Updates to the remuneration policy

The general meeting on 28 October 2019 approved the new remuneration policy, which is consistent with the most recent Italian and European regulatory framework, reinforcing governance and remuneration criteria and processes.

The new remuneration policy:

  • rewards the bank areas that generate value based on objective measurement criteria;
  • attracts and retains professionals with skills and expertise that meet the group’s requirements;
  • is in line with the remuneration policies of other national and international players.

The main changes concern:

  • the adoption of a specific policy for the identification of key personnel (i.e., material risk takers);
  • greater details on the control functions’ activities to monitor the types of financial transactions and investments performed by key personnel that could compromise the risk alignment of the remuneration mechanisms;
  • the adequately justified departure from the 2:1 cap on the ratio of performance-based pay to base salary (see the box below), which can be applied for all personnel, including key personnel operating exclusively in Asset Management (which is, in any case subject to a 5:1 cap);
  • the update of the list of company functions with a 33% cap on performance-based pay as a percentage of base salary;
  • the revision of performance-based pay deferral mechanisms for key personnel (the time horizon, the percentage of equity-based payments and the applicable remuneration caps). In particular, at least 55% of key personnel’s total performance-based pay must be in the form of equity;
  • the definition of a calculation mechanism for caps on severance pay following early termination of employment;
  • policy elements more closely linked to sustainability (CSR) principles.

Performance-based pay cap of 200% of base salary

As established by the European Capital Requirements Directive (CRD) IV package applicable to banks, we have capped performance-based pay at 200% of base salary.
This cap enables us to:

  • maintain flexibility and minimise fixed costs;
  • align interests and encourage the achievement of sustainable results;
  • attract and retain talent in a competitive market context;
  • reward performance and tie individual performance to the bank’s results.

Bonuses are paid subject to the achievement of specific indicators known as gateways. Individual bonuses are based on the documented assessment of quantitative and qualitative performance, with a specific focus on compliance.

Departures from this cap (up to 5:1) are permitted for Asset Management personnel not subject to the banking regulations (see above).

2019

All the gateways were met for the payment of performance-based pay:

  • the required capital and liquidity ratios defined in the risk appetite framework were confirmed;
  • the group generated an operating profit;
  • the CEO and General Manager achieved the targets in their scorecards. They will receive their performance-based pay over five years, subject to additional checks on the performance, malus conditions and clawback clauses.

Regulatory framework

We prepare our remuneration policy with a constant focus on Italian and European regulations and the most recent documents published by the supervisory authorities. In particular, we follow:

  • the Bank of Italy’s provisions on remuneration and incentive policies and practices, published on 23 October 2018, which update Italian regulations to the European Banking Authority’s Guidelines on sound remuneration policies, in force since 1 January 2017, and other recent international guidance on sound remuneration;
  • the Bank of Italy’s provisions on the transparency of banking and financial transactions and services and  correct conduct between intermediaries and customers, issued on 19 March 2019;
  • Italian Legislative Decree no. 49 of 10 May 2019, transposing into Italian law Directive (EU) 2017/828 (i.e., the Shareholders’ Rights Directive), which requires the remuneration and incentive policy to contribute to a business strategy of sustainable profitability in the long term based on a clear presentation of objectives;
  • the European Commission Delegated Regulation of 4 March 2014, which establishes the qualitative and quantitative criteria for the identification of key personnel (i.e.,  “identified staff” whose professional activities have a material impact on the risk profile).
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