2020 Universal registration document and annual financial report - BNP PARIBAS78
2 CorPorate GovernanCe and internal Control
2
Report on Corporate governance
➤ SUMMARY OF THE CRITERIA FOR SETTING THE ANNUAL VARIABLE REMUNERATION APPLICABLE TO THE CHIEF EXECUTIVE OFFICER AND THE CHIEF OPERATING OFFICERS
Criteria applicable
% of fixed remuneration
Chief Executive Officer
Chief Operating Officers Type
Criteria linked to the Group s financial performance
37.50% 18.75% Change in earnings per share
37.50% 18.75% Achievement of budgeted Group gross operating income
N.A. 18.75% Change in pre-tax net income in the area of responsibility for the year compared to the previous year
N.A. 18.75% Achievement of budgeted gross operating income in the area of responsibility
Criteria linked to the Group s CSR performance 10.00% 10.00%
Multicriteria assessment of the actions taken by BNP Paribas Group with respect to social, societal and environmental issues
Qualitative criteria 15.00% 15.00%
Assessment with regard to implementation of the Bank s strategic guidelines, particularly the human, organisational and technical dimensions of its transformation plan, and taking into account the general context of the year under consideration
Ceiling The Board of directors ensures the consistency of the annual variable remuneration with changes in the Group s results and the area of responsibility of each of the Chief Operating Officers.
In any case:
■ each of the criteria related to the Group s financial performance (two in the case of the Chief Executive Officer and four in the case of the Chief Operating Officers) is capped at 130% of its target weight and cannot therefore result in an annual variable remuneration exceeding respectively 48.75% of the fixed remuneration for the Chief Executive Officer and 24.38% for the Chief Operating Officers;
■ the criteria related to the Group s CSR performance, as well as the qualitative criteria, are capped at 100% of their target weight and cannot therefore result in an annual variable remuneration greater than, respectively, 10% and 15% of the fixed remuneration;
■ the amount of annual variable compensation awarded to each executive corporate officer is capped at 120% of their fixed compensation.
Terms and conditions of payment The payment terms for variable remuneration of BNP Paribas Group s corporate officers, in accordance with the provisions of the French Monetary and Financial Code and the European Banking Authority s Guidelines on remuneration policy, are:
■ 60% of annual variable remuneration is deferred over five years, at the rate of one-fifth per year;
■ regarding the non-deferred portion of the variable remuneration:
■ half will be paid in cash in May of the year of the award, subject to the approval of the Shareholders Annual General Meeting under the terms provided for by article L.22-10-34 II of the French Commercial Code, and less payments received for directorships, where applicable, within the Group for entities other than BNP Paribas (SA),
■ and half will be paid in cash indexed to BNP Paribas share performance, at the end of a one-year holding period starting on the award date (award date is the date of the Board of directors decision), i.e. in practice, in March of the year following the year in which the remuneration is awarded;
■ the deferred portion of the variable remuneration will be paid annually in fifths over 5 years, the first payment being paid only at the end of a deferred period of one year from the award date of the variable remuneration. Each instalment will be paid:
■ half in cash in March every year,
■ and half in cash indexed to BNP Paribas share performance, in March of the following year, at the end of a one-year holding period,
■ provided that the Group s pre-tax ROE for the year preceding the payment is greater than 5%.
3. Conditional Long-Term Incentive Plan (LTIP) over five years
To align the interests of executive corporate officers with the medium to long-term performance of the BNP Paribas Group without compromising risk management, in 2011, the Board of directors introduced a conditional LTIP over 5 years.
The LTIP, which amounts to the target annual variable remuneration awarded in respect of the previous year, is split into two equal parts: one to reward an increase in the intrinsic value of the share, and the other potential outperformance relative to peers.
First half of the award amount: intrinsic share performance The first half of the award amount is dependent on the change in share price(1) given that no payment will be made for 50% of the award amount if the BNP Paribas share price does not increase by at least 5% from the date of the award by the Board of directors to the end of a five-year period from the award date.
(1) The initial and final amounts used to measure the performance of the share price over five years are as follows:
the initial value is the average of the opening price of the BNP Paribas share for the rolling 12-month period preceding the award date;
the final value is the average of the opening price of the BNP Paribas share in the rolling 12-month period preceding the payment date.
