51. Benefits for the PKO Bank Polski S.A. key management

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PKO Annual
Report Online
2020

Accounting policies

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.

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

Variable remuneration components are granted in the form of: non-deferred remuneration (in the first year after the calendar year constituting an appraisal period), and deferred remuneration (for the next 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 component of remuneration 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 Stock Exchange, published in the Thomson Reuters or Bloomberg information systems – from 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 Stock Exchange from 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 deterioration in the financial performance of the Bank or a Group Company, respectively, a loss incurred by the Bank / Company or deterioration of 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 2020, variable remuneration components were also granted in selected PKO Bank Polski S.A. Group companies. Regulations on variable remuneration components for members of the Management Board applied in: PKO Bank Hipoteczny S.A., PKO BP BANKOWY PTE S.A., PKO TFI S.A., PKO Leasing S.A., PKO Towarzystwo Ubezpieczeń S.A., PKO Życie Towarzystwo Ubezpieczeń S.A., Kredobank S.A. and PKO Faktoring S.A. Simultaneously, employees in certain managerial positions at PKO Bank Hipoteczny S.A., PKO Towarzystwo Ubezpieczeń S.A., PKO Życie Towarzystwo Ubezpieczeń S.A. and PKO Leasing S.A. having a significant impact on the company’s risk profile, and certain employees at PKO TFI S.A., 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 – a more detailed description in chapter 10.2 “Variable remuneration components of the Bank’s Management Board members and key managers with a high impact on the Bank’s risk profile” of the Management Board’s report on the activities of the PKO Bank Polski S.A. Group for 2020 drawn up together with the Management Board’s report on the activities of PKO Bank Polski S.A.

Financial information

COST OF REMUNERATION OF THE BANK’S MANAGEMENT AND SUPERVISORY BOARDS
(in PLN thousand)
2020 20191
Management Board of the Bank
Short-term employee benefits  9 162  9 547
Long-term employee benefits  1 484  1 134
Share-based payments settled in cash  3 711  2 835
Benefits to the Bank’s Management Board members who ceased to perform their functions in prior years  – 172
Total 14 357 13 688
Supervisory Board of the Bank
Short-term employee benefits  1 388  1 340
Total  1 388 1 340

COSTS OF REMUNERATION OF THE SUBSIDIARIES’ MANAGEMENT AND SUPERVISORY BOARDS
(in PLN thousand)
2020 20191
Management Boards of the Companies
Short-term employee benefits 24 108  27 097
Long-term employee benefits 3 867  2 577
Share-based payments settled in cash 2 903  3 121
Benefits to members of the Companies’ Management Boards who ceased to perform their functions in prior years  538 108
Total  31 416 32 903
Supervisory Boards of the Companies
Short-term employee benefits 1 089  1 542
Total  1 089 1 542
1 The data for the comparable period takes into account a shift in the proportion between variable remuneration in cash and in financial instruments towards increasing the financial instruments portion, and a shift in the proportion of deferred and non-deferred variable remuneration towards increasing the deferred variable remuneration portion.

LOANS AND ADVANCES GRANTED BY THE BANK TO THE MANAGEMENT AND SUPERVISORY BOARDS
(in PLN thousand)
31.12.2020 31.12.2019
Supervisory Board of the Bank 902 376
Management Board of the Bank 769  1 340
Total  1 671 1 716

 

The interest rates and repayment terms do not differ from the arm’s-length conditions and repayment terms 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 concluded on an arm’s-length basis.

Variable remuneration components

PROVISION FOR VARIABLE REMUNERATION COMPONENTS 31.12.2020
(for 2015-2020)
31.12.2019
(for 2014-2019)
Management Board (including members who ceased to perform their functions) 18 18
Other Risk Takers (persons holding managerial positions other than members of the Bank’s Management Board) 63 39
Group entities 28 22
Total provision 109 79
Remuneration paid during the year 31.12.2020
(for 2015-2020)
31.12.2019
(for 2014-2019)
– granted in cash 28 21
Management Board (including members who ceased to perform their functions) 3 6
Other Risk Takers (persons holding managerial positions other than members of the Bank’s Management Board) 11 9
Group entities 14 6
– granted in the form of financial instruments 8 18
Management Board (including members who ceased to perform their functions) 4 4
Other Risk Takers (persons holding managerial positions other than members of the Bank’s Management Board) 10
Group entities 4 4
Total remuneration paid 36 39

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