49. Remuneration of the PKO Bank Polski SA key management

Accounting policies

Short-term employee benefits are employee benefits, which are settled in full within 12 months from the end of the annual reporting period, in which the employees performed work related to them. As a short-term employee benefits next to the base salary, not deferred part at the variable remuneration component paid in cash was recognised.

The deferred part of the variable remuneration component paid in cash was recognised as other long-term benefit.

Non-deferred and deferred remuneration components in the form of the financial instrument i.e. phantom shares (for which conversion into cash is carried out after an additional period of retention) are recognised as share-based payments settled in cash in accordance in accordance principles described below.

The principles for determining the variable remuneration components policy for key management personnel in the Group

In order to fulfil the requirements of the Resolution No. 258/2011 of the Polish Financial Supervision Authority of 4 October 2011 on detailed principles for functioning of the risk management system and internal control system and detailed terms of estimating internal capital by banks and reviewing the process of estimating and maintaining internal capital, and the principles for determining the variable remuneration components policy for key management personnel at the Group (Resolution of PFSA No. 258/2011), the Group implemented by resolutions of:

  • the Supervisory Board of the Bank: ‘The variable remuneration components policy for key management personnel at the Bank’ (constituting the basis of further regulation issue) and ‘The variable remuneration components policy for the Management Board members’,
  • the Management Board of the Bank: ‘The variable remuneration components policy for key management personnel’,

Cited Principles and Regulations issued on their basis describe the procedure of granting variable remuneration components associated with the results and effects of work to the above-mentioned persons. In accordance with the requirements of the cited resolution of the PFSA and in proportion specified in it, the variable remuneration components are granted in the form of:

  • non-deferred (in the first year after the calendar year constituting a period of assessment),
  • deferred (for the next three years after the first year of the assessment period),

both the non-deferred and deferred remuneration, is awarded in equal parts in cash and in the form of the financial instrument, i.e. the phantom shares (for which conversion into cash is carried out after an additional period of retention).

Component of remuneration in the form of the financial instrument is converted into phantom shares after granting a particular component - including the median of the daily average prices of the Bank’s shares (Volume Weighted Average Price) on the Warsaw Stock Exchange, published in the Thomson Reuters or Bloomberg information system - from the fourth quarter of the assessment period. Next, after a period of retention and deferral period, shares are converted into cash - including the median of the daily average prices of the Bank’s shares (Volume Weighted Average Price) on the Warsaw Stock Exchange from the period of a third quarter preceding the payment (the Management Board) and a third quarter of a calendar year, in which the payment is made (other persons on managerial positions), published in the Thomson Reuters or Bloomberg information system.

The deferred remuneration may be reduced in the event of deterioration in the financial performance of the Bank or a Group Entity respectively, the loss of the Bank / Company or deterioration of other variables related to the effects of work during the evaluation of key management personnel and results of the performance of organizational units/cells supervised or managed by these persons, which were revealed after a period of evaluation.

Additionally, in 2016 regulations determining the policy of variable remuneration components functioned in selected Group entities. ‘Regulations of the variable components of remuneration for the members of the Management Board’ were binding in PKO Leasing SA, PKO Towarzystwo Funduszy Inwestycyjnych SA, PKO BANKOWY PTE SA, PKO Życie Towarzystwo Ubezpieczeń SA, PKO Towarzystwo Ubezpieczeń SA and in PKO Bank Hipoteczny SA. Additionally, in PKO Życie Towarzystwo Ubezpieczeń SA, PKO Towarzystwo Ubezpieczeń SA and PKO Bank Hipoteczny SA employees holding selected managerial positions were also covered by the variable remuneration policies.

At the same time, in connection with the amended regulations for investment fund management companies – in particular in connection with Article 47a, section 1 of the Act of 27 May 2004 on investment funds and on managing alternative investment funds, and the Regulation of the Minister of Finance dated 30 August 2016 on detailed requirements to be met by remuneration policies of investment fund management companies – on 2 December 2016 the Supervisory Board of PKO Towarzystwo Funduszy Inwestycyjnych SA adapted the remuneration policies in respect of variable remuneration components both for Members of the Management Board and for the Investment Fund Management Company employees to the new requirements.

In 2016 in Raiffeisen-Leasing Polska SA the policies related to variable remuneration components introduced by the document ‘Corporate guidelines – Remuneration policies based on CRD IV, Raiffeisen-Leasing Polska SA’ were binding, in accordance with the principles in force in the Raiffeisen Bank International AG Group, based on EU regulations and the Austrian Banking Act. Members of the Company’s Management Board were covered by the said principles.

Financial information

Remuneration received by members of the Supervisory Board from PKO Bank Polski SA (in PLN thousand)

 

 20162015
The Supervisory Board982120
Remuneration of the Supervisory Board Members who ceased to perform their functions in 2015 or 2016*2861 078
   
Total 1 268 1 198

* including post-employment benefits

 

Employee benefits for members of the Management Board due or potentially due from PKO Bank Polski SA (in PLN thousand)

 Total short-term employee benefits (in PLN thousand)Other long-term benefits - variable remuneration in cash (in PLN thousand)3Total share-based payments settled in cash (in PLN thousand)
 remuneration in 20161other received in 20162received in 2016potential as at 31.12.2016received in 2016due as at 31.12.2016potential as at 31.12.2016
The Management Board of the Bank9 1291 2767021 6401 1511 6921 640
Management Board Members who ceased to perform their functions in 20162 1047854809948021 076994
        
Total 11 233 2 061 1 182 2 634 1 953 2 768 2 634

1 Includes basic remuneration and additional benefits due to employee pension programs (PPE), additional insurance, medical care and company social benefits fund (ZFŚS).
2 Non-deferred component of variable remuneration (in cash form).
3 Deferred component of variable remuneration (in cash form).

 

 Total short-term employee benefits (in PLN thousand)Other long-term benefits - variable remuneration in cash (in PLN thousand)3Total share-based payments settled in cash (in PLN thousand)
 remuneration in 20151other received in 20152received in 2015potential as at 31.12.2015received in 2015due as at 31.12.2015potential as at 31.12.2015
Total11 3111 6948042 3602 2401 9522 360

1 Includes basic remuneration and additional benefits due to employee pension programs (PPE), additional insurance, medical care and company social benefits fund (ZFŚS).
2 Non-deferred component of variable remuneration (in cash form).
3 Deferred component of variable remuneration (in cash form).

   

Post-employment benefits for the Members of the Management Board who ceased to perform their functions in 2016 (in PLN thousand)2016
Management Board Members who ceased to perform their functions in 20161 166

Termination benefits for the Members of the Management Board who ceased to perform their functions in 2016 (in PLN thousand)2016
Management Board Members who ceased to perform their functions in 20163 313
 

Remuneration received from related entities (other than the State Treasury and entities related to the State Treasury) (in PLN thousand)

In 2016 Mr. Jakub Papierski received PLN 22 thousand as remuneration received from the Bank’s associate (remuneration for 2015 amounted to PLN 42 thousand).

Remuneration received by members of the Management Boards and the Supervisory Boards of the PKO Bank Polski SA Group subsidiaries (In PLN million)

Remuneration received by members of the Management Boards and the Supervisory Boards of the PKO Bank Polski SA Group subsidiaries
 20162015
The Supervisory Board0.50.3
The Management Board20.520.4
Total 21.0 20.7
 

loans and advances granted by the Bank to the management (In PLN thousand)

Loans and advances granted by the Bank to the management (in PLN thousand)
 31.12.201631.12.2015
The Supervisory Board of the Bank6081 093
The Management Board930946
Total 1 538 2 039
 

Variable remuneration components

Provision for variable remuneration components31.12.201631.12.2015
 (for the years 2012-2016)(for the years 2012-2015)
The Bank’s Management Board (including members of the Bank’s Management Board who ceased to perform their functions in 2016)16.714.2
Other Risk Takers (persons holding managerial positions other than members of the Bank’s Management Board)31.326.7
Group entities14.210.0
Total provision 62.2 50.9
Remuneration paid during the year20162015
 (for the years 2012-2016)(for the years 2012-2015)
- granted in cash 15.2 10.8
The Bank’s Management Board (including members of the Bank’s Management Board who ceased to perform their functions in 2016)3.22.5
Other Risk Takers8.16.4
Group entities3.91.9
- granted in the form of financial instruments 9.7 8.4
The Bank’s Management Board (including members of the Bank’s Management Board who ceased to perform their functions in 2016)2.02.2
Other Risk Takers6.95.1
Group entities0.81.1
Total remuneration paid 24.9 19.2