2018 Registration document and annual fi nancial report - BNP PARIBAS540

7 A COMMITTED BANK: INFORMATION CONCERNING THE ECONOMIC, SOCIAL, CIVIC AND ENVIRONMENTAL RESPONSIBILITY OF BNP PARIBAS

7

Our social responsibility: developing and engaging our people responsibly

A compensation policy aligned with regulatory changes(1)

The Group s compensation policy, applicable to all branches and subsidiaries, including those outside the European Union, aims to ensure consistency between the behaviour of employees whose professional activities have a signifi cant impact on the Group s risk profi le and the Group s long-term objectives, particularly in terms of risk management. Since 2009, the implementation of this policy has contributed to:

■ strengthening governance (with the involvement of the control functions, the Executive Management and the Compensation Committee of the Board of directors);

■ identifying employees qualifi ed as Material Risk Takers (MRT);

■ taking into account, in the allocation of their annual variable compensation, their behaviour with regard to the Group's principles, whether this is their "compliance with the Code of conduct, rules and regulations", or their contribution to the "assessment and control of risks";

■ deferring a significant fraction of their variable compensation over at least three years (from 40 to 60% deferred for the highest compensation);

■ indexing a portion of their variable compensation (over 50% for 2018 allocations in respect of 2017) to the performance of the share and the Group, in order to align the interests of the benefi ciaries with those of the shareholders and BNP Paribas;

■ linking deferred payment at each due date to the achievement of performance and behavioural conditions, the non-compliance with which may result in the partial or total loss of the annual portion ( malus system).

Information on the compensation policy and on compensation practices as well as quantitative information on the compensation of Group MRT employees in respect of 2018 will be published in a report that will be posted on the BNP Paribas website (http://invest.bnpparibas.com) before the General Meeting of 23 May 2019.

The compensation policy also complies with applicable regulations, notably (i) regulations in relation to customer protection (MiFID II(2) or European Banking Authority guidelines on compensation practices in relation to the sale of Retail Banking products) for employees working directly or indirectly with customers, (ii) sector-specifi c provisions (asset management with AIFMD and UCITS, and insurance with Solvency), or (iii) business-specifi c regulations with the application of the provisions of French banking law and the Volcker rule applicable to market participants.

It complies with the laws and regulations in force, including those that might exist on minimum wages, which can be used to compensate employees according to their level of experience, expertise and market practices.

A competitive and fair compensation policy

In 2018, for retention purposes, the Group awarded for the 6th consecutive year to over 6,750 key employees(3) a three-year retention plan (maturing in June 2021), known as the Group Sustainability and Incentive Scheme (GSIS) of which 20% of the initial allocation is related to the Group s CSR performance, while the rest is indexed to its operational performance. CSR performance is based on nine objectives refl ecting the four pillars of the Group s governance and CSR policy(4).

Since 2016, a new monitoring indicator on the consistency of compensation granted to men and women has been included in the annual compensation review process, for all the Group s businesses and functions. For a number of years, measures may also be taken locally to reduce any pay gap between men and women. In 2018, BNP Paribas SA set aside a EUR 5 million budget(5) to address any possible gender differences in annual compensation. In addition, the budget provided by subsidiaries in France increased to around EUR 1.3 million.

In France, the Group associates employees with its performance as part of profi t-sharing and incentive mechanisms. For 2018, EUR 147 million will be distributed to the estimated 67,269 benefi ciaries of entities that are members of the Group profi t-sharing agreement (compared with EUR 153 million to 67,355 benefi ciaries in 2017).

In addition, BNP Paribas SA and almost all of the Group s entities in France have established an incentive agreement specifi c to their business. To that end, EUR 117 million will be allocated to approximately 45,746 benefi ciaries of BNP Paribas SA for 2018 (compared with EUR 124 million for 46,206 benefi ciaries in 2017). The amounts to be paid for 2018 with respect to the incentive agreements put in place in the subsidiaries will be known at the end of the fi rst quarter of 2019.

Social benefi ts relating to retirement and savings

In France, the Group supports employees voluntary saving efforts with an employer s contribution to savings and retirement plans, totalling EUR 71 million in 2018 (EUR 72 million in 2017). It offers a mandatory mutualised health plan to employees and a protection insurance system that allows employees to adjust their level of protection according to their personal situation.

For BNP Paribas SA, the incentive agreement signed for a three-year period in 2016 has three components, with one relating to CSR based on paper consumption per employee, with a target already met in 2017. In accordance with the government scheme, BNP Paribas SA decided in December 2018 to pay a one-off EUR 1,000 bonus to all employees earning total compensation of less than three times the minimum wage in France (the SMIC), for a total amount of around EUR 24 million. At BNP Paribas Fortis in Belgium, part of the variable compensation known as collective compensation is linked to S ustainable D evelopment Goals such as customer satisfaction, promoting diversity, improvement of well- being in the workplace, risk awareness and compliance and the reduction of the Bank s negative impact on the environment. The 2018 objectives

(1) European Directive CRD 4 of 26 June 2013, as transposed into French law in the French Monetary and Financial Code, as well as Delegated Regulation 604/2014 on the criteria for identifying risk-taking employees (MRTs) and the European Banking Authority guidelines on sound compensation policies of 27 June 2016.

(2) Markets in Financial Instruments Directive.

(3) Key employees: senior managers, high-potential employees or key local resources.

(4) For the 2015 plan, payable in 2018, 8 of the 9 CSR criteria having been achieved, the corresponding fractions of the initial allocation have been maintained and paid to the plan benefi ciaries.

(5) The entities can freely allocate this total amount to fi xed or variable compensation.