "Supervisory Provisions" which prescribe that the ordinary Shareholders' Meeting approves, amongst other items, the remuneration policy for members of the Board of Directors, employees and collaborators not related to the company by an employment agreement (or for FinecoBank selected Personal Financial Advisors of the Company) as well as according to section 123-ter of the legislative Decree 58 dated February 24th, 1998 (Consolidated Finance Act, known as TUF from its Italian initials). The approval of remuneration policy and incentive systems must evidence their conformity with prudent risk management and the company's long-term objectives, ensuring also an appropriate balance between the fixed and variable components of remuneration as required by regulators and, in the case of the latter, risk-weighting systems and mechanisms designed to ensure that compensation is linked to effective and lasting results.
In addition, in compliance with indications of the regulators, the 2017 Compensation Policy provides information on the implementation of the 2016 FinecoBank compensation policy approved by the Shareholders' Meeting on April 12th , 2016 (Section II of the 2017 Compensation Policy "Annual Compensation Report").
It is therefore proposed that this Shareholders' Meeting approves the 2017 Compensation Policy which defines the principles and standards that FinecoBank applies and which are used to define, implement and monitor the compensation policy and systems. The proposal was formulated by the Human Resources function, with the contribution of Compliance, Risk Management, Finance and Network Controls, Monitoring and Service Department functions on the topics by their scope. Shareholders are also invited to consult the information regarding the implementation of the 2016 Compensation Policy of FinecoBank approved by the Shareholders' Meeting on April 12th , 2016.
The key principles of the 2017 Compensation Policy, which are confirmed with respect to those approved by Shareholders' Meeting on April 12th, 2016, are described in the section II of the attached document - that were made available to Shareholders and the market – and they are summarised here below:
(c) the key pillars of the 2017 Compensation Policy are:
In line with the regulatory requirements provided by European Banking Authority (EBA), FinecoBank performed the yearly assessment of the staff categories whose professional activities have a material impact on the Bank's risk profile. The self-assessment was performed at local and Group level, as requested by Bank of Italy, and is documented in the 2017 Compensation Policy. The defined number of Identified Staff in 2017 amounted to 14 employees and 7 financial advisors.
Moreover, in line with the indications of national and international regulators, it was considered appropriate within the annual review of policy to highlight in particular:
In line with national and international standards, the key implementation features and the main results of FinecoBank compensation policy and 2016 incentive systems, as well as evidence of the coherence of the rationale behind the long-term loyalty plans of FinecoBank with the principles of its compensation policy and with specific regulatory requests, are described in the Annual Compensation Report that were made available for information to Shareholders and the market within the limits established by law. The Annual Compensation Report provides a description of compensation practices adopted in FinecoBank and the implementation of incentive systems, as well as Remuneration Tables with a focus on Non-Executive Directors, the Chief Executive Officer and General Manager, Executives with strategic responsibilities and other Identified Staff with a material impact on risk, in compliance in particular with the applicable regulations.
The Annual Compensation Report provides also the disclosure as per section 84-quater of Issuers regulation as adopted with the Consob Resolution no. 11971 of May, 14th, 1999, as later modified, referring to Directors, Statutory Auditors, General Manager and executives with strategic responsibilities. The document contains specific information regarding the approval and execution of equity plans, as requested by section 114-bis of TUF.
* * *
Dear Shareholders,
If you agree with the above, you are invited to approve the proposal on the agenda and, as a result, to adopt the following resolutions:
We have called this ordinary Shareholders' Meeting to request your approval of the renewal of the "FinecoBank Termination Payments Policy" (hereinafter "2017 Severance Policy" or the "Policy"), set out in the attached document which forms an integral part of the present Report, in compliance with the requirements set forth in the Part I, Title IV Chapter 2, "Remuneration policies and practices" of the Bank of Italy's Circular n. 285 of December 17th, 2013 ("Supervisory Provisions concerning Banks"). In particular, according to the dispositions mentioned before, the ordinary Meeting has to approve, amongst other items, the criteria to determine the compensation to be granted in case of early termination of the employment or office, including the limits to such compensation in terms of annual fixed remuneration and the maximum amount deriving from their application.
In the general assumption that termination payment (hereinafter, also "the Severances") is defined in each case in the best interests of the company, such payments do not exceed the limits provided by the law and/or by the collective labor agreements applicable in case of lay-off.
In particular, it is proposed that the termination payments do not exceed 24 months of total compensation including the indemnity in lieu of notice. In this context, in any case, the additional payments on top of the indemnity in lieu of notice, cannot exceed 18 months of total compensation.
To this regards is highlighted that the 2017 Severance Policy - compared to the same policy approved by the Shareholders' Meeting on April 23rd 2015 - sets a more strict maximum limit for the Severances (the 2015 document set a maximum limit of 24 months, plus the indemnity in lieu of notice).
With the only aim of meeting the regulatory provision introduced by the Bank of Italy, which requires to set a maximum limit to Severances also in terms of number of monthly fixed pay and in absolute terms, it is reported that – in view of maximum 2:1 ratio between variable and fixed remuneration set by 2014 Shareholders' Meeting – the aforesaid maximum limit (including the indemnity in lieu of notice) could arrive to correspond to a merely theoretical value of 72 months of fixed compensation in the case, purely hypothetical and improbable, of a subject who in the last three years prior to the termination has always received bonuses in a measure equal to 200% of his/her fixed compensation. The value of the Severance so determined will not in any case exceed Eur 5,1 million.
The value of each month's salary used to calculate the Severance is set – in compliance with the law and the applicable collective labor agreement – considering the current fixed remuneration plus the average of the incentives actually cashed-in during the last three years prior to the termination.
Regarding the determination criteria, Severances, due to the mechanism for the calculation of the compensation used for the determination, which includes the bonuses actually cashed-in after the application of malus clause, are as a matter of fact already differentiated just on the basis of the risk-adjusted individual performance. The definition of their amount also occurs evaluating on a case-by-case basis and in an overall perspective, the specific objective and subjective circumstances of the relationship resolution, however considering - within the specific legal and contractual framework - the following elements: duration of the employment, performance provided over time, assumption of inappropriate risks, behaviors alignment with FinecoBank and Group values, personal and social impacts of the termination, willingness to take on additional commitments, interest of the company to come anyway to a consensual resolution of the relationship rather than a unilateral one.
Severances are paid out in forms and with timings fully consistent with the discipline, also regulatory, time by time applicable to the specific case.
* * *
Dear Shareholders,
If you agree with the above, you are invited to approve the proposal on the agenda and, as a result, to adopt the following resolutions:
We have called this Ordinary Shareholders' Meeting to request your approval of the 2017 Incentive System, providing for the allocation of an incentive, in cash and/or in free ordinary shares, to be granted in a multi-year period to selected resources of FinecoBank, in accordance with the modalities described below and subject to the achievement of specific performance conditions.
This proposal was formulated in compliance with the provisions of section 114-bis of Decree 58 dated February 24th, 1998, and in accordance with the provisions set forth by Consob with reference to incentive plans based on financial instruments assigned to corporate officers, employees or collaborators; for this purpose, a document describing the details of the incentive system was released pursuant to section 84-bis of the Consob Regulation no. 11971/99 and subsequent amendments, and was made available to the public under the terms of the law and reference is made to detailed description of the incentive system described in this report.
The proposal is also aligned with the Compensation Policy of FinecoBank, the indications issued by the Bank of Italy on remuneration and incentives policies and practices, and the directive set by the European Directive 2013/36/EU (Capital Requirements Directive, also known as CRD IV), and by EBA (European Banking Authority) guidelines. Respecting these provisions, FinecoBank determined the adoption of a ratio between the variable and the fixed remuneration equal to 2:1 for employees working in business functions, unless of the application of a lower limit as provided by Regulators.
The 2017 Incentive System (hereinafter also "2017 System") aims to attract, retain and motivate FinecoBank beneficiaries, in compliance with the national and international regulatory requirements with the aim to define - in the interest of all stakeholders - incentive systems aligned with long- term company strategies and goals, linked to bank results, adjusted in order to consider all risks, in coherence with capital and liquidity level necessary to cover the activities in place and, regardless, be able to avoid misleading incentives that could drive excessive risks taking for the bank and the system on a whole.
The potential beneficiaries of the 2017 System, identified in line with the criteria issued by Commission Delegated Regulation (EU) no. 604/2014 of March 4th, 2014, are the following:
The overall number of beneficiaries as at January 9th, 2017 is equal to 14.
(b) The bonus pool will be defined on the basis of local and Group performance and assigned to employees according to individual performance.
(c) The 2017 System aims to attract, retain and motivate the beneficiaries and to align FinecoBank incentive system to the most recent national and international regulatory requirements and provides for:
(e) Incentive pay-outs shall be made over a multi-year period (2018-2023) subject to continuous employment at each date of payment and as follows:
in 2018 the first instalment of the overall incentive ("1st instalment") will be paid in cash, in absence of any individual values / compliance breach, considering also the gravity of any internal/external findings (e.g. Audit, Bank of Italy, Consob and/or analogous local authorities);
over the period 2019-2023 the remaining amount of the overall incentive will be paid in several instalments in cash and/or Fineco free ordinary shares; each subsequent tranche will be subject to the application of the Zero Factor for the year of allocation and in absence of any individual values / compliance breach, considering also the gravity of any internal/external findings (e.g. Audit, Bank of Italy, Consob and/or analogous local authorities);
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| 20% cash + | ||||||
| CEO/GM and 1st reporting line | 20% cash | 10% cash | 10% shares | 10% shares | 20% cash | 10% shares |
| 10% cash + | ||||||
| Other Identified Staff | 30% cash | 10% cash | 30% shares | 10% shares | 10% shares | - |
In order to guarantee the compliance with regulatory and legal requirements (also regarding fiscal matters), to ensure the implementation of the 2017 System, the Chairman and the Chief Executive Officer will be granted with all necessary power of attorney to implement, also separately, any necessary adaptations to the 2017 System that do not change substantially the content of resolution of Board of Directors and Shareholders' Meeting, also via alternative solutions that fully comply with the principles of 2017 System and allow achievement of the same results (e.g. a different percentage distribution of the various instalments of payments; a different period of deferral; a retention on granted shares; extension of 2017 System application to other beneficiaries considered as equivalent to Identified Staff; using a trust company; paying an equivalent amount in cash in lieu of granting shares; to be determined on the basis of the market value of Fineco shares, considering the arithmetic mean of the official market price of ordinary shares during the month preceding each Board meeting to execute the actual grant).
It is understood that these amendments will be adopted in any case in accordance with the applicable requirements.
The issue of Fineco free ordinary shares necessary for the execution of the 2017 System, as in the past, will be performed in compliance with section 2349 of the civil Code and will be object of a delegation of power of attorney to the Board of Directors, in compliance with section 2443 of the civil Code.
Accordingly, the extraordinary session of today's Shareholders' Meeting will be asked to approve the proposal to delegate to the Board of Directors the related power of attorney.
For the issuance of Fineco ordinary shares to support the 2017 System the proposal will be submitted to the Extraordinary Shareholders' Meeting to transfer the powers of attorney to the Board of Directors as allowed by section 2443 of the Italian civil Code, to proceed with the capital increase in accordance with the provisions of section 2349 of the civil Code for a maximum nominal amount of euro 128,700,00 (attributable entirely to capital at Eur 0.33 per share, equal to the par value), corresponding to up to 390,000 Fineco ordinary shares with a par value of Eur 0.33 each, with the same characteristics as those in circulation with regular dividend entitlement.
Related to section 2443 of civil Code that provides that the Directors can exercise the right to carry out a free capital increase for a maximum period of five years starting from the date when the Shareholders' Meeting resolution providing the delegation of power was registered and therefore, until 2022, in order to assign last share instalment provided for 2023 it will be necessary to submit to a future Shareholders' Meeting approval a proposal aimed at integrating the delegation of power already provided to the Board of Directors so that the implementation of 2017 System can be completed.
The issue of free ordinary shares needed for the execution of 2017 System shall be done using the special reserve known as "Provisions Linked to the Medium-Term Incentive System for the staff of FinecoBank" which, if case may be restored or increased via allocation of profits or a portion of available statutory reserves, formed from the distribution of company profits that shall be identified by the Board of Directors at the moment of share issuance.
In case it will not be possible to issue (fully or partially) the shares to support the 2017 System, including the case in which the amount of the "Provisions Linked to the Medium-Term Incentive System for the staff of FinecoBank" would not be sufficient, an equivalent amount in cash will be allocated to the beneficiaries, determined in base of arithmetic mean of the official market price of Fineco ordinary shares during the month preceding the Board resolution that evaluates performance achievements 2017.
Dear Shareholders,
If you agree with the above proposal, you are invited to approve it by adopting the following resolutions:
"The Ordinary Shareholders' Meeting of FinecoBank S.p.A., having heard the Board of Directors' proposal,
We have called this ordinary Meeting to request your approval of the 2017 Incentive System for Personal Financial Advisors, aimed at allocating an incentive in cash and/or in FinecoBank free ordinary shares, to be granted over a multi-year period to a selected group of FinecoBank Personal Financial Advisors Identified Staff, according to the conditions described below.
This proposal has been formulated in compliance with the provisions of section 114-bis of Decree 58 dated February 24th, 1998, and in accordance with the provisions set forth by Consob with reference to incentive plans based on financial instruments assigned to corporate officers, employees and collaborators; for this purpose, a document describing the details of the incentive systems has been prepared pursuant to Section 84-bis of the Consob Regulation no. 11971/99 and subsequent amendments, and has been made available to the public under the terms of law and reference is made to detailed description of the incentive system described in this report.
The proposal is also in line with FinecoBank Compensation Policy, the indications issued by Bank of Italy1 on remuneration policies and practices and the direction set by the European Directive 2013/36/UE (Capital Requirements Directive or CRD IV) and by EBA (European Banking Authority) guidelines. With this regards, it should be recalled that FinecoBank, in respect to these provisions, has defined the adoption of a ratio between the variable and the fixed remuneration equal to 2:1 for the Personal Financial Advisors Identified Staff, within the regulatory limit.
The 2017 Incentive System for Personal Financial Advisors Identified Staff (also the "2017 PFA System") aims to retain and motivate the Personal Financial Advisors, in compliance with national and international regulatory requirements and with the aim to define – in the interest of all stakeholders – incentive systems aligned with long term company strategies and goals, linked to Company results, adjusted in order to consider all kind of risks, in coherence with capital and liquidity levels needed to cover the activities in place and, in any case, able to avoid misleading incentives that could drive excessive risk taking for the bank and the system in its whole.
The potential beneficiaries of the 2017 PFA System, as provided by the criteria issued by Commission Delegated Regulation (EU) No 604/2014 of March 4th, 2014, are:
The total estimated number of beneficiaries, as on the date of the hereby report, is ca.10.
1 7° update of November, 18th, 2014 of "Disposizioni di vigilanza per le banche", Circolare nr. 285 of December, 17th, 2013 ( "Nuove Disposizioni").
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| 30% | 10% cash + | 10% | |||
| FinecoBank | 10% FinecoBank | FinecoBank | |||
| 30% | 10% | ordinary | ordinary | ordinary | |
| Personal Financial Advisors Identified Staff | cash | cash | shares | shares | shares |
(g) In coherence with 2016, it is foreseen a specific minimum threshold below which deferral mechanism will not be applied (Eur 75,000 that will be paid in cash).
In order to guarantee the compliance with regulatory and legal dispositions (also in fiscal matter), during the implementation of 2017 PFA System, it deems appropriate to empower the Chairman and the Chief Executive Officer and General Manager, also separately, with every opportune power to implement any eventual change to the 2017 PFA System that do not change substantially the content of resolutions of Board and today's General Shareholders' Meeting, also through alternative solutions that fully comply with the principles of 2017 PFA System and allow achievement of the same results (e.g.: a different percentage distribution of the various instalments of payments; a different period of deferral; paying an equivalent amount in cash in lieu of granting shares, to be determined on the basis of the market value of FinecoBank shares, considering the arithmetic mean of the official closing price of ordinary shares during the month preceding each Board resolution to execute the actual grant; extension of 2017 PFA System application to other beneficiaries considered as equivalent to identified staff).
It is understood that these amendments will be adopted in any case in accordance with the applicable provisions and in particular as provided by the Regulation "Nuove Disposizioni".
Dear Shareholders,
If you agree with the above proposal, you are invited to approve it by adopting the following resolution:
"FinecoBank's ordinary shareholders' meeting, having heard the Board of Directors proposal,
Dear Shareholders,
We have called this ordinary Meeting to request your approval of the authorization to purchase and to dispose of treasury shares. Consequent and inherent resolutions.
In order to acquire the financial instruments needed to carry out the 2017 PFA System for the Personal Financial Advisors, it is needed to propose to the Shareholders' Meeting the authorization, pursuant article 2357 civil Code, to purchase and to dispose of treasury shares. In this way the Company will have, by purchasing them on the market, the shares needed to support the 2017 Incentive System for PFA through the assignment of those shares to the beneficiaries who have the right to receive them.
The proposal foresees to confer to the Board of Directors the faculty to carry out repeated and subsequent transactions to buy and sell (or other kind of disposals) treasury shares on a revolving base, also for fractions of the maximum amount authorized, so that, at any time, the number of shares of the purchase proposed and in the Company's ownership does not exceed the limits set by the law and by the authorization provided by the Shareholders' Meeting.
The authorization request is for maximum number of 346,000 ordinary shares, equal to 0.06% of share capital and, therefore, well below the maximum limit of 20% provided by the applicable regulation, also taking into consideration the nr. 714,325 treasury shares owned by the Company at the date of the present report, equal to 0.12% of share capital, and also the maximum number of treasury shares (i.e. number of 250,000 shares, equal to 0.04% of the current share capital) that the Bank will be able to purchase on the market in order to support the "2016 PFA Plan", already authorized by the 2016 Shareholders' Meeting and also by the European Central Bank.
The purchase of treasury shares will be executed within the limits of the distributable earnings and of available supply consequent to the last annual report approved at the moment of the disposal of purchasing operations.
The purchasing of treasury shares reduces the net worth of an equal amount, through the inclusion in the balance sheet of a specific passive item, with negative sign.
The proposal foresees that purchasing and disposition orders of treasury shares have to be made on regulated capital markets, according to art. 132 of the Consolidated Finance Act (TUF) and to art. 144-bis (1) (b) of Consob regulation, with the same operational procedures described in the guidelines of organization and management of such marketsin order to guarantee equality in treatment between Shareholders and which do not allow the direct matching of purchase orders against pre-determined sell orders; in particular, these purchases will have to be made:
(i) by public offering for purchase or trade;
Sell operations of treasury shares in portfolio instead will be executed in the manner deemed recommendable for the Company's interest, including transfer and/or the assignment to execute stock granting incentive plans.
With reference to the amount of the purchasing operations, it is proposed that it should not be below the nominal per share value, equal to a nominal value of Eur 0.33 and not above, as a maximum, to the arithmetic mean of the official closing price of FinecoBank ordinary shares registered in the MTA ("Mercato Telematico Azionario" – Milan Stock Exchange) in the 30 days preceding the purchase, increased by 10%.
Regarding the disposal of the treasury shares, the Board of Directors will establish from time to time criteria for the definition of the corresponding fees and/or modalities, terms and conditions of purpose of treasury shares in portfolio, taking into consideration the procedure followed, the share price trend in the period prior to transactions and the best interest of the Company.
Finally it is proposed that the authorization to purchase is released for a period of eighteen months from the date of the Shareholders' Meeting that passed the resolution for authorization.
Dear Shareholders,
If you agree with the above proposal, you are invited to approve it by adopting the following resolution: "FinecoBank's ordinary shareholders' meeting, having heard the Board of Directors proposal, according to the provisions of articles 2357 and 2357-ter of the Civ. Cod., 132 D, Lgs. D. n. 58/1998 and 114-bis of Consob Regulation
We have called this Ordinary Meeting to request your approval of an authorization renewal to purchase and dispose of treasury shares for stock granting plan "2015-2017 PFA PLAN". Related and consequent resolutions.
In order to acquire the financial instruments needed to carry out the stock granting plan "2015-2017 PFA PLAN" for the Personal Financial Advisors - also considering the relevant resolution of the Shareholders' Meeting held on June, 5th 2014 - it is needed to propose to the Shareholders' Meeting the authorization, pursuant article 2357 Civil Code, to purchase and to dispose of treasury shares. In this way the Company will have, by purchasing them on the market, the shares needed to support the stock granting plan "2015-2017 PFA PLAN" through the assignment of those shares to the beneficiaries who have the right to receive them.
The proposal foresees to confer to the Board of Directors the faculty to carry out repeated and subsequent transactions to buy and sell (or other kind of disposals) treasury shares on a revolving base, also for fractions of the maximum amount authorized, so that, at any time, the number of shares of the purchase proposed and in the Company's ownership does not exceed the limits set by the law and by the authorization provided by the Shareholders' Meeting.
The authorization request is for maximum number of 5,520,000 ordinary shares, equal to 0.91% of share capital and, therefore, well below the maximum limit of 20% provided by the applicable regulation, also taking into consideration the nr. 714,325 treasury shares owned by the Company at the date of the present report, equal to 0.12% of share capital, and also the maximum number of treasury shares (i.e. number of 250,000 shares, equal to 0.04% of the current share capital) that the Bank will be able to purchase on the market in order to support the "2016 PFA PLAN", already authorized by the 2016 Shareholders' Meeting and also by the European Central Bank.
The purchase of treasury shares will be executed within the limits of the distributable earnings and of available supply consequent to the last annual report approved at the moment of the disposal of purchasing operations.
The purchasing of treasury shares reduces the net worth of an equal amount, through the inclusion in the balance sheet of a specific passive item, with negative sign.
The proposal foresees that purchasing and disposition orders of treasury shares have to be made on regulated capital markets, according to art. 132 of the Consolidated Finance Act (TUF) and to art. 144-bis (1) (b) of Consob regulation, with the same operational procedures described in the guidelines of organization and management of such markets, in order to guarantee equality in treatment between Shareholders and which do not allow the direct matching of purchase orders against pre-determined sell orders; in particular, these purchases will have to be made:
(i) by public offering for purchase or trade;
Sell operations of treasury shares in portfolio instead will be executed in the manner deemed recommendable for the Company's interest, including transfer and/or the assignment to execute stock granting incentive plans.
With reference to the amount of the purchasing operations, it is proposed that it should not be below the nominal per share value, equal to a nominal value of Eur 0.33 and not above, as a maximum, to the arithmetic mean of the official closing price of Fineco ordinary shares registered in the MTA ("Mercato Telematico Azionario" – Milan Stock Exchange) in the 30 days preceding the purchase, increased by 10%.
Regarding the disposal of the treasury shares, the Board of Directors will establish from time to time criteria for the definition of the corresponding fees and/or modalities, terms and conditions of purpose of treasury shares in portfolio, taking into consideration the procedure followed, the share price trend in the period prior to transactions and the best interest of the Company.
Finally it is proposed that the authorization to purchase is released for a period of eighteen months from the date of the Shareholders' Meeting that passed the resolution for authorization.
Dear Shareholders,
If you agree with the above proposal, you are invited to approve it by adopting the following resolution:
"FinecoBank's ordinary shareholders' meeting, having heard the Board of Directors proposal, according to the provisions of articles 2357 and 2357-ter of the Civil Code, 132 D, Legislative Decree n° 58/1998 and 114-bis of Consob Regulation
We have called this Extraordinary Shareholders' Meeting to submit for your approval the proposal to delegate authority to the Board of Directors, pursuant to section 2443 of the civil Code, to increase the share capital pursuant under section 2349 of the civil Code (granting of free ordinary shares to employees of FinecoBank) in order to:
We also submit for your approval the consequent amendments required to the Articles of Association.
As known, on April 12th, 2016 the Ordinary Shareholders' Meeting approved the 2016 Incentive System aimed to incentivize the Identified Staff of FinecoBank, over a multi-year period (2017-2022), through a balanced structure of "upfront" (following the moment of performance evaluation) and deferred payments, in cash and/or in Fineco ordinary shares.
In the same date, the ExtraOrdinary Shareholders' Meeting approved to give to the Board of Directors the power of attorney to issue the necessary free ordinary shares to execute the 2016 System.
Considering that, pursuant to Article 2443 of the civil Code, the power of attorney to the Directors for capital increase can't have a duration higher than five years from the date of the registration of relevant Shareholders' resolution, during the above mentioned meeting it was anticipated to Shareholders the need to submit to a future Shareholders' Meeting approval the proposed assignment of a further power of attorney to allocate the last share instalment to be executed in 2022, as foreseen by 2016 System.
Having said that, it is submit for the approval of today's meeting the proposal to give to the Board of Directors the power of attorney, that will be executed in 2022, to resolve a free capital increase for a maximum number of 67,000 ordinary shares, corresponding to up to Eur 22,110,00 calculated on the basis of the par value of Fineco ordinary share equal to Eur 0.33, consequently amending the Articles of Association.
The above mentioned capital increase would be carried out using the special reserve known as "Provisions Linked to the Medium-Term Incentive System for the staff of FinecoBank" set up for this purpose which, if case, may be increased via allocation of profits or a portion of available statutory reserves, formed from the distribution of company profits that shall be identified by the Board of Directors at the moment of share issuance.
It has been submitted to the approval of today's Ordinary Shareholders' Meeting the 2017 System based on financial instruments, in order to align shareholders' and Management interests, reward long term value creation and motivate and retain key resources of FinecoBank.
The 2017 System aims to incentive in a multi-year period the following employees: Chief Executive Officer and General Manager (CEO/GM), Deputy General Managers (DGM), Executive Vice President (EVP), Senior Vice President (SVP), employees with total remuneration greater than Eur 500,000 in the last year, employees included within 0.3% of staff with the highest remuneration, employees whose remuneration is within the remuneration ranges of senior management and/or other Identified Staff and other selected roles (including new hires). The overall number of beneficiaries as at January 9th, 2017 is equal to 14.
Individual bonuses will be allocated to the beneficiaries of 2017 System based on available bonus pool, individual performance evaluation, internal benchmarking for specific roles and bonus cap as defined by the Ordinary Shareholders' Meeting.
Overall incentive pay-out shall be done over a multi-year period (2018-2023) in a balanced structure of "upfront" (following the moment of performance evaluation) and deferred payments, in cash and in shares, providing that the beneficiaries will be still employees at the moment of each payout:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| 20% cash + | ||||||
| CEO/GM and 1st reporting line | 20% cash | 10% cash | 20% shares | 10% shares | 10% shares | 10% shares |
| 10% cash + | ||||||
| Other Identified Staff | 30% cash | 10% cash | 30% shares | 10% shares | 10% shares | - |
The number of shares to be allocated in the respective instalments shall be defined in 2018, on the basis of the arithmetic mean of the official closing market price of Fineco ordinary shares during the month preceding the Board resolution that evaluates 2017 performance achievements (the maximum number of shares to support the 2017 System is estimated equal to 480,000).
Considering the number of beneficiaries and the total number of financial instruments to be allocated, the optimal method identified to execute the 2017 System is the resolution – on one or more occasions - by the Board of Directors upon power of attorney delegated by this Shareholders' Meeting under section 2443 of the Italian civil Code, of a free capital increase, as allowed by section 2349 of the Italian civil Code, within five years of the date of the Shareholders' resolution, for a maximum amount of Eur 128,700,00 (attributable entirely to capital), with the issue of up to 390,000 new FinecoBank ordinary shares with a nominal value of Eur 0.33 each, with the same characteristics as those in circulation, with regular dividend entitlement, to be granted to the Identified Staff of FinecoBank. In compliance with section 2349 of the civil Code, the consequent amendments to the Articles of Association are submitted to today's Shareholders' Meeting.
Being understood that, under the provision of section 2443 of the Italian civil Code, the power of attorney to the Board of Directors for capital increase can't have a duration higher than five years from the date of the registration of relevant Shareholders' resolution, in order to complete the execution of 2017 System - having a 6-years duration - it will be submitted to one of the future Shareholders' Meetings approval the proposed assignment of a further power of attorney to the Board of Directors for capital increase to service the above mentioned 2017 System through the allocation of a maximum overall number of 90,000 Fineco ordinary shares, corresponding to a capital increase of a maximum of Eur 29,700,00.
It is highlighted that a maximum number of Fineco ordinary shares equal to 48,000 will be devoted to possible new hiring of Identified Staff from external market also in reference to the so called "bonus buy-out" to be paid to possible new hires who are entitled to receive previous incentive plans assigned by previous Employer. The pay-out scheme offered in such cases will mirror the one as defined by the previous Employer and regardless in compliance with actual regulations.
The capital increase would be carried out using the special reserve known as "Provisions Linked to the Medium-Term Incentive System for the staff of FinecoBank" set up for this purpose which, if case, may be increased via allocation of profits or a portion of available statutory reserves, formed from the distribution of company profits that shall be identified by the Board of Directors at the moment of share issuance.
In case it would not be possible to proceed with the issuance (full or partial) of the Fineco ordinary shares to support the 2017 System (including the case in which the amount of the "Provisions Linked to the Medium-Term Incentive System for the staff of FinecoBank" would not be sufficient), an equivalent amount in cash will be allocated to the beneficiaries, determined on base of arithmetic mean of the official closing market price of Fineco ordinary shares during the month preceding the Board resolution that evaluates results achieved in 2017.
Should the aforementioned delegation of power of attorney be exercised to its maximum amount, the newly issued shares would represent an overall 0.06% of existing share capital (0.08% considering the maximum number of shares equal to 480,000 which include also the 90,000 shares for the allocation of the last instalments in shares in 2023).
In light of the above, it is proposed to amend Art. 5 of the Articles of Association, through the amendment of the paragraph n. 10 and the insertion of an additional paragraph (n. 11). Changes submitted to Shareholders' approval are shown in the synoptic table below.
The status of shareholder implies unconditional acceptance of the deed of incorporation and of the articles of association.
(unchanged)
(unchanged)
(unchanged)
It should be noted that the amendments to the Articles of Association of FinecoBank submitted to the approval of today Shareholders' Meeting are subject to the measure of examination by the Bank of Italy pursuant to the provisions of Article 56 of Legislative Decree no. 385/9.
The aforementioned amendments will be effective starting from the registration of the Extraordinary Shareholders' Meeting resolution at the relevant "Registro delle Imprese".
Dear Shareholders,
in relation to the above, considering as approved by today's ordinary Shareholders' Meeting the adoption of the 2017 Incentive System, you are invited to approve the following resolution:
"The Extraordinary Shareholders' Meeting of FinecoBank S.p.A., having heard the Board of Directors' proposal,
to delegate to the Board of Directors all the necessary powers for issuing the new shares;
Piazza Durante 11, 20131 Milano Freephone 800 52 52 52 From e mobile phone or from abroad 02 2899 2899 [email protected] FinecoBank S.p.A. – Part of the UniCredit Banking Group enrolled in the Register of Banking Groups at No. 02008.1 Registered Oce in Piazza Durante 11, Milan, 20131 Headquarters in Via Rivoluzione d'Ottobre 16, Reggio Emilia, 42123 approved Share capital €200,545,403.85 fully subscribed and paid-in €200,540,166.09 ABI Code 3015.5 – VAT No. 12962340159 – Tax ID No. and Milan Companies Register No. 01392970404 and the Interbank Fund for the Protection of Deposits. Fineco is a trademark licensed for use by FinecoBank S.p.A.
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