51. Benefits for the PKO Bank Polski SA key management

Accounting policies

Short-term employee benefits are employee benefits, which are settled in full within 12 months from the end of the annual reporting period in which the employees performed the respective work. Short-term employee benefits include, apart from the base salary, also the part of the variable remuneration component paid in cash which is not deferred.

The deferred part of the variable remuneration component paid in cash was recognized as other long-term benefits.

Annual report
2018

Non-deferred and deferred remuneration components granted in the form of financial instruments i.e. phantom shares (for which conversion into cash is carried out after an additional period of retention) are recognized as share-based payments settled in cash in accordance with the principles described below.

Variable remuneration components of key management personnel in the Group

The variable remuneration components are granted in the form of:

  • non-deferred (in the first year after the calendar year constituting an appraisal period);
  • deferred (for the following three years after the first year of the appraisal period),

whereas both the non-deferred and deferred remuneration, is awarded in equal parts in cash and in the form of financial instruments, i.e. phantom shares (for which conversion into cash is carried out after an additional period of retention).

The remuneration component in the form of the financial instrument is converted into phantom shares after granting a particular component – taking into consideration the median of the daily average prices of the Bank’s shares (Volume Weighted Average Price) on the Warsaw Securities Exchange, published in the Thomson Reuters or Bloomberg information systems – in the fourth quarter of the appraisal period. Next, after a period of retention and deferral period, the shares are converted into cash – taking into consideration the median of the daily average prices of the Bank’s shares (Volume Weighted Average Price) on the Warsaw Securities Exchange in the third quarter of the calendar year preceding the payment (the Management Board) and the third quarter of the calendar year, in which the payment is made (other persons in management positions), published in the Thomson Reuters or Bloomberg information systems.

The deferred remuneration may be reduced in the event of a deterioration in the financial performance of the Bank or a Group Company, respectively, a loss incurred by the Bank / Company or deterioration in other variables related to the performance in the period of appraisal of key management personnel and results of the organizational units/cells supervised or managed by these people, which were revealed after the appraisal period.

In 2018, variable remuneration components were also granted in selected PKO Bank Polski SA Group companies. The regulations on variable remuneration components for members of the Management Board applied in: PKO Bank Hipoteczny SA, PKO BP BANKOWY PTE SA, PKO TFI SA, PKO Leasing SA, PKO Towarzystwo Ubezpieczeń SA and PKO Życie Towarzystwo Ubezpieczeń SA. Simultaneously, employees in certain managerial positions at PKO Bank Hipoteczny SA, PKO Towarzystwo Ubezpieczeń SA and PKO Życie Towarzystwo Ubezpieczeń SA having a significant impact on the company’s risk profile, and certain employees at PKO TFI SA, whose jobs include activities that materially affect the risk profile of the company or the fund management company, were also covered by variable remuneration policies.

Financial information

2018 2017
Supervisory Board of the Bank 1 351 1 315
Total 1 351 1 315

Short-term employee benefits, including variable remuneration paid in cash – not deferred Other long-term benefits – deferred variable remuneration paid in cash Share-based payments settled in cash
remuneration in 2018 other received in 2018 1 received in 2018 contingent, due as at
31.12.2018
received in 2018 due as at
31.12.2018
contingent, due as at
31.12.2018
Management Board of the Bank 6 342 94 742 906 2 558 1 047 906
Members of the Management Board who ceased to perform their functions in 2017 and 2016 69 636 592 1 719 868 592
Total 6 342 163 1 378 1 498 4 277 1 915 1 498

1 Includes additional benefits under employee pension programs (PPE).

Short-term employee benefits, including variable remuneration paid in cash – not deferred Other long-term benefits – deferred variable remuneration paid in cash Share-based payments settled in cash
remuneration in 2017 1 other received in 2017 received in 2017 contingent, due as at 31.12.2017 received in 2017 due as at 31.12.2017 contingent, due as at 31.12.2017
Management Board of the Bank 7 470 1 423 611 1 642 1 258 2 558 1 642
Members of the Management Board who ceased to perform their functions in 2017 and 2016 1 647 733 698 1 224 1 510 1 719 1 224
Total 9 117 2 156 1 310 2 865 2 768 4 277 2 865

1Includes basic remuneration and additional benefits under employee pension programs (PPE), additional insurance, medical care and company social benefits fund (ZFŚS).

On 13 March 2017, the Extraordinary Shareholders’ Meeting (ESM) adopted a resolution on the principles for determining the remuneration of members of the Management Board and Supervisory Board proposed by the State Treasury represented by the Minister of Development and Finance who exercised the rights from the Bank shares owned by the State Treasury. The Resolution concerned adapting the remuneration policy for members of the Management and Supervisory Boards of PKO Bank Polski SA to the provisions of the Act on principles of remunerating people who manage certain companies. On the basis of the resolution, the Supervisory Board introduced a new policy of employing and remunerating members of the Management Board which were defined in accordance with the provisions of the Act on principles of remunerating people who manage certain companies.

On 22 June 2017 the policies for remunerating members of the Management Board and Supervisory Board were implemented. Contracts for the provision of services have been signed with the member of the Management Board, which replaced the former employment contracts, and the benefits paid in respect of the change in employment are shown in the table below.

Post-employment benefits 2018 2017
Management Board 1 541
Members of the Management Board who ceased to perform their functions in 2017 and 2016 8 312
Total benefits 8 1 853

Termination benefits for members of the Management Board who ceased to perform their functions in 2017 and 2016 2018 2017
Members of the Management Board who ceased to perform their functions in 2017 and 2016 832

Remuneration from subordinated entities (in PLN ‚000) 31.12.2018 31.12.2017
Total short-term benefits 119

Remuneration of the Management and Supervisory Board members of the subsidiaries of the PKO Bank Polski SA Group 2018 2017
Supervisory Board 824 467
Management Board 24 578 25 095
Total 25 402 25 562

Loans and advances granted by the bank to management 31.12.2018 31.12.2017
Supervisory Board 416 666
Management Board of the Bank 1 344 1 355
Total 1 760 2 021

The interest rates and repayment terms do not differ from the arm’s-length conditions for similar banking products.

The Bank provides the key management personnel, members of the Supervisory Board and their families with standard financial services which comprise, among other things, operating bank accounts, accepting deposits, granting loans and providing other financial services. All these transactions are on an arm’s length basis.

Provision for variable remuneration components 31.12.2018 31.12.2017
(for 2013-2018) (for 2012-2017)
Management Board (including members who ceased to perform their functions in 2017 and 2016) 22 18
Other Risk Takers (persons holding managerial positions other than members of the Bank’s Management Board) 37 30
Group entities 25 25
Total provision 84 73
Remuneration paid during the year 2018 2017
(for 2013-2018) (for 2012-2017)
– granted in cash 18 16
Management Board (including members who ceased to perform their functions in 2017 and 2016) 1 4
Other Risk Takers (persons holding managerial positions other than members of the Bank’s Management Board) 9 7
Group entities 8 5
– granted in the form of financial instruments 17 14
Management Board (including members who ceased to perform their functions in 2017 and 2016) 4 3
Other Risk Takers (persons holding managerial positions other than members of the Bank’s Management Board) 10 9
Group entities 3 2
Total remuneration paid 35 30

 

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