All of the components of the remuneration strategy are inspired and developed organically, in line with the strategic vision and the values of the Group, based on the five principles presented at the Capital Markets Day 2022, with relative details.
THE GUIDING PRINCIPLES OF THE REWARD STARTEGY
Fairness and moderation
Virtuous conduct to support long-term and sustainable growth can only emerge in a context where merit and individual contribution are rewarded, regardless of gender, age and/or other personal characteristics.
At the same time, and without compromising on competitiveness, the various remuneration components are centred around a fair and moderate approach with levels of remuneration that are usually aligned with the market median. The principle of moderation characterises the remuneration of all senior management personnel; each year a specific analysis of the pay for performance remuneration of the CEO-GM is conducted, revealing that despite a performance that is significantly above the Group's peers, the overall remuneration is below the median for the peer group.
Long-term focus
Among its stakeholders, Poste Italiane is considered a partner in the pursuit of sustainable value. The adoption of a long-term vision characterises the strategic business decisions, including in terms of ESG, as well as the Reward Strategy that includes variable long-term incentive plans with a time horizon up to 10 years, guaranteeing the link between the incentives and the Group's results.
Transparency
Compliance with rules, integrity of conduct, loyalty, honesty and clarity are essential values to ensure the proper functioning of organisational processes as well as the reputation and reliability of Poste Italiane. These values are key not only to the achievement of the short-term objectives, but also to the adoption of a virtuous cycle in the long term.
The principle of transparency and compliance with rules represent two cornerstones of Poste Italiane's internal and external relationships. In this context, the incentive plans clearly and accurately present the performance indicators during both the assignment phase and final assessment.
To summarise, transparency is a shared value that is essential to the development of long-lasting relationships.
Dialogue with investors
Promoting a constant dialogue with investors on remuneration matters is one of Poste Italiane’s priorities, because on the one hand it facilitates the implementation of the best market practices and, on the other, represents an active stimulus for continuous improvement with positive effects on shared value creation.
Each year, this dialogue is used as a starting point for conducting analyses aimed at identifying - given the market context - possible changes to the remuneration systems and their disclosure with a view of continuous improvement.
No pay for failure
The remuneration policy is aimed at supporting the implementation of the business strategy, with reference to economic/financial and ESG performance. The key indicators are set at challenging levels, the achievement of which guarantees, in particular, the self-financing of all the incentive systems. It is standard practice in Poste Italiane’s remuneration policy to set the threshold values of the economic/financial indicators during the budget and Strategic Plan activities. In addition, to ensure financial sustainability over time, the variable incentive schemes are subject to strict malus and clawback clauses and lock-up/deferral/retention periods.
The key remuneration items are the fixed component, variable remuneration (short and medium/long-term) and severance payments on termination of employment.
The pay mix between fixed and variable component, balanced between the monetary and non-monetary component, is linked to the role held and the responsibilities assigned. In this regard, Poste Italiane uses a job evaluation framework for the various roles, certified periodically by an independent consulting firm.
Fixed components
Fixed remuneration reflects technical, professional and managerial skills.
Competitiveness, attractiveness, meritocracy and the assignment of greater responsibilities may lead to the recognition of adjustments to fixed remuneration.
Proposed adjustments to gross annual fixed pay follow a structured process, based on objective, non-discretionary criteria.
Fixed remuneration is also determined taking into account internal equity values and market benchmarks (as noted, the Company's benchmarking is conducted with reference to market medians).
Certain non-monetary benefits are also provided in accordance with the applicable statutory requirements and in line with market practices. Benefits are subject to specific guidelines, which require the application of common criteria depending on the uniform category of employee concerned.
Variable components
Variable remuneration is the incentive component directly linked to company and individual performance, according to a meritocratic approach that recognises and rewards predetermined, transparent, measurable and verifiable results and objectives achieved.
Incentives linked to variable remuneration are paid at the end of an accurate verification process of the results actually achieved.
Variable remuneration is paid in the form of cash and financial instruments, over an annual and multi-year time horizon.
Variable pay is capped depending on the category of beneficiary.
The CEO-GM and KMP of Poste Italiane may not receive one-off payments or other variable components other than as described in the Report on remuneration policy.
All the incentive schemes are linked to the achievement of predetermined levels of performance and subject to malus and clawback provisions, as described in the Report on remuneration policy.
Other items
In exceptional circumstances, newly hired personnel may receive specific awards, including a signing bonus (also in instalments).
In accordance with the Company's policies, there are and it is possible to stipulate provisions/agreements governing aspects of termination of employment in line with the Company's long-term strategies, values and interests.
The remuneration of the Chairwoman of the Board of Directors consists of a fixed component, by way of remuneration, approved by the Shareholders' Meeting of May 15, 2020, for the 2020-2022 term, in accordance with art. 2389, paragraph 1 of the Italian Civil Code and equal to €60,000 per annum, unchanged compared to the one defined for the previous term of office.
In addition to the above, on December 17, 2020, the Board of Directors, on the recommendation of the Remuneration Committee and in consultation with the Board of Statutory Auditors, awarded further remuneration to the Chairwoman of the Board of Directors for the 2020-2022 term (pursuant to art. 2389, paragraph 3 of the Italian Civil Code). This additional remuneration is equal to €420,000 per year, unchanged from as defined for the previous term of office. There are no forms of variable remuneration.
Remuneration of the Chief Executive Officer and General Manager includes a fixed component, a short-term variable component and a medium/long-term variable component.
From 2021, as resolved by the Shareholders' Meeting of May 28, 2021, the maximum ratio of variable remuneration to fixed remuneration is 2:1.
The gross annual fixed remuneration, with reference to the 2020-2022 term, has not changed compared to the previous term of office and is therefore confirmed at €1,255,000, while the value of the overall incentive schemes (both short and medium-long term) cannot be more than twice the same fixed amount (unchanged compared to 2021).
Certain benefits are provided in accordance with the applicable statutory requirements and in line with market practices.
In light of these elements, the following chart shows the CEO-GM Pay Mix for 2022, assuming over-achievement of results. It also illustrates the mix between the short-term and medium/long-term variable component, a specific focus on the timing of variable remuneration and a breakdown between the monetary and equity components:
CEO-GM PAY MIX IN CASE OF OVER-ACHIEVEMENT
This Pay Mix has been calculated on the basis of awards under the short and medium/long-term incentive schemes thus, in the event of over-achievement, considering the entire value of the "2022-2024 Performance Share LTIP" and the annualised value of the "Deliver 2022 LTIP". The amounts of fixed and variable short and medium-long term remuneration are unchanged compared to 2021.
The mix between the short-term and medium/long-term variable component, assuming over-achievement of results, foresees prevalence of the latter over the short-term.
With respect to the timing of recognition of the newly defined variable remuneration for 2022, less than 10% may be paid in 2023 in the case of over-achievement performance, while more than 90% may be paid between 2024 and 2031.
Also with reference to variable remuneration, as shown in the last chart and again in case of over-achievement, more than 2/3 may be paid in the form of shares.
VARIABLE REMUNERATION PAY-OUT FOR THE CEO-GM
The structure of the payout over time involves the award of variable remuneration over a total period through to 2031, including performance, deferral and retention periods. Given the performance achieved, less than 10% of newly defined variable remuneration for 2022 will be effectively paid out in 2023, following approval of the financial statements for 2022, whilst the remaining portion is spread out over time. Each payment is subject to, at least, verification of BancoPosta RFC's capital and liquidity requirements.
Furthermore, the Chief Executive Officer and General Manager receives the Share Ownership Guidelines.
CONDITIONS AND PERFORMANCE TARGETS OF VARIABLE REMUNERATION FOR THE CEO-GM
On a general basis and for all the members of the Board of Directors, the Shareholders' Meeting held on May 15, 2020 determined - based on a proposal submitted by the Ministry of the Economy and Finance - the remuneration payable pursuant to art. 2389, paragraph 1 of the Italian Civil Code to members of the Board of Directors in office in the period 2020-2022, amount unchanged compared to the one defined for the previous term of office.
In 2021, the benchmarking analysis of remuneration assigned for participation on internal board committees compared to that of the peer group described in the Report on the Remuneration Policy approved by the Shareholders' Meeting in 2021, highlighted a substantial alignment with the first quartile of the market. Poste Italiane is characterised by its presence in several different business sectors, each subject to specific regulations that require members of the internal committees to show a consistently high level of commitment and remain up to date.
The figure below shows the revision to the remuneration assigned for participation on the internal board committees from 2022, resolved upon by the Board of Directors on the proposal of the Remuneration Committee, having consulted with the Board of Statutory Auditors, subject to the approval of the Report on the 2022 remuneration policy by the Shareholders’ Meeting. In line with the principle of fair and moderate remuneration which distinguishes Poste Italiane, the updated remuneration figures for the Chairperson of the Committee and Committee Members are between the first quartile and the median of the market.
REMUNERATION OF BOARD COMMITTEES
The increases were resolved in full compliance with the principle of Fairness and moderation of the Reward Strategy described earlier in the Report.
The Statutory Auditors' remuneration is in no way linked to Poste Italiane's performance. The fees paid to Statutory Auditors consist solely of a fixed component, determined on the basis of the commitment required in order to carry out their duties.
The Shareholders' Meeting held on May 28, 2019 appointed the Board of Statutory Auditors for the term of three years, with expiry as at the date of the meeting to be held to approve the financial statements for the year ended December 31, 2021. In the same meeting, the fees payable to the Chairperson and each standing Auditor of the Board were determined for each year in office, respectively equal to €80,000 and €70,000.
The Shareholders' Meeting of May 27, 2022, set to renew the Board of Statutory Auditors due to the expiry of the current mandate, will determine - for each year of office - the remuneration to be paid to the Chairperson and the fee awarded to each statutory auditor on the Board.
No attendance fees are payable for participation in meetings.
The term Key Management Personnel, within the context of the Company, refers, in general, to the heads of the various functions reporting directly to the CEO-GM, as well as the Manager Responsible for Financial Reporting.
KMP with particular responsibilities are subject to remuneration policies in line with the related statutory requirements and the provisions of the Group's Corporate Governance processes.
The following chart shows a summary of the incentive schemes applicable to KMP, highlighting the payment criteria defined in accordance with the sector regulations if identified as among BancoPosta's Material Risk Takers ("MRTs")[1] .
VARIABLE REMUNERATION PAYOUT FOR THE KMP
Furthermore, the KMP receive the Share Ownership Guidelines.The performance targets for 2022 are linked to the objectives set in the new “2024 Sustain & Innovate Plus” Strategic Plan.
With regard to the “MBO” short-term incentive plan, the function specific targets are set out e.g. net inflows, volumes, launch of new business and organisational and management efficiency targets.
ESG objectives represent 2/3 targets differentiated by function to be identified within the KPIs of the Group's ESG strategy, summarised in 8 pillars, also on the basis of the results of the materiality analysis. The beneficiaries, by way of example but not limited to, may be assigned ESG KPIs related to Green Transition, Customer Experience, and Diversity & Inclusion, also within the scope of the priorities that emerged from the materiality analysis.
SUMMARY OF PERFORMANCE TARGETS OF THE SHORT-TERM AND MEDIUM/LONG-TERM INCENTIVE SCHEMES 2022
[1] Ref. "Guidelines for BancoPosta RFC's remuneration and incentive policy for 2022"
Tables – CONSOB Form 7-bis1
TABLE 1: REMUNERATION PAID TO MEMBERS OF THE BOARD OF DIRECTORS AND BOARD OF STATUTORY AUDITORS, GENERAL MANAGERS AND OTHER KEY MANAGEMENT PERSONNEL
TABLE 1: REMUNERATION PAID TO MEMBERS OF THE BOARD OF DIRECTORS AND BOARD OF STATUTORY AUDITORS, GENERAL MANAGERS AND OTHER KEY MANAGEMENT PERSONNEL
* The amounts included in the tables are computed on an accruals basis in respect of fixed remuneration and the short-term incentive scheme ("MBO"). The variable pay shown in the tables is based on an estimate of the amount payable at the time of preparing the Report on the amounts paid in 2021.
Last update: April 29, 2022
- Remuneration Highlights 2022
- Report on the 2022 remuneration policy and on the amounts paid in 2021
- Equity-based incentive plans
- Remuneration Highlights 2021
- Report on the 2021 remuneration policy and on the amounts paid in 2020
- Equity-based incentive plans
- Remuneration Highlights 2020
- Report on the 2020 remuneration policy and on the amounts paid in 2019
- Information document on Equity-based incentive plan
- Remuneration report 2019
- Information circular 2019 on Equity-based incentive plans
- Remuneration report 2018
- Incentive plan, based upon financial instruments, addressed to the material Risk Takers of BancoPosta’s Ring-Fenced Capital
- Remuneration report 2017
- Remuneration report 2016
- Information document related to the LTI plan 2016-2018
- Information Circular related to the STI plan 2017 for BancoPosta’s MRT
