(Upper limit of the variable portion of remuneration payable to senior managers and certain categories of personnel – article L.511-78 of the French Monetary and Financial Code)
The Annual General Meeting, in accordance with the quorum and majority requirements laid down in article L.511-78 of the French Monetary and Financial Code, having read the Board of Directors’ report, hereby authorises the variable portion of individual remuneration allocated for 2014 to senior managers and categories of personnel, including risk-takers, persons exercising supervisory functions and any employee who, given his/her overall income, is in the same remuneration bracket, whose professional activities have a significant impact on the risk profile of BNP Paribas or the BNP Paribas Group, to be increased by a maximum of 200% of the fixed portion of the overall salary of each of these persons, with the option to apply the discount rate specified in article L.511-79 of the French Monetary and Financial Code.
Presentation of the resolution
The fifteenth resolution, This resolution is specific to the banking industry, as was the previous one, relates to the fixing of the ceiling on the variable part of the remuneration of the Senior Management, which at BNP Paribas means executive officers, and certain categories of employees whose professional activities have a significant impact on the risk profile of the Company or Group.
European Directive CRD 4 of 26 June 2013 concerning access to business and the prudential supervision of credit institutions has a governance component that strictly regulates compensation policies in order to avoid potential excessive risk-taking.
In particular, it provides that the variable component should not exceed 100% of the fixed component of the total remuneration for each individual. However, it states as well that shareholders may approve a higher maximum ratio, provided that the overall level of the variable component does not exceed 200% of the fixed components of the total remuneration for each individual. This ratio may be defined after taking into account a discount rate that may be calculated on up to 25% of the sum of the variable remuneration components provided payment is done with deferred tools for a period of a minimum of 5 years. This discount rate will be determined, as the case may be, following indications to be given by the European Banking Authority. These measures were implemented in the legislation by both the French banking Law of 26 July 2013 on separation and regulation of banking activities and the edict of 20 February 2014 related to several measures aiming at adapting the French legislation to the European Union law for financial matters.
This provision shall apply to remuneration awarded for 2014 and concerns the categories of employees spread across the Group’s businesses whose professional activities have a significant impact on the risk profile of the group identified for 2014 according to the criteria that will be published by the European Commission in 2014.
These capping rules will therefore apply to a particularly wide range of positions and are not limited to those employees operating within the territory of the European Union. With its international scope and presence in many countries, BNP Paribas operates in a highly competitive environment in which similar banks are not subject to the same rules governing compensation. The resolution thus presented is consistent with the long-term interest of the shareholders as it enables the Bank to hire and retain the best employees covered by this measure.
The variable compensation awarded, which would in any event be capped, will also continue to be strictly controlled and aligned with the long-term interests of the Group and the shareholders (deferred payments that are subject to performance conditions and linked for half to BNP Paribas share performance) and will be consistent with a sound management of the Bank.
The Board suggests that the General Meeting decide that variable compensation component for the persons involved as defined following the rules of the European Directive hereabove mentioned may represent up to 200% of their fixed component.
The Board draws the shareholders’ attention to the fact that this resolution, to be approved, must be voted by a qualified majority depending on the quorum present at the final vote in the Meeting.
It is necessary to assemble:
The Council further notes that abstention is treated by French law as a vote against the proposed resolution.
(1)In accordance with the article L.511-78 of the Monetary and Financial Code, the shareholders concerned with the compensation cap are not authorized to vote directly or indirectly.