Issues related to remuneration

The remuneration strategy developed in accordance with operating standards and values constituting the basis of the Bank’s mission is reflected in internal regulations and makes it possible to develop and protect the Bank’s reputation and create permanent values for all stakeholders. The Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna is a key regulation in this area. The policy reflects the Bank’s mission and values in its approach to remuneration systems, in particular, it:

• defines remuneration pillars, the management of the Bank’s structure as well as corporate and organizational processes;
• confirms requirements related to the compliance of remuneration systems with generally applicable laws,
• defines principles for monitoring market practices and the Bank’s approach to remuneration systems ensuring the continuity of the Bank’s operations.

Sustainable results contributing to long-term value creation for stakeholders refer to the actual results achieved and the way in which they are achieved, with a view to measuring results consistent with shareholders’ interests and profitability principles based on a safe level of risk, sustainable risk management practices and multidimensional analysis of results and quality of activity.

To ensure that the remuneration structures are competitive and transparent and the remuneration system is effective and fair, the Bank monitors market trends in relation to remuneration forms and levels. Decisions concerning the remuneration system at the Bank are made taking into account the data on market trends in the area of fixed remuneration, as well as incentive systems. Such data are obtained from consultancy firms offering analyses of the financial sector. At the level of the Bank’s organizational units, a comparative analysis is performed in order to ensure consistency of remuneration in individual areas. In 2022, the analysis of consistency in salaries between men and women in identical positions continued, in order to make efforts to equalize the pay gap that exists in the Bank.

The Bank also has a Remuneration Policy for Members of the Bank’s Supervisory Board and the Management Board of Bank Polska Kasa Opieki Spółka Akcyjna, which sets forth framework principles and rules for establishing, monitoring and controlling the Bank’s remuneration principles and practices for members of its Supervisory Board and Management Board.

The Remuneration Policy for Members of the Supervisory Board and the Management Board of Bank Polska Kasa Opieki Spółka Akcyjna supports proper and effective risk management and does not encourage excessive risk taking beyond the acceptable overall risk level approved by the Bank’s Supervisory Board; implementation of the Bank management strategy and risk management strategy; mechanisms for managing and mitigating conflicts of interest in the Bank’s activities; ensuring that remuneration and any associated terms and conditions of employment that affect remuneration, including conditions for awarding and paying remuneration, are gender-neutral, i.e. not differentiated in terms of gender.

Solutions adopted in this Policy contribute to the implementation of the business strategy, long-term interests and stability of the Bank as well as aim to support the sustainable growth of the Bank, including to ensure that the Policy is consistent with the strategy for the introduction of risks to sustainable growth in the investment decision-making process into the Bank’s operations.

Due to the special function and generally applicable regulations governing relations between members of corporate bodies and the company, the Bank does not conclude employment contracts with Members of the Supervisory Board of the Bank and Members of the Management Board of the Bank, whereas it concludes Contracts for management services with Members of its Management.

Members of the Supervisory Board are entitled to remuneration in a fixed monthly amount and are not entitled to any variable remuneration.

The total remuneration of a Member of the Management Board consists of a fixed part constituting the basic monthly remuneration and a variable part, representing supplementary remuneration for the Bank’s fiscal year. The variable remuneration of a Member of the Bank’s Management Board depends on the level of achievement of the established management objectives (among other things, growth in the Bank’s value and improvement of economic and financial indicators) and may not exceed 100% of the fixed remuneration of that Member of the Bank’s Management Board in the previous fiscal year for which the calculation of the amount of the variable remuneration to be paid is made. Should the contract be dissolved or terminated by the Bank for reasons other than a breach of basic obligations, a Member of the Management Board may be awarded a severance pay in the amount not higher than three times the fixed remuneration, provided that they have discharged the office for at least twelve months prior to the termination of the contract. It is also possible to conclude a non-compete agreement with a member of the Bank’s Management Board that is effective after the termination of his or her position.

Members of the Supervisory Board and members of the Bank’s Management Board have the right to join Employee Capital Plans (ECPs) on the terms and conditions in force at the Bank.

Based on the remuneration system, employees are offered non-financial benefits that ensure just treatment and consistency of the remuneration system.

Companies of the Capital Group of the Bank have remuneration policies adapted to the size and specificity of their activities and remuneration principles.

The Bank has three main incentive systems in place: Variable Remuneration System for Management Staff, Management by Objective (MBO) System, and a system based on the Collective Agreement providing, in particular, for a quarterly bonus and an incentive award.

Top management is subject to the variable remuneration system dedicated to persons having a significant impact on the Bank’s risk profile. The aim of the system is to support the implementation of the Bank’s strategy and to reduce excessive risk and conflicts of interest. In this system, a participant may obtain variable remuneration based on the bonus pool concept. The system provides for a comprehensive measurement of performance by individuals, business units and the whole Bank, including the evaluation of the participant’s compliance with law and the Bank’s standards and risk assessment. In order to strengthen care for the construction of a durable value of the Bank in the long term under the system, at least 50% of the bonus is implemented in phantom shares based on the value of the Bank’s shares and at least 40% of the bonus is deferred and paid after the end of the assessment period for which it is entitled.

The variable remuneration system is prepared by the HR Division with involvement and participation of other organizational units of the Bank. This is to ensure that the system complies with the Bank’s regulations, articles of association, and ethical standards or other standards of conduct that apply to the Bank in a way that legal, compliance and reputation risks that are mostly connected with customer relationships are duly monitored and managed.

Variable remuneration systems implemented in the Bank’s subsidiaries have similar schemes for the division of remuneration into cash and financial instruments, taking into account general provisions and guidelines of market regulators concerning sectors in which companies operate.

The system based on the Collective Agreement applies to all employees subject to the Agreement. Pursuant to the Collective Agreement, the system is based on a quarterly discretionary bonus the amount of which is conditioned on the evaluation of an employee’s performance and commitment and the Bank’s results in a given year. It also provides for an incentive award which is granted for special professional achievements. In 2022, there were guidelines for variable compensation, i.e., quarterly bonuses for sales network employees covered by the CA, which take into account both performance targets and quality targets.