In order to fulfil the requirements of the Resolution No. 258/2011 of the Polish Financial Supervision Authority of 4 October 2011 on detailed principles for functioning of risk management system and internal control system and detailed terms of estimating internal capital by banks and reviewing the process of estimating and maintaining internal capital, and the principles for determining the variable salary components policy for persons holding managerial positions in the Bank, the Bank implemented by resolutions of:
- the Supervisory Board: ‘The variable salary components policy for persons holding managerial positions in the Bank’ (constituting the basis of further regulation issue) and ‘The variable salary components policy for the Management Board’s members’,
- the Management Board: ‘The variable salary components policy for persons holding managerial positions’,
- Supervisory Boards of selected subsidiaries of the PKO Bank Polski SA Group (PKO Leasing SA, PKO TFI SA, PKO BANKOWY PTE SA, PKO Życie Towarzystwo Ubezpieczeń SA): ‘The variable salary components policy for the Management Board’s members’.
Cited Principles and Regulations issued on their basis, describe the procedure of granting variable salary components associated with the results and effects of work to the above-mentioned persons. In accordance with the requirements of the cited resolution of the PFSA and in proportion specified in it, the variable salary components are granted in the form of:
- non-deferred (in the first year after the calendar year constituting a period of assessment),
- deferred (for the next three years after the first year of the assessment period),
and both the non-deferred and deferred salary, is granted in equal parts in cash and in the form of a financial instrument, i.e. the phantom shares (in which conversion into cash is carried out after an additional period of retention).
Component of salary in the form of a financial instrument is converted into phantom shares after granting a particular component - including the median of the daily average prices of the Bank’s shares (Volume Weighted Average Price) on the Warsaw Stock Exchange, published in the Thomson Reuters or Bloomberg information system - from the fourth quarter of the assessment period. Next, after a period of retention and deferral period, shares are converted into cash - including the median of the daily average prices of the Bank’s shares (Volume Weighted Average Price) on the Warsaw Stock Exchange from the period of a third quarter preceding the payment (the Management Board) and a third quarter of a calendar year, in which the payment is made (other persons on managerial positions), published in the Thomson Reuters or Bloomberg information system.
The deferral salary may be reduced in the event of deterioration in the financial performance of the Bank or a Group Entity respectively, the loss of the Bank / Company or deterioration of other variables related to the effects of work during the evaluation of persons holding managerial positions and results of the performance of organisational units/cells supervised or managed by these persons, which revealed after a period of evaluation.
As at 31 December 2014 a provision for variable salary components for the years 2012 - 2014 amounted to PLN 37.4 million, of which PLN 23 million for persons holding managerial positions except for the Bank’s Management Board and PLN 11 million for the Bank’s Management Board, and PLN 3.4 million for the entities of the Group. As at 31 December 2013 the provision for variable salary components for the years 2012 - 2013 amounted to PLN 28.5 million, of which for persons holding managerial positions except for the Bank’s Management Board in the amount of PLN 16 million, for Management Board amounted to PLN 9 million and for the entities of the Group it amounted to PLN 3.5 million.
Under current regulations, in 2014, non-deferred component was paid out - cash for persons holding managerial positions except for the Bank’s Management Board non-deferred component relating to bonuses for the year 2013 and deferred component relating to bonuses for the year 2012 - cash in the amount of PLN 4.6 million, and for the Bank’s Management Board –in the amount of PLN 2.3 million without charges, and PLN 2.0 million for the entities of the Group.
Under current regulations, in 2013, non-deferred component relating to bonuses for the year 2012 was paid out - cash for persons holding managerial positions except for the Bank’s Management Board in the amount of PLN 3 million, for the Bank’s Management Board in the amount of PLN 1.6 million, and PLN 1 million for the entities of the Group.
Payment of phantom shares for the year 2012 and 2013, calculated in accordance with law provisions, based on the share price in the third quarter of 2014 in the amount of PLN 38.52, was made in November 2014 for persons holding managerial positions except for the Bank’s Management Board in the amount of PLN 4.6 million without charges, and PLN 0.8 million for the entities of the Group. In January 2014 for the Bank’s Management Board – PLN 1.8 million (with charges) was paid.