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.
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 |