2018 Registration document and annual fi nancial report - BNP PARIBAS76
2 CORPORATE GOVERNANCE AND INTERNAL CONTROL
2
Corporate governance report
Qualitative criteria The portion of the variable remuneration linked to the Board of directors qualitative assessment is 15% of the target variable remuneration (versus 25% up to and including 2018 performance).
The performance of this qualitative assessment by the Board of directors is considered essential, especially in view of the reinforcement of its responsibilities for monitoring and control provided by the French Monetary and Financial Code since 2014 (thereby implementing CRD 4).
In addition to the Bank s strategy, which it must approve, the Board of directors must also assess the performance of Executive Management based on their capacities for anticipation, decision-making, leadership and exemplary behaviour.
To do this, the Board assesses the qualitative aspect of annual variable remuneration, regarding the implementation of the Bank s strategic guidelines, in particular its transformation plan and its human, organisational, technical and CSR dimensions in the general context of the year under consideration.
➤ SUMMARY OF CRITERIA FOR SETTING ANNUAL VARIABLE REMUNERATION
Criteria applicable
% of fi xed remuneration
Reminder: 2018 measurements
Measures starting in 2019
Criteria linked to the Group s fi nancial criteria
37.50% 37.50% Change in earnings per share
37.50% 37.50% Achievement of target gross operating income
Criteria linked to the Group s CSR performance
N/A 10.00% Multicriteria assessment of the actions taken by BNP Paribas Group with respect to social, societal and environmental issues.
Qualitative criteria 25.00%(*) 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.
(*) Up to and including the 2018 performance year, the assessment of the CSR performance was included in the qualitative criteria.
Ceiling The Board of directors ensures that annual variable remuneration is in line with the Group s results.
In any case,
■ each of the two criteria linked to the Group s fi nancial performance is capped at 130% of its target weight and cannot therefore lead to the award of an annual variable remuneration greater than 48.75% of the fi xed remuneration;
■ the criteria linked to the Group s CSR performance and qualitative criteria are capped at 100% of their target weight and cannot therefore lead to the award of an annual variable remuneration greater than 10% and 15% respectively of the fi xed remuneration;
In total, the amount of annual variable remuneration awarded for each of the executive corporate offi cers is capped at 120% of their fi xed remuneration.
Terms and conditions of payment The payment terms for variable remuneration of BNP Paribas Group s executive 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 fi ve years, at the rate of one-fi fth 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.225-100 of the French Commercial Code; and less Directors fees received, 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 on an annual basis in fi ve instalments over fi ve years, the fi rst instalment only being paid at the end of a deferred period of one year from the award date of the variable remuneration, provided that the Group s ROE before tax for the year preceding the payment is greater than 5%. 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.
3. Conditional Long-Term Incentive Plan (LTIP) covering a fi ve-year period
To align the interests of executive corporate offi cers with the medium to long-term performance of the BNP Paribas Group without compromising risk management, in 2011, the Board introduced a conditional long-term incentive plan over fi ve years (LTIP).
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.
