2018 Registration document and annual fi nancial report - BNP PARIBAS 243
4CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
4
Notes to the fi nancial statements
7.e SHARE-BASED PAYMENTS
Share-based loyalty, compensation and incentive schemes
Until 2012, BNP Paribas set up several share-based payment schemes for certain employees: performance shares plans and stock subscription or purchase plans.
After 2012, only some cash-settled long term compensation plans are still share price-linked, especially for employees whose activities are likely to have an impact on the Group s risk exposure.
Deferred share price-linked, cash-settled compensation plans
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 benefi ciaries 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 fi nance 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 profi le.
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.
Global Share-Based Incentive Plan (until 2012)
BNP Paribas set up a Global Share-Based Incentive Plan for some Group employees, including stock options and performance share awards.
The option exercise price under these plans is determined at the time of issuance and no discount is offered. The duration of the options granted is 8 years.
Performance shares awarded between 2009 and 2012 vest after a period of 3 or 4 years, depending on the case and provided that the employee is still a member of the Group. The compulsory holding period for performance shares is two years for France-based employees.
Since 2010, the conditional portion granted had been set at 100% of the total award for members of the BNP Paribas Group Executive Committee and senior managers and 20% for other benefi ciaries.
Under stock option plans set up between 2003 and 2011, the performance condition was not fully met on seven out of thirty occasions and the adjustments described above were therefore implemented. Under performance share plans awarded between 2009 and 2012, the performance condition was not met on three out of ten occasions and the relevant contingent portion therefore lapsed.
All unexpired plans settle in a potential subscription of BNP Paribas shares.
Valuation of stock option plans and performance share plans
As required under IFRS 2, BNP Paribas attributes a value to stock options and performance shares granted and recognises an expense, determined at the date of grant, calculated respectively on the basis of the fair value of the options and shares concerned. This initial fair value may not subsequently be adjusted for changes in the quoted market price of BNP Paribas shares. The only assumptions that may result in a revision of the fair value during the vesting period, and hence an adjustment in the expense, are those related to the population of benefi ciaries (loss of rights) and internal performance conditions. The Group s share-based payment plans are valued by an independent specialist fi rm.
History of plans granted under the Global Share-Based Incentive Plan
The tables below give details of the characteristics and terms of all unexpired plans at 31 December 2018:
