2020 Universal registration document and annual financial report - BNP PARIBAS 247

4Consolidated finanCial statements for the year ended 31 deCemBer 2020

4

Notes to the financial statements

Since 2013, BNP Paribas has introduced a Group loyalty scheme with a cash payment, at the end of a three-year vesting period, which fluctuates according to the Group s intrinsic performance. The aim of this loyalty scheme is to make different categories of managerial staff partners in the Group s development and profitability objectives. These personnels are representative of the Group s talent and the breadth of its managerial framework i.e. senior managers, managers in key positions, line managers and experts, high-potential managers, high-performing young executives with good career development prospects and key contributors to the Group s results.

The amounts allocated under this plan are linked to changes in the Group s operational performance over three years (for 80%) and to the

achievement of the Group s corporate social responsibility (CSR) targets (for 20%). These nine targets are in line with the four pillars on which the Group s CSR policy is based. In addition, the final payment is subject to continuous service within the Group between the grant date and the payment date, provided that the Group s operating income and pre-tax income for the year prior to payment are strictly positive. For employees subject to special regulatory frameworks, this loyalty scheme is adjusted in accordance with the CRD 4 European Directive.

The net obligation related to deferred compensation plans and loyalty schemes amounts to EUR 694 million at 31 December 2020 (EUR 651 million at 31 December 2019).

In millions of euros 31 December 2020 31 December 2019

Net provisions for other long-term benefits 1,137 1,099

Asset recognised in the balance sheet under the other long-term benefits (83) (89)

Obligation recognised in the balance sheet under the other long-term benefits 1,220 1,188

6.d TERMINATION BENEFITS BNP Paribas has implemented a number of voluntary redundancy plans and headcount adaptation plans for employees who meet certain eligibility criteria. The obligations to eligible active employees under such plans are provided for as soon as a bilateral agreement or a bilateral agreement proposal for a particular plan is made.

In millions of euros 31 December 2020 31 December 2019

Provision for voluntary departure, early retirement plans, and headcount adaptation plans 468 513

6.e SHARE-BASED PAYMENTS As part of the Group s variable remuneration policy, deferred annual compensation plans offered to certain high-performing employees or set up pursuant to special regulatory frameworks may entitle beneficiaries to variable compensation settled in cash but linked to the share price, payable over several years.

Variable compensation for employees, subject to special regulatory frameworks

Since the publication of the Decree by the French ministry of finance on 13 December 2010, and following the provisions of the European Directive CRD 4 of 26 July 2013 transposed into the French law in the Monetary and Financial Code by the Order of 20 February 2014 as well as the Decrees and Orders of 3 November 2014 and the delegated European

regulation of 4 March 2014, the variable compensation plans apply to Group employees performing activities that may have a material impact on the Group s risk profile.

Under these plans, payment is deferred over time and is contingent on the performance achieved by the business lines, core businesses and Group.

Sums will mostly be paid in cash linked to the increase or decrease in the BNP Paribas share price.

Deferred variable compensation for other Group employees

Sums due under the annual deferred compensation plans for high- performing employees are partly paid in cash linked to the increase or decrease in the BNP Paribas share price.

➤ EXPENSE OF SHARE-BASED PAYMENTS

Expense/(revenue) in millions of euros Year to

31 Dec. 2020 Year to

31 Dec. 2019

Prior deferred compensation plans (103) 84

Deferred compensation plans for the year 441 372

TOTAL 338 456